Needs Principle in a Divorce – Divorce Solicitors

Parties often find finances 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 do not exceed the parties needs. 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.

Are spouses financial needs the same?

Not always. But, often spouses needs are similar. 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 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, the Court considers it is not fair for one parent to continue to live in a 3/4/5-bedroom property whilst the other moves into a studio flat. As a result, the Court expect children to experience a similar standard of living with both parents.

Likewise, the Court generally expect a financial settlement to leave parties living to a similar standard. This applies whether or not children are involved.  

However, this is not always possible. 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?

Firstly, before you consider any financial proposal you should ensure you know the full financial position of your spouse. It is desirable for full disclosure to take place. 

Thereafter, how the Court expect your income and capital needs to be met will depend on your circumstances considering the section 25 factors. A Specialist Divorce & Financial Settlement Solicitor will be able to advise how your needs will be considered in your circumstances.

As a result, I recommend you obtain at least initial advice. This will help you understand your rights and the financial claims available to you. You should do this before you explore 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 come back into play. 

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 everything.

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.