downsize their property on retirement

The financial needs of each spouse are one of the factors to be taken into consideration in dividing assets between a couple on divorce. When looking at financial needs it is often suggested that it is reasonable to assume that each spouse will downsize property on retirement. 

This would have an impact on:-

  1. The amount of capital that is needed to house that person in retirement;
  2. Their likely outgoings in retirement and therefore their income needs; and
  3. The capital that is available to meet any shortfall in income in comparison to outgoings

Resolving finances on divorce

Very often in resolving finances on divorce we use calculations known as the Duxbury tables to calculate how much someone will need in capital to replace an income. The Duxbury tables assume:-

  • Rates of return on investing the capital
  • The anticipated rate of inflation
  • The recipient of the capital will use all of the interest on the investment and all the capital by the time they die with no shortfall or surplus. This is calculated using actuarial life expectancies.

The release of additional capital from downsizing can therefore be used as an argument to enable additional funds to be used towards meeting outgoings rather than housing needs in retirement.  

The matrimonial court

However, in the recent case of ZN V GN [2020] EWHC 1316 (Fam) the matrimonial court made it clear that it should not always be assumed that someone should or will downsize. In that case the court assumed that the husband would continue to live in the same property during the remainder of his working life and throughout his retirement. As a result the husband in that case would not be releasing money from his property to help fund his retirement. The income that he needed for his retirement would therefore have to be funded entirely from other sources.  

This case also demonstrates the wide discretion of the matrimonial courts and how every case will be decided on its own specific circumstances. As a result, it is essential to take legal advice as soon as possible regarding your specific circumstances if you are considering a divorce.