Needs Principle in a Divorce – Divorce Solicitors

Parties often find financial security one of the most worrying aspects of a relationship breakdown. I regularly meet clients who not unsurprisingly worry about whether they will be housed and how they will afford to live post-divorce. This is where the needs principle comes in. But what is the needs principle in a divorce? How does it affect a divorce financial settlement?

What is the ‘Needs Principle’ in a divorce?

The needs principle means the Court must ensure that a financial settlement caters for the financial needs of the parties.

The needs of the parties and any minor children is often a determining factor in a financial settlement.

This is particularly relevant where the available assets are limited. Namely, in a ‘needs-based case’. Needs-base cases are very common. In this type of case, the Court determine the financial settlement based strictly on needs.

What are financial needs in divorce?

A party’s needs vary from case to case. This is because needs refer to the reasonable needs generated by the marriage.

Needs refer to capital needs. For instance, your ability to house yourself.

In addition, needs refer to income needs. For example, your ability to meet your expenditure.

The Court has no set formula to work out ‘needs’. Whenever the Court makes a financial Order, they must have regard to each section 25 factor. Each of these factors has a bearing on the parties’ needs. The Court, therefore, determine needs based on the facts of the case being the circumstances of the spouses.

Are spouses financial needs the same?

Not always. A spouses’ needs are often similar but their ability to meet their needs is relevant. This can mean one spouse will need more resources than the other to meet their needs. The Court therefore carefully analyse the available resources and facts of the case.

Does this change for parents?

Having similar housing needs is particularly relevant for parents. Parents both need a property to accommodate their children living with them during their time. The Court aims to achieve fairness. Consequently, one parent remaining living in a 4/5-bedroom property with two children whilst the other moves into a two bedroom studio flat may not be considered appropriate but it will depend on the wider circumstances. Often the Court consider it appropriate for the children to experience a similar standard of living with both parents.

The available resources play a big part in deciding the financial settlement. In cases of limited financial resources, parties may need to be creative and think outside the box. This is where a Specialist Divorce & Financial Settlement Solicitor can help.

I have received an offer from my spouse, how do I know if it meets my needs?

You need to ensure that it allows you to rehouse and you are able to meet your expenditure in a similar way to how you did in the marriage and/or in a way you are able to move towards financial independence.

To consider this you should ensure you know the full financial position of your spouse and you likely will need to take advice from a legal and financial specialist.

A Specialist Divorce & Financial Settlement Solicitor will be able to advise on what your needs are relevant to your circumstances and whether any proposed outcome would be suitable in your circumstances.

As a result, I recommend everyone going through a divorce at least obtains initial advice before they consider any offer. This will help you understand your rights and the financial claims available to you. You should do this before you explore and agree to any financial settlement. 

In cases where needs are clearly met, is the needs principle still relevant?

Yes. The Court must ensure reasonable needs are met in all financial settlements. But, where there are ‘surplus’ assets, additional principles are relevant and the resources available in excess of needs are considered differently.

Consequently, the Court reverts to considering the principle of sharing and equality. This principle applies to all matrimonial assets. As a result, the Court then considers the source of assets. Thereafter, where appropriate, non-matrimonial assets may be ring-fenced and excluded from the financial settlement. Similarly, in limited circumstances, the Court can consider the need for compensation.

This is in contrast to a needs-based case, where whether an asset is non-matrimonial is irrelevant. Assets are used to meet needs irrespective of who owns them. This is because needs trump source.

Get in touch to find out how the needs principle will affect your divorce.

Want to know what your financial settlement may look like? Or how your needs will be catered for?  Please contact Gemma Keats on 07874349555 or by email to see how best she can support you.