According to the landmark case of Sharp v Sharp, marriage does not necessarily mean sharing everything. The recent Court of Appeal decision creates a controversial change in the law that will mean short marriages will not always see an equal division of assets on divorce.
A brief background to splitting finances after divorce
The ‘yardstick of equality’ established in White v White has been a governing factor in guiding judges on financial division of assets. The starting point is equality, based on the concept of sharing everything within a marriage and any departure from this must be justified. For example, a pension that accrued prior to the marriage could arguably be left out of the matrimonial pot.
This ruling aimed to ensure there would be no discrimination between contributions made to the marriage, whether from the breadwinner or home maker, since it was considered that some women had sacrificed their careers and earning potential to look after children.
Sharp v Sharp
In the case of Sharp v Sharp, both Mr and Mrs Sharp were in their early 40s, had no children and were married for approximately 6 years (counting an 18 month period of cohabitation). Whilst both parties started the marriage on similar salaries, Mrs Sharp was enjoying a successful career as an energy trader and during the course of the marriage received discretionary annual bonuses that totalled £10.5m.
Upon divorce, total assets amounted to around £7m of which approximately £5.5m had been generated during the marriage. The High Court found “no sufficient reason has been identified for departing from equality of division” and accordingly awarded the husband 50% of the matrimonial pot.
However, on appeal it was held that equality should be departed from and a larger share of the matrimonial pot should be awarded to Mrs Sharp to account for her earnings. Five main factors contributed to this decision:
- Short marriage
- No children
- Dual career – both parties had been in full-time employment
- Respective finances had been kept separate
- Contributions made by each of the parties during the marriage
This case creates an unprecedented legal distinction between a ‘short’ and a ‘long’ marriage. However, what counts as a ‘short’ marriage has yet to be clarified. Essentially, the equal sharing principle is not inevitably the case where the above factors apply.
Advice about splitting assets on divorce settlements
Reaching a settlement out of court, where both parties compromise slightly more than they would have hoped to, is likely to lead to a more satisfying result overall. If this is not possible, the court will consider the following factors when determining the outcome of your case:
- Welfare of the children.
- Financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future.
- Income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.
- The standard of living enjoyed by the family before the breakdown of the marriage.
- The age of each party to the marriage and the duration of the marriage.
- Any physical or mental disability of either of the parties to the marriage.
- The contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family including any contribution by looking after the home or caring for the family.
- The value to each of the parties to the marriage of any benefit which by reason of the dissolution of the marriage that party will lose any chance of acquiring.
- The conduct of each of the parties if that conduct is such that in the opinion of the Court it would be inequitable to disregard it.
Advice about splitting money in divorce
If you should require advice on any matter relating to splitting money and assets in divorce, or any aspect of family law, then please do not hesitate to contact a member of our family law team, using the telephone numbers below: