Asset Division Criteria

Broad Criteria

The judicial separation and divorce legislation set out broadly equivalent criteria to guide the courts in the exercise of their powers for the division of assets on judicial separation and divorce. The court is to have regard to the income, earning capacity, property and other financial resources which each spouse has or is likely to have in the foreseeable future. All income earned and unearned as well as the capacity to earn is considered.

All assets, including land, buildings, investments, and personal possessions, are considered. The courts may have regard to or disregard prospective inheritance as the circumstances require.

They consider the financial needs, obligations and responsibilities which each spouse has or is likely to have in the future, whether in the case of remarriage or otherwise. They take into account both short-term and long-term considerations, ranging from general maintenance expenses to long-term costs such as the purchase of a home.

Any physical or mental disability is relevant. It may give rise to special needs. Possible limitations may arise in employment. One spouse may need special care or accommodation.

Reduced Living Standards

The standard of living enjoyed by the family before the proceedings were instituted, or the separation as the case may be, is considered. The court will endeavour in so far as possible to ensure that parties have a lifestyle commensurate with that available to their partner or to which they were used to.

However, in most cases, separation will necessitate a diminution in living standards. Where families are wealthy, it may be possible to maintain the pre-existing lifestyles. In other cases, the courts will endeavour to ensure the same standard of living for both spouses in so far as possible.

Age & Length of Marriage

The courts have regard to the age of the spouses and the length of time they have lived together. Age may bear upon the possibility of future employment.

The longer the marriage, the more likely partners have changed their position, abandoned careers or foregone the opportunity to pursue a career, etc. In the case of a short marriage, one spouse’s input into building assets and wealth may be minimal. A long-lasting marriage is likely to be subject to a higher return than a shorter marriage.

Where there has been a long partnership based on one partner building up a business and the other working in the home over a long number of years, a broadly equal division or something approximating to it is more likely, particularly when the partner who has remained at home is not in a position to earn a living.

Contributions Made

The contribution that each spouse has made or is likely to make in the foreseeable future to the welfare of the family is considered. This may include balancing such as relative contributions made, income-earning capacity, property and financial resources on the part of one spouse and the relative contribution made by the other in looking after the home or caring for the family.

A value is placed on the stay-at-home spouse who devotes him or herself to the welfare of the home or family. This accords with Article 41.2 of one of the Constitution, which recognises the role of the spouse (the woman) working in the home.

The courts have, in cases of high-network individuals, emphasised the importance of spousal support in the home while the other spouse has built up wealth and assets. They consider the effect on the earning capacity of each of the spouses of the marital responsibilities assumed by each during the period when they lived together.

Earning Capacity

The courts have particular regard to the degree to which the future earning capacity of the spouse is impaired by reason of that spouse having relinquished or foregone the opportunity to pursue earning activity in order to look after the home or care for the family.

Where one spouse has given up a career to devote him or herself to the home or care of the family, regard may be had to this foregone opportunity. This may have an effect on the earning capacity of that spouse relative to what he or she might otherwise have had.

Regard is had to any income or benefits to which either spouse is entitled by statute. This includes social welfare and other benefits.

Conduct

Regard is had to the conduct of the spouses if that conduct is such that, in the opinion of the court, it would, in the circumstances, be unjust to ignore it.

Judicial separation and divorce legislation applies, broadly speaking, on a non-fault basis. The division of assets is not a reward for good behaviour or a punishment for bad behaviour. However, in certain exceptional circumstances, the conduct of the parties may be a factor. In some cases, extramarital affairs or misconduct may be ignored, while in other cases where they have a serious impact regard may be had to them.

Regard may be had to the financial conduct of the parties. If one spouse has hidden or transferred assets, flittered assets away or acted recklessly or extravagantly, then regard may be had to this in the distribution of assets. In particular, if both parties have assets, the court may reflect this in the order made.

Family Home

The family home will often be the principal asset.  In some cases, the courts may order its sale and the division of the proceeds. In other cases, it may be possible to postpone sales or it may be required to be transferred to one spouse. The accommodation needs of the spouses are usually important.

Divorce or judicial separation will almost invariably require new separate accommodations for two separate households. If one spouse has custody of the children, that spouse may require more accommodation and will often be allowed to stay in the family home. This may continue during the dependency of children or longer.

In some cases where formerly wealthy parties found themselves in substantial negative equity, the courts transferred the family home. Such transfer would not be a disposition to defeat creditors. Family law orders cannot reduce secured debt.

Loss of Pension Rights

Regard is had to the value to each of the spouses of any benefit (e.g. pension benefit) which, by reason of the divorce or judicial separation, one spouse might forfeit the possibility of acquiring and in which the other spouse may acquire an exclusive interest.

This may cover benefits that the spouse would otherwise have had but for the divorce or judicial separation. An order can be made dividing interest in a pension fund.

Rights of Third Parties

Account is taken of the rights of any other relevant person, including a person whom the spouse has remarried. Where a spouse has remarried, he or she will have obligations to that party.

Generally priority should be given to the needs of the former spouse and children. However, the responsibilities to a new partner and spouse cannot be ignored.

Separation Agreement

The court may have regard to an existing separation agreement. The court is not precluded from making orders in  divorce or judicial separation proceedings which are contrary to the terms of the agreement. However, the contents of the agreement are a significant consideration. The more recent the agreement, the more relevant it will be.

An agreement negotiated at arm’s length will be given greater weight. Conversely, less weight will be given to an older agreement, in particular where circumstances have changed substantially.

Where spouses have been separated for many years, and one spouse has become considerably wealthier and has greater income, the courts may allow the other spouse to share in the improved position. The disparity may be particularly pointed where the spouse has disclaimed Succession Act rights.

Pre-Nuptial Agreements

The courts may make a consent order embodying the terms of a settlement agreement. The court will not necessarily approve the settlement without reviewing the statutory guidelines. However, if it has been properly made and agreed at arm’s length with proper advice, the court will generally approve the settlement.

A prenuptial agreement is an agreement entered before marriage. Prenuptial agreements are granted greater significance in other jurisdictions than in Ireland.

Historically, the common law did not favour prenuptial agreements as they tended to undermine the marriage itself, being in contemplation of separation. More weight was given to post-marriage agreements.

In recent times, this view has become less relevant. The UK Supreme Court has held that it should no longer apply.  Regard should therefore be had to the prenuptial agreement, under this approach.

In considering the weight to be given to the prenuptial agreement, the courts will have regard to how old it is, its fairness, whether it was negotiated at arm’s length and the reasons and purposes for entering it.

Prenuptial agreements cannot affect the rights and needs of children.

The UK courts will now give considerable weight to a freely negotiated prenuptial agreement unless it is unfair to do so. It is not clear whether the Irish courts will take the same approach as the UK Supreme Court.

Courts Approach

The court has wide discretion as to how and to what extent it may make orders dividing assets. The criteria are very general, and each case will be different. The courts are to have regard to the particular circumstances. The court should set out in its judgement the reasons why particular weight is given to a particular factor.

The courts attempt to ensure that in so far as possible, the spouses will enjoy the standard of living they enjoyed during the marriage. Where there are very significant assets available, which exceed any day-to-day needs, a substantial lump sum may be appropriate to secure this objective. This will not be possible in most cases.

The Supreme Court, in an important case in 2003, highlighted that those clean break principles which are favoured to a great extent in the UK, may be possible to apply in some cases by way of a lump sum order. The view had been taken by the High Court judge that the Irish legislation did not facilitate a clean break.

The Supreme Court held that where, as in this case, the parties desired to finalise their affairs in so far as possible, the court could make an order with a view to finalising affairs as such. This could not preclude fresh applications but would minimise the possibilities of such.

The Supreme Court indicated that the Irish legislation did not provide for the automatic division of assets. It provides for provision rather than division. There are no target percentages. It was indicated that where there was ample resources, a figure of one-third of the net assets might be a useful benchmark of fairness. However this is far from prescriptive. In cases where such a division would require a sale of the family business, this may not be appropriate.

In another case of ample means where the husband had inherited a very substantial sum of money, significant provision was made for the spouse by way of capital payment for accommodation and future annual income. This amounted in the circumstance to no more than about 20% of the assets, between 10% capital provision and an annual payment of 1%of the asset. The court was of the view that this was appropriate so as to avoid an immediate sale and enable the husband to continue in business on the lands concerned.

Orders for Dependants

Orders may be made both in favour of spouses and dependent family members/children. A dependent member of the family is a child under 18 or under 23 if in full-time education. A child may be dependent for life if he has a mental or physical disability and is unable to maintain himself.

In exercising these powers in relation to such provision, the criteria set out above, save those in relation to conduct etc, are considered. They include:

• the financial needs of the family member
• the income, earning capacity, property and financial resources of the member
• physical and mental disability
• incomes and benefits to which he is entitled by statute
• the manner in which the member was being and which the spouse concerned anticipated that the member would be educated or trained
• income and earning capacity of both spouses,
• needs, obligations and responsibilities
• the standard of living enjoyed by the family prior to the proceedings
• accommodation needs