Fairness requires a consideration of the parties’ respective needs, including whether either party should be compensated for economic disadvantage that the marriage has created, and by reference to the principle of equality in sharing in the fruits of the marriage.
As a starting point, the courts will typically prescribe an equal division of the assets generated during the marriage, unless needs dictate otherwise.
The courts can make income or capital orders for financial provision. Income orders cover periodical payments orders which provide for ongoing maintenance.
Though less favoured these days the courts can and do make maintenance orders that are payable for the parties’ joint lives. Recent years, however, have seen a move towards more fixed or extendable ‘term’ maintenance orders for a defined period.
However, unlike in other jurisdictions, in England and Wales there are no set time limits for which maintenance is payable, with terms dependent on the facts of each case.
In terms of capital orders, the court can order one party to pay to the other a lump sum. Additionally, there are property adjustment orders that include transfers of ownership and orders for sale and the distribution of proceeds between the parties in such proportion as the court sees fit.
Pensions
The court also has powers regarding the redistribution of pensions on divorce. The importance of pensions on divorce cannot be overstated. Pensions provide security on retirement, and they are often a person’s most valuable asset.
It is essential, therefore, that they are handled appropriately and expert pensions advice sought where relevant.
Since its enactment the Matrimonial Causes Act 1973 has been subject to three main amendments that have radically changed the outcome for pensions on divorce. There are presently three possible ways that pensions rights can be handled on divorce, namely:
- The traditional practice of pension off-setting.
- Pension attachment orders.
- Pension sharing orders.
Off-setting
Before the courts were granted the power to make orders specifically dealing with the parties’ pension arrangements, pension rights were at best afforded a passing acknowledgement as one of the “circumstances of the case” under the Matrimonial Causes Act 1973, and at worst completely ignored despite their potential value.
All the courts could do was to allocate one spouse (normally a wife) a proportion of the matrimonial assets equivalent to the approximate value of the pension benefits lost on divorce.
This meant there was a trade-off between pension rights and other matrimonial assets, with one spouse typically retaining a greater share of the equity in the home, in lieu of a notional share of equivalent value in the other spouse’s pension.
