In ancillary relief proceedings, does the Court make any allowance for income earned after spouses have separated, or is post-separation income counted as matrimonial assets with no allowance made?
In a recent ancillary relief case, B v B, the Court had to consider whether post-separation income should be taken into account when assessing the wife’s award. The couple married in 1996 after a period of living together and have three children. The husband worked in the financial sector and his income includes bonuses. The wife altered her full time hours to part-time hours and then gave up work to care for their youngest child who has special needs. They separated in July 2007 and the husband earnt substantial bonuses which were paid in the period 2009 – 2010. Both spouses were in agreement that the wife should be awarded part of the wealth accrued since the separation, but could not agree on the actual amount. Both spouses were also seeking a clean break settlement with ongoing child maintenance to be paid by the husband.
The wife argued that she should receive just under half of the wealth including bonuses earnt up to and including 2009 as this reflected a fair share of 49% the matrimonial assets and her financial needs.
The husband argued the wife’s award should acknowledge that a significant part of his assets was earnt after their separation. He proposed the wife should receive 25% of bonuses earned by him in 2008 and 12.5% of bonuses earned by him in 2009 plus half the matrimonial assets. This would leave the wife with approximately 37% of the matrimonial assets and bonuses, and the husband with approximately 63%.
The Court took into account that the husband’s bonuses were not guaranteed but were discretionary and could not be relied on as future income. The Court rejected the argument that the wife should be awarded half of the wealth existing at the date of the trial, but allowance should be made for the fact that a significant amount of that wealth had accrued post-separation.
The Court made a clean break award of 47% of assets before the bonuses earned in 2008 onwards, based on the wife’s needs, and awarded a further 15% of all bonuses net received by the husband up to 2009. It was felt this gave sufficient weight to the fact the bonuses were earned post-separation.
Child maintenance was considered separately and the Court made a maintenance order based on the agreement already reached by the husband and wife.
Although Courts do have discretion in considering how to divide matrimonial assets and financial settlements are made on the merits of individual cases, post-separation income is considered separately from income earned prior to separation.
If you are concerned about ancillary relief or a financial settlement after divorce or separation, please call Alistair Dobson or Janet Hopkins on 01858 445480 or James Haworth on 0116 212 1080 now or complete one of the on-line forms. James is a member of the Leicestershire Regional Committee for Resolution, an association of legal professionals working to reduce conflict in separation and divorce.
