When financial settlements are being made on divorce, one crucial aspect that is taken into account in deciding the structure and value of the settlement is the 'financial needs' of the person receiving maintenance from their former spouse.
However, one of the recurring problems in such cases is that 'need' appears to mean somewhat different things to different people – including different judges.
In a bid to introduce more consistency into decisions regarding financial needs on divorce, the Family Justice Council has introduced a 64-page guidance document for the judiciary.
The guidance specifies that the question of financial need will be decided by the court as a matter of fact and will, in most cases, take into account housing needs and present and future income needs, which will normally include income in retirement.
The level and duration of the need will be decided by the court. Where greater resources are available, the guidance states that, as regards the definition of a party's 'reasonable needs', the 'key point…is that in cases involving more financial resources and higher marital standard of living, "needs" can be met at a higher level than would otherwise be possible'. The importance of the standard of living in assessing need will generally depend on the duration of the relationship, and some reduction in living standards may be expected as a result of 'the objective of transition to independence'.
Where resources are 'modest', the needs of children may predominate.
The guidance stresses that all available assets should be taken into account when determining the terms of the settlement, not just those acquired during the relationship.