When you get a divorce, all your financial assets are taken into account, and it can have a huge impact on your income, but why? Take a look…
During your divorce, yours and your partner’s income will pay a huge role in the decisions to be made. But why?
There are lots of reasons why your income is taken into account when you get divorced. Your divorce lawyer has to decide what assets you and your ex-spouse are entitled to, and that includes how much money you earn.
So, in this post, we’re going to discuss these reasons in greater detail so that you can understand it better. Take a look…
What Does Income Have to do With a Divorce?
When you get married, you agree to support your partner, and this doesn’t end when your marriage does. It might seem silly to have your income taken into account, and potentially pay spousal maintenance once the marriage is over, but here are the reasons why.
Marriage can change the course of a person’s life, especially if they give up work and a potential career to raise a family. Finding a new job, or a job that earns as much money as they had with their partner, could be almost impossible after all the time they’ve lost.
Also, a person shouldn’t be financially punished for divorcing their partner. Falling out of love with someone is hard enough, but to then live a less prosperous life as a result is unfair in the eyes of most people, and the law.
What Effect Can Income Have on a Divorce?
Based on both partner’s income, one of them could be ordered to pay spousal maintenance to the other. If there is a shortfall between their needs, the court will then consider the spouse’s situation.
In order to establish the losing partner’s needs, the court has to answer the following questions:
- Can they meet their needs without the support of their ex? Does their income potential cover all their financial needs?
- Have they been married for a long time and sacrificed their carer to take care of their partner’s children and home?
- How old are they? Is it still possible for them to establish a career that will support their needs?
- Are they prepared to go to court to handle the matter if their spouse does not agree?
- Are they in another relationship and looking to re-marry?
If it’s established that the partner can’t meet their needs without their ex, won’t be able to earn a decent income due to sacrifices made in the marriage, are too old, or never plan to remarry, then maintenance could be owed.
The court will take into account other forms of finance as well, including property, but surplus income is usually the main factor in their decision.
Alternatively, the court can order one party to pay the other a lump sum or a series of lump sums. This can replace the need to pay spousal maintenance, and basically clear one partner’s maintenance claims against the other.
If this lump sum can’t be obtained, or the splitting of the couple’s assets is too difficult because it’s all in property, the court could order the selling of the matrimonial home. The net proceeds of the sale can then be divided between the divorcing couple.
What Else is Taken into Account During a Divorce?
There are other issues that are taken into account when deciding how financial assets should be split in a divorce. These are:
Welfare of the Children
When a couple has dependent children, their needs have to be taken into account first. This means providing a home for the children and, in situations where assets are limited, the parent responsible for caring for the child will receive all the liquid assets.
Once this has been established, the needs of the partner caring for the child will be taken into account in much the same way we described in the last section.
Standard of Living Before the Divorce
We touched on this a bit earlier, but one of the big factors on how finances are settled during a divorce is the life the partner who isn’t earning the majority of the income is accustomed to.
If they, and their children, were used to a certain quality of life, they should continue to have that same standard once the marriage is over.
Physical or Mental Incapacity
If either party is struggling with a physical or mental issue that makes it difficult for them to work or earn a house of their own, this will be taken into account. For this, proof has to be obtained via medical records.
Loss of Benefit
This is usually related to pensions. A pension sharing order can be put in place by the court, which allows the party without the pension to have access to some of this asset.
For example, the husband could be ordered by the court to transfer all or some of his pension to his wife’s pension fund for her to use when she retires.
Income and Divorce Are Very Much Related
In this post, we’ve shared the main reasons why income is relevant to your divorce, what effect it can have, and discussed what other issues can be taken into account.
Divorce is a difficult time for everyone involved, and untangling years of finances complicates the issue further. All you need to remember is that your income can be taken into account because your partner might not be able to earn a decent wage without you.
Whether this is because they gave up a career to raise your family, are too old to get a decent job or are looking after your children, they could be entitled to spousal maintenance or a lump sum based on your assets.