How is future earning potential considered in a financial settlement?

When navigating a divorce or dissolution of a civil partnership, financial stability is a priority. Future earning potential often plays a key role, particularly if one partner sacrificed their career to support the family or enable the other to progress professionally.

‘You may also wonder how plans to retire early or reduce work hours could impact this,’ says Samantha Sinclair, Head of Family Law at Ware & Kay. ‘Understanding how future earnings are considered can help you make informed decisions and prepare effectively.’

 The Court’s Approach

When determining a financial settlement, the court considers all relevant circumstances, including future earning potential. This assessment may involve:

• Current work and earnings;
• Qualifications and skills;
• Experience and employment history;
• Projections of future earning capacity.

Future earnings are vital for assessing income needs but are not treated as a matrimonial asset. This reflects the court’s objective to achieve a “clean break,” severing financial ties where possible.

Spousal Maintenance

While future earning potential is not classed as a matrimonial asset, it plays an important role in determining spousal maintenance. The court assesses both parties’ income and earning capacity to decide a fair level of support. Factors such as health, nearing retirement, or the potential for increased earnings are considered.

However, higher maintenance is not guaranteed simply because the paying party earns more. The court balances the receiving party’s needs with the paying party’s ability to pay. Both parties are also expected to work toward financial independence. If a party can return to work quickly, long-term maintenance is unlikely.

Quantifying Future Earnings

Estimating future earning capacity can be complex. In these cases, expert evidence, such as a report from an employment consultant, may be necessary. This impartial input helps the court gain reliable insights to make a well-informed decision.

How we can help

If you are facing divorce or dissolution or need advice on how future earnings might influence your case, our specialist team can guide you through every step.

Contact Samantha Sinclair, Head of Family on York 01904 716000, Wetherby 01937 583210 or Malton 01653 692247 or email  samantha.sinclair@warekay.co.uk.