Does it matter if you’re a breadwinner or a homemaker when agreeing a financial settlement?

When it comes to deciding how wealth is split, English courts do not discriminate based on your role within the family.

A Spanish court hit the headlines recently after it ordered a businessman to pay his ex-wife €205,000 – just over £182,000 – in recognition of her 25 years as a homemaker. The judge calculated the figure based on the annual minimum wage she would have received throughout the couple’s marriage.

In this case, the couple has entered into a separation of property agreement, similar to a prenuptial agreement, which specified that whatever each partner earned was theirs alone. Since Mrs Moral looked after the family and worked as a housewife during the couple’s marriage, and Mr Moral was the sole breadwinner, the agreement would have left Mrs Moral with no access to the couple’s wealth after they split. The judge decided this would be financially abusive and ordered the record payout.

While the case was decided in Spain, it puts into sharp focus the issue of financial settlements in England. How are financial settlements determined here? And what happens to the financially weaker spouse who made sacrifices made during the marriage, such as staying home to look after the children?

What’s mine is yours

In England and Wales, equality is the starting point for any financial settlement. This means that each party should receive a fair share (not necessarily equal) of matrimonial assets such as money, property, investments and pensions. If both parties earn a similar amount and made similar contributions during the marriage, the court will likely order an equal split.

In reality, however, it is rarely a 50-50 split. The court’s main aim is to achieve fairness and ensure that one party does not profit at the expense of the other due to their money-making abilities. When deciding what’s fair, the court will take into account things like:

• Length of the marriage
• Each party’s income and financial needs
• Standard of living during the marriage
• Time out of the workplace
• Age and earning capacity
• Any non-financial contribution made by either party, such as one partner staying at home for childcare.

Different rules apply to inherited wealth and pre-existing trust funds. In those cases, assets are much less likely to be divided equally.

Homemakers are the same as breadwinners

When assessing each party’s contribution to the marriage, the court has made it clear that homemakers stand on equal footing with breadwinners. Stay-at-home parents may not contribute to the family’s bank account, but they do make an equal contribution to the welfare of the family, and as such as considered an equal contribution.

The result is that a stay-at-home spouse or financially weaker partner could be entitled to receive more of the other partner’s income or assets if this would make their settlement fairer. Often, the financially stronger party will be ordered to make ongoing maintenance payments in order to meet the other party’s needs.

This approach is more generous towards the financially weaker party than many other jurisdictions, which make financial settlements based on financial contributions alone.

The court’s decision when settling a financial dispute will always depend on the individual case. For example, a 50-year-old woman who has not worked for the duration of her 30-year marriage may have a tough time finding a job and supporting herself financially. She might expect to receive a larger share of the matrimonial assets than a 25-year-old who earns similar to their spouse and could easily start again with a reasonable salary.

Final words

The recent case in Spain serves as an important reminder that financial settlements after a divorce should never just be about money. It is important to consider all the contributions each partner has made, both financial and non-financial, and ensure that these are taken into account when deciding what’s fair. After all, a marriage is about two people working together – not one benefitting from the other’s sacrifices.