Family law calls for quite a lot of mathematics. From calculating how matrimonial finances should be divided upon divorce, to considering the tax implications of the same, a lot of number crunching goes on.
Here, Head of Family for Kuits Katie McCann, who specialises in complex matrimonial finances, explains how a good divorce lawyer needs to be well-versed in the calculations that are necessary to ensure a fair settlement is reached for their client.
How is money distributed following divorce?
When dealing with finances after a marriage has broken down, parties must disclose their financial situations so that the ‘total available pot’ can be calculated. After this, each party’s circumstances must be considered so that finances can be divided in a way that takes care of their needs at the same time as being fair.
In the famous case of White v White (1 All ER 1) Lord Nicholls introduced the ‘yardstick of equality’ and explained that, as a general rule when it comes to dividing finances, equality should only be departed from if there is a good reason for doing so.
In order to consider what would represent a fair division of assets, judges will be guided be S25 Matrimonial Causes Act 1973. Amongst other considerations such as the standard of living enjoyed by the family prior to the breakdown of the marriage, each parties’ income and earning capacity moving forward, judges must give thought to the duration of the marriage.
Does the length of the marriage affect the way money is distributed?
The significance of the length of a party’s marriage was highlighted in the case of Sharp v Sharp (EWCA Civ 408), in which Mrs Sharp claimed that the £10.5million bonus payments that she had accrued during the marriage should be protected. Mr and Mrs Sharp had no children, earned similar incomes and, most importantly, had only been married for four years. Based on the facts of the case, the Court of Appeal reduced Mr Sharp’s initial award from £2.7million down to £2million, thus highlighting that equality is more likely to be departed from when a marriage has been short-lived.
As a result, it is now more important than ever for family lawyers to be able to advise their clients whether a marriage is likely to be considered ‘long’ or ‘short’ by the Court. As there is no definitive guidance on this topic each case must be decided on its own facts and this is where things start to get tricky.
Does cohabitation affect the court’s view of the length of a marriage?
The case of GW v RW (EWHC 611) makes it clear that if a couple’s cohabitation moves seamlessly into marriage, such cohabitation must be considered when calculating the length of the marriage. Using a worked example to illustrate the importance of this guidance, in the event a couple have cohabited for 15 years and then are married for just three, this marriage is most likely going to be defined as long. This is extremely significant, as we know that a long marriage is likely to result in finances being divided equally between the parties.
Based on the above, you would be forgiven for thinking that 15 years of cohabitation but no marriage would grant both parties an equal split. However, there is no such thing as common law marriage in the UK. A couple could have lived together for 30 years or more, but the absence of a marriage certificate means their entitlements are limited in the event the relationship breaks down.
This is where our current laws start to become illogical: either cohabitation is worth something or it is not. It cannot be fair that a cohabitation of 10 years followed by a short marriage will result in an equal split, but a 30-year cohabitation with no marriage is worth nothing at all.
With more and more couples choosing to cohabit, something has to change. If logic is to be worth anything at all, then either long-term cohabitation should result in an equal financial division following separation, or cohabitation should not be considered when calculating the length of a marriage. At the moment the maths simply doesn’t add up.
Katie McCann is head of family law and in-house counsel at Kuits Solicitors in Manchester City Centre. She has a special interest in resolving high value relationship breakdown disputes.