We are married, that means 50:50 doesn’t it?
Not necessarily. This seems to be the common view formed by most and a lot of people are now dividing their assets following separation without any input or advice from the legal profession. It is certainly true that in a lot of cases dividing assets equally is a common outcome especially when the marriage is a lengthy one and there is no dependant children involved. The aim of the court is to achieve “fairness” and that does not always mean an equal division of assets.
When the court is considering how to exercise its powers it considers all the circumstances of the case giving first consideration to the welfare of any minor children. In addition to considering what financial resources the parties actually have the court will also take into account the financial needs of the parties, length of the marriage, standard of living, ages of the parties and duration of marriage and the contributions either has made and are likely to make in the future.
The general starting point will be the equal sharing of what we call “Matrimonial Assets”, meaning those acquired and/or built up during the course of the marriage unless the needs of the parties dictate otherwise. By way of example consider the following;
Mr A and Mrs A have been married for 10 years. They don’t have children and the house they own has £100,000 equity. Mr A is a banker earning £60,000 PA and Mrs A is a librarian earning £12,000 PA. The Equity should be shared equally shouldn't’t it? Probably not. After a 10 year marriage both Mr A and Mrs A will need to be able to obtain a home. Mr A can obtain a mortgage of £150,000 and can quite easily purchase a house for £160-£170,000. Mrs A can obtain a mortgage of £45,000 and if she was to share in the £100,000 equity equally she is unlikely to be able to purchase a house. Would it still be seen as a fair outcome is Mrs A received more than 50% of the equity? Yes, highly likely that would be the outcome to achieve fairness.
Mr B and Mrs B have been married for 5 years. They don’t have children and the house they own has £20,000 equity. Mr B is a handyman earning £16,000 PA and Mrs B is a teacher earning £28,000 PA. They both ideally want to buy new homes following their separation but Mr B has a borrowing capacity of £50,000 and Mrs B a borrowing capacity of £85,000. Like the example above Mr B with the lower borrowing capacity should be able to argue for more than 50% right? Wrong. It is highly unlikely that neither will be in a position to purchase a home and the fairest outcome is to divide the equity equally. The marriage is shorter than Mr A and Mrs A and the disparity in income is not as great.
Finally consider Mr C and Mrs C. They have been married for 15 years and have 2 children, a boy and girl aged 6 and 10. Mr C is a delivery driver earning £20,000 PA and Mrs C is a Zumba instructor earning £20,000 PA. The house they own has £100,000 equity and each can borrow £60,000. They have agreed that Mrs C will be the main carer of the children and Mr C will see the children each Wednesday and on alternate weekends. Mrs C hopes to purchase a 3 bed roomed home for her and the children and that will cost £130,000 meaning she will need more than 50% of the equity. They earn the same and can borrow the same meaning they should share the equity equally? No probably not. As Mrs C is the primary carer of the children their needs are the courts first consideration. Given the age/sex of the children she does need a 3 bedroomed property. Although the children will stay with Mr C this will only be on a fortnightly basis and the main priority is the children’s main home.
The moral of the story is that there are lots of factors that are taken into account when the courts are deciding how to distribute matrimonial assets. It’s not always as simple as dividing assets equally and the overall aim is to achieve fairness.
If you would like more information based on your personal circumstances, please contact a member of the Family Law team at any of our four offices.