Family Law Guide

Guide to variation or capitalisation of financial orders

Guide to variation or capitalisation of financial orders

Financial settlements reached after a full hearing or by agreement of the parties are incorporated into a financial order of the court. In cases where the order is one for maintenance, such an order is generally capable of variation by the parties by way of a further order. This allows either party to apply to the court, where appropriate, to vary the terms of the maintenance order. Such applications are commonly made where the paying party is no longer able to afford the level of maintenance ordered or conversely where it is no longer adequate for the receiving party’s needs. As an alternative to, or in addition to varying a maintenance order, an application may be made to capitalise it into a final capital sum rather than on-going maintenance. This can be very important in allowing a clean break with the past.  Not every type of financial order can be varied, as it is intended that capital orders (such as lump sum and property adjustment orders) should allow both parties a level of certainty for their financial future. These orders are therefore not capable of variation unless they are being paid by instalments.  In contrast to maintenance orders, capital orders (such as lump sum and property adjustment orders) are intended to provide both parties with a level of certainty for their financial future, and are therefore not capable of variation unless they are being paid by instalments.

The financial orders that can be varied include:

a) Maintenance pending suit and interim maintenance: This is where a party has been awarded maintenance payments prior to the conclusion of the financial proceedings or an order being made.

b) Periodical payments: This type of order is most commonly varied in order to increase or reduce maintenance payments or eventually to extinguish these payments entirely, either simply by stopping them or by rolling them up into a capital sum.

c) Payment of a lump sum by instalments: The court has the power to vary the number and amount of instalments of a lump sum payment but will only vary the overall sum in very exceptional cases.

The financial orders that cannot be varied include:

a) Lump sum orders not payable by instalments.

b) Transfer of property orders.

c) Pension sharing orders (unless the variation takes place before the order comes into effect and before the decree absolute is issued).

When facing an application for variation of a financial order, the court will consider all of the circumstances of the case that will include the needs of each party and primarily the welfare of any children. While the court’s first approach will be to maintain the balance achieved by the original order, it is essential to have proper and specialised legal advice at this crucial stage in legal proceedings to ensure that a satisfactory final order is made.

If you are interested in discussing the variation or capitalisation of a financial order please see How Vardags can help with the variation or capitalisation of financial orders.