Financial needs in divorce: your questions answered


date published

9th March 2020

written by

Emma Heptonstall Image

date published

9th March 2020

Financial needs in divorce: your questions answered


What happens with money when you divorce? It’s one of the first questions people have, understandably. In Financial needs in divorce: your questions answered, we take a look at this question in relation to the concept of ‘financial needs’ and how it’s dealt with in the courts.


The short answer to what happens with money when you divorce is: you take your assets – property, cash, investments, art, antiques, pensions, whatever else, and you split them. The starting point is a 50:50 split.


But it’s only a starting point and often a rough guide to what might happen. That’s why you can’t look at your parents’ divorce or your sister’s or best friend’s to know what’s going to happen to you. Yes, financial needs in divorce are not straightforward!


The truth is: it depends on all the circumstances of your case.


It depends on the s25 Factors, and the needs of you and the family. Section 25 basically looks at all the circumstances of the case. If the available wealth in the family doesn’t exceed the needs of the family (which is true for most people), yours is a needs-based divorce. This includes the needs of your ex as well as you. Yes, financial needs in divorce are always about both of you.


What are the s25 Factors?


The s25 factors are of crucial importance. Whether you sit down with your ex over coffee, whether you mediate, collaborate or arbitrate, the s25 factors will influence the decisions that a court will seal in a final order. The factors include:

  • The welfare and needs of under 18s (including children that aren’t your ex’s by law, but that your ex assumed some responsibility for while you were together)
  • The income of you and your ex, as well as future earning potential
  • Financial needs of you and your ex, including the standard of living you are both accustomed to
  • Your age and mental and physical health, including any disabilities
  • The length of the marriage.


You can read the full list of s25 factors here.




Do courts across England and Wales rule consistently?


Attempts are continually being made to ensure that there is consistency of approach in courts across the country. This is challenging, however. Financial needs in divorce vary geographically. My experience as a divorce coach with clients both nationally and internationally is that often courts still take very differing views about how assets are distributed on divorce. London is seen as more generous to women (this has an international reputation), but then, it’s more expensive! As a London resident myself now – I can attest that my living costs have significantly increased for this Yorkshire girl (yes, ouch)!


The main problem that self-represented people find is that there are no set rules. When we feel lost and uncertain, rules can make us feel safe, secure and in control. When there are no rules, it’s terrifying. How long is a piece of string? Which side of the bed did the judge get out of? Will they see through my charming/victim-playing husband? Shall we just toss a coin to see who gets the dog?


What are ‘financial needs’ in divorce?


Just as there are no rules, there’s currently no definition of ‘financial needs’ in statute so if you’ve been looking, you can stop now.


It makes predicting court decisions difficult. Of course, it stands to reason that ‘needs’ will always be relative. The middle-aged wife of a wealthy man could live in a one bedroomed flat in the cheapest town in England, of course. But will she have to? No. Her needs may still run into a multi-million-pound divorce settlement. So the concept of needs isn’t straight forward.


The basic concept of ‘needs’ refers to the need for housing and the provision of income. Marriage often creates a ‘relationship of dependency’ through, for example, caring for children, homemaking and caring for ageing or ill relatives. These marriage-generated needs are taken into account.


How ‘needs’ are interpreted is down to judicial discretion. The first consideration is to the welfare of children under the age of 18, but not above all other factors. So, whilst the children’s welfare is important, it must be considered in light of all your circumstances.


Many find the age 18 limit frustrating, and out of touch with modern family realities. More and more adult children remain financially dependent on their parents into their twenties and beyond. Yet, the law doesn’t recognise the needs of these adult children. It can be a sad reality that adult children may find themselves in rented accommodation sooner than they had planned. Unless both parents agree to continue to provide at least one stable residence they are on their own.


How is ‘financial need’ in divorce assessed?


You can’t have a share of what isn’t there. You have to start with what there is. The first step always needs to be a full inventory of the assets and the liabilities held by you and your ex, both jointly and individually.


It’s why I always say (and often!) ‘no negotiation without knowing your numbers’. The starting question will always be:


‘What are the financial resources available to meet both parties’ needs?’


Once that is clear the resources will be split based on the need for housing and living costs taking into account all the circumstances of the case and the s25 factors.


What does case law tell us?


The leading cases are still Miller v Miller and McFarlane v McFarlane from 2006.  In these cases, the House of Lords looked at the issue of need, compensation, and sharing. The overriding objective of decisions is fairness.


The starting point is a 50:50 split of assets. But what if this does not meet the ‘needs’ of one spouse? Then the decision moves in favour of the financially weaker party. Baroness Hale in Miller, McFarlane said:

 “Giving half the present assets to the breadwinner achieves a very different outcome from giving half the assets to the homemaker with children”.


If there is additional wealth, once the needs of both spouses (and children) are met, the rest of the assets should be shared. This is of course considered in the light of all the s25 factors so the age of parties, duration of marriage and contribution to that outstanding wealth will all be considered.


Does it matter whether they are matrimonial or non-matrimonial assets?


The duty is to disclose all assets within the marriage that one or both parties have a legal or beneficial interest in. This includes assets acquired prior to the marriage. Everything must be declared. It doesn’t matter whether the asset is realisable now or not. All illiquid assets must be declared although of course, the courts will need to consider the nature of these assets when looking at asset distribution. Assets held in trust must also be declared.


In recent years, parties have asked the courts to distinguish assets which have been gained during the course of the marriage – clear ‘marital assets’ and those which could be considered ‘non-marital’. This could include property acquired before marriage or trust assets, for example. Unless there is a surplus of assets to needs (which is uncommon) the court will not make this distinction, because it would lead to unfairness when the overriding objective in such cases is to ensure that each party is housed and can afford to live.


What if assets are inherited?


As mentioned above, inherited assets must be disclosed. They are, at the very least, a resource to which the inheriting spouse has access. Depending on how that inheritance has been dealt with, it may be considered by the court as an asset that can be used to meet needs.


What happens when assets exceed needs?


When assets exceed needs the court has more discretion to consider the issue of matrimonial v non-matrimonial assets. Current case law tells us that in such cases, the principle of ‘sharing’ is more appropriate than simply reassigning the asset back to its original owner, but that each case should turn on its own facts and judicial discretion should be applied. This is where it’s hard to find a consistency of approach!


However, the longer the marriage, the less likely the court would be to refuse to share the asset. If you feel that you have a ‘non-matrimonial’ asset case you should seek specific legal advice.


What if there’s not enough to go around?


In many cases, there simply isn’t enough in the pot for each spouse to live comfortably once the assets are split. The court then has the unenviable task of balancing the ‘unfairness’ between the parties – remember, in financial proceedings, the needs of the children do not trump everything. All s25 factors are considered.


Do I need to become financially self-sufficient?


Usually, yes. In most cases, the court will expect you to reach self-sufficiency. Gone are the days when most divorced women can look forward to a ‘whole life’ order, regardless of the relationship of dependency during the marriage. These days, women are expected to work toward financial independence. This will mean returning to work if they have been a stay at home mum (read more about that here), increasing working hours, or retraining or upskilling to better-paid work. This is subject to the ages of the children and the other aspects of the s25 factors – capabilities, health, and financial resources.


What about compensation?


The concept of compensation arose in the cases of Miller v Miller, McFarlane v McFarlane. This sought to address the situation where one spouse (often the wife), had given up a highly successful or lucrative career to stay at home to raise the family. Compensation was intended to reflect the lost opportunity to climb to the highest levels of financial renumeration. Even if she returns to work, she may have lost 10-20 years of career and is unlikely to match her ex’s salary. Whilst she may receive an equal share of assets, she will no longer have access to a share of his earnings.


To compensate, the court may award the compensated spouse a greater share of capital assets or spousal maintenance. Which sounds positive for many of my clients who find themselves in the position of needing to return to the workforce with diminished career prospects.


Unfortunately, the issue of ‘compensation’ has not had an easy ride in case law. It is often decided that the equal division of capital assets (the starting point) is enough to ‘compensate’. And in many cases the career must already have been lucrative to successfully argue a ‘compensation’ point. Having the potential to rise high is not enough.


How do you consider your own financial needs in divorce?


This helpful guide from the judiciary is a good starting point to work out your needs.  It sets out what the courts expect, and what you need to take into account. Don’t forget to consider your values as you work through it  – think about what matters to you. Case law and statute are all well and good. They cannot and should not be ignored. But they only go so far – remember, this is your life and your divorce.


What do you want and ‘need’ for you? Often it’s not just about the money. Money issues are often a cover for so much more about what matters to us, how we feel about what the future may or may not hold. The court won’t help you sort out your emotional life, that’s your job. But it doesn’t mean you have to do it alone.


When you work with me you get confidential support from the perspective of someone who knows the legal system, the financial disclosure requirements, AND who can support you emotionally as you navigate decision-making and paperwork.


If you want to get your needs – financial and emotional – understood and sorted so you can stand strong in your divorce, I’m happy to help. Just book in a call.

Emma Heptonstall, the Divorce Alchemist is author of the Amazon best selling book How to be a Lady Who Leaves, the Ultimate Guide to Getting Divorce Ready. A former lawyer, Emma is a family mediator and founder of Get Divorce Ready the online self-study and group programmes. Emma has been featured on BBC Radio, The Telegraph, the iPaper and in Marie Claire Magazine. To find out more visit


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