The Law Commission has published a Consultation Paper addressing some of the issues that arise when the Court has to resolve financial arrangements on divorce.

The Law Commission is looking at how the Court determines the amount of maintenance which should be payable after a divorce, and for how long it should be paid. Under current law, it should only be paid insofar as it is required to meet “needs”, but there is no definition or consistent judicial interpretation of “need”. This makes it hard to predict what maintenance will be ordered.

One solution suggested is the use of a formula. Formulas are used in the USA and Canada, and are based upon both parties’ incomes, the length of the marriage, and the ages of any children. The Law Commission is clear that there would need to be the possibility of variation if the formula operated unfairly in a particular case.

The Paper also addresses “non-matrimonial” assets, i.e. property received by inheritance or gift, or owned before the marriage, by one party. Under the current law the presumption that assets should be shared equally does not apply to non-matrimonial assets as it does to other assets. However, the rules that do apply to non-matrimonial assets are not clearly established, and different Judges take different approaches. The Law Commission proposes that non-matrimonial assets should not be shared at all, unless that is necessary to meet the other party’s needs.

We hope the Commission’s work will result in a system that provides more certainty, but this is unlikely to happen for some time yet, as a Final Report is not due until next autumn. In the meantime, the uncertainty is contributing to an increasing number of couples using pre-nuptial or post-nuptial agreements to set out what they would want to happen to their finances in the event of divorce.

Please contact a member of our Family Team if you would like advice on any of the issues mentioned above.