In order to establish how to divide the â€Å“matrimonial pot†we will first need to establish what is in the pot and will thus need to compute both parties' resources. Once we have a clear picture of the finances, we would then, within the context of the section 25 criteria, consider ways of distributing those resources fairly between the parties by reference to three principles, namely need, compensation and sharing.
The starting point for all divorce financial settlements is a 50/50 split of all the parties’ financial resources. However, the consideration of the section 25 criteria and the guiding principles will ultimately determine the final split.
- The section 25 criteria require the parties to consider:
- The income, earning capacity and financial resources of both parties
- Each party’s financial needs and obligations both now and in the foreseeable future
- The standard of living enjoyed by the parties before the relationship breakdown
- The parties’ ages and duration of the marriage
- Any mental or physical disability of either party
- The contributions made by each party to the marriage, including the contribution of looking after the home and raising the children
- Any benefits either party will lose as a result of the divorce, such as pension entitlements
This criteria should be considered with reference to the three principles:
- Sharing â€â€œ marriage is a partnership and the parties’ financial resources should be split as equally as possible
- Needs â€â€œ divorcing couples should consider what each party needs to maintain a good standard of living in the future, for example, income and housing
- Compensation â€â€œ rarely invoked in divorce cases, this may be relevant where one party has made a valuable sacrifice to the marriage, such as giving up a lucrative career so their spouse can excel in theirs. It is usually only an issue in high net worth divorce cases