Few people could claim to need £40,000 a year for fur coats, £109,000 a year for dresses and £60 million for a home in London – yet this is what Christina Estrada claimed before the High Court at the beginning of July 2016.  A question we are often asked – how are financial needs calculated after divorce?

Although the court eventually awarded the super model less than the £238 million she had been seeking, the £75 million settlement, including a £53 million cash payment, is thought to be the largest “needs” based award ever made by an English court.

Needs-based cases are those in which the available assets do not exceed the parties’ needs and, while the court’s starting point is always the equal division of assets, this will be departed from, if required, in accordance with the parties’ needs. Baroness Hale pointed out that, “giving half the present assets to the breadwinner achieves a very different outcome from giving half the assets to the homemaker with children” – and certainly not equality of outcome, or fairness.

How can you work out ‘needs’ in a divorce?

The Law Commission’s definition of ‘needs’ is simply “a very broad concept with no single definition”. While this definition may seem unhelpfully vague, it reflects the fact that what ‘needs’ means will be different for every couple. There is a list of factors that the court will take into account when quantifying a party’s needs – these include:

  • The income needs, earning capacities and financial resources has or is likely to have in the foreseeable future;
  • The financial needs, obligations and responsibilities of each party;
  • The standard of living enjoyed by the parties prior to the separation – although parties should expect to have to make some compromises;
  • The age of the parties and the duration of the marriage;
  • Any disability of either party to the marriage;
  • The contributions of each party to the welfare of the family – such as being the homemaker;
  • Any misconduct by wither party – although in reality this has to be extreme to have any bearing on the outcome; and
  • Any benefit a party to the marriage may forfeit by reason of the dissolution of the marriage.

In particular, the court will have regard to the financial resources available to meet the needs of the parties and the standard of living enjoyed by the parties before the separation. In many cases, parties will complete and exchange a Form E. As part of this, parties are required to disclose a breakdown of their current expenditure and their estimated future income and capital needs.

So, if a party presently spends £40,000 on fur coats every year, then there would be an argument, if the financial resources allowed, that this should be continued post-divorce. However, the court has a wide discretion and any number of other factors may cause the financial needs to be assessed upwards or downwards.

Harriet is a trainee solicitor in the family team in Exeter. If you would like to get in touch about the content in this article, then please call 01392 210700 or email family.exeter@stephens-scown.co.uk.