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Divorce settlements: 50/50? Very Rarely

28th January 2015

On divorce each party gets an equal split of the assets, right? This seems to be the common held view of the Man on the proverbial Clapham Omnibus, or whatever the 21st century equivalent is.

However, in practice this is rarely the case. Most divorces involve assets which are simply not substantial enough to justify an equal division. It is completely wrong in principle to consider a settlement as fair if it provides an equal division for people who are in economically different positions.

If your earning capacity, pension contributions, mortgage borrowing capacity etc. have been affected because you stayed at home and looked after the children, you need more because you have less. In practice “relationship generated needs”, as the Judges grandly refer to them, are and always have been a relevant consideration when it comes to a financial settlement.

This means the proceeds of the family home, if it is to be sold, may have to be shared unequally. Pension sharing may have to reflect the fact that women live longer (statistically) than men and that the effect of sacrificing your career by staying at home may mean that you will never be financially independent.

If you have less, now and in the future, you need more.

The starting point as always is to determine exactly what resources exist and once that task has been undertaken, to consider carefully what the needs of each party are. As always there has to be some give and take on both sides but, fundamentally, the task of any professional involved in this process is to determine a fair, not equal, outcome based on all of the relevant circumstances. The current legislation enables practically everything to be taken into account and this generally means that most often an unequal distribution is the outcome.

Bearing in mind that for many people these are arrangements which have to carry them through the remainder of their life, careful professional advice is vital if you are to avoid the pitfalls of an equal division of assets. There is no substitute for legal advice at an early stage in this process to fully understand what approach a Court is likely to take to your specific situation. Remember that your situation will almost always be at least subtly different to that of your friends and family.

The moto is fairness, not equality.

George Ide
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