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Family Law Series Part 2: How does the Court treat the standard of living enjoyed during the marriage, on divorce?

As examined in Part 1 of this Series, one of the factors that the Court takes into account when making Financial Orders is the standard of living enjoyed by the family before the breakdown of the marriage.  This factor was explored in the recent case of AF v SF [2019] EWHC 1224 (Fam).  In this case the parties started cohabiting in 2002, married in 2004 and separated in 2017.  They had two children together aged 14 years and 12 years.

The wife gave up a good career to care for the parties’ children.  The wife petitioned for divorce and made an application for financial remedies.

The family wealth was derived very substantially from the husband’s family.  It was held in a trust structure of which the husband and other family members were life tenants.  His notional share was £106 million.  The trust fund generated a very significant income for the husband, likely to be £1.19 million per annum over the next 5 years.

The parties had accordingly enjoyed a high standard of living during the marriage.  The husband had £5.5 million of non-trust assets, some of which were needed for legal costs.  The wife had funds of £215,513 and a small pension.

The wife asserted her needs at the rate of almost £19 million, with an annual budget of £352,992.  The husband offered £2.88 million.

The Court awarded the wife £7 million, including the former matrimonial home and a lump sum of £4.25 million, of which £1.75 million was to come from the funds frozen in the husband’s accounts and the remainder to be paid over 5 years with the wife to receive additional reducing maintenance over that period.  The wife’s reasonable income needs were assessed to be £175,000 per annum, rather than £352,992.

The Court concurred that the standard of living during the marriage is a relevant consideration, but it is not a lodestar.  It was noted in this case that there needed to be consideration given to whether the standard of living was excessive, particularly if there was overspending.  It was also noted in this case that the parties cannot expect to live at the same standard completely as during the marriage but that of what is reasonable.

If you would like advice on this newsletter or family issues generally, please do not hesitate to contact Panay Vassiliou of our Family Department on 020 7625 6003 or email him at p.vassiliou@fgdlaw.co.uk