Financial Needs In Divorce, How Much Is Enough?

In January this year I wrote an article on financial needs in divorce, and in answer to the question "How much is enough?" responded - in stereotypical lawyer fashion, I admit "it depends".

In view of the recent Court of Appeal decision in Sharp v Sharp, it is worthwhile looking at this topic again. In this case, the couple was classed as being married for 6 years, during which they had cohabited for two of them. There were no children. There were £6.9m of assets, of which £4.2m was held in the Wife’s bank accounts. Both of them earned similar amounts, but the Wife had earned bonuses totaling £10.5m during the marriage. They had kept their finances very much separate throughout the marriage.

The court’s first decision was that the equal sharing principle should apply, and the Husband was awarded half of the assets. The Wife appealed.The Appeal Court reduced the Husband’s share to £2m, being a 50% share of two properties and £700,000 from the Wife’s savings. Overall this was said to reflect (a) the standard of living enjoyed during the marriage, (b) sharing, and (c) the Husband’s need for a modest capital fund. The reduction from the original ruling however was due to the short length of the union.

The Judge found that amongst some Judges and practitioners the settled practice, namely that assets were subject to equal sharing regardless of the length of the marriage, was wrong. The length of the marriage will simply be one of the factors in each case to be considered on its own merits. The statute governing the factors the courts have to have regard to in dividing a divorcing couple’s assets has now been given greater prominence, for in the words of the Court of Appeal a “blind application of a 50/50 split in every case can only be an impermissible judicial gloss on the statute, which expressly requires the court to consider all of the circumstances of the case.” Instead of providing further clarification therefore, the waters have been muddied further. Practitioners still have to first establish whether a couple divorcing fall into the “short”, “medium” or “long” marriage category and whether or not the assets are sufficient to cover both parties’ needs. So whilst the guidance might have changed, the answer from my original article hasn’t, it still depends!