Whist not applicable to all cases, an important financial consideration following divorce is whether payment of spousal maintenance is necessary, and the appropriate level and ‘term’ (i.e. length) of those payments.
Spousal maintenance will usually only be appropriate where one party is unable to meet their needs from their own income and resources. Income needs are assessed with reference to the standard of living enjoyed by the parties during the marriage. In some cases, needs will be assessed generously to compensate the payee for their contribution to a marriage, often to the detriment of their own career and subsequent earning capacity.
Orders are more likely following long marriages, where the payee is the primary carer for dependent children, and where a payee has a limited or no earning capacity, or is unable to work due to ill-health.
When considering orders for spousal maintenance, the court is obliged to consider how long those payments should subsist. The court has a wide discretion in this respect, and can make orders either for the ‘joint lives’ of the parties (i.e. until the death of either party), or for a limited term, usually expressed in years, linked to the length of time the payee requires to adjust, as soon as just and reasonable, to financial independence. Spousal maintenance payments will terminate automatically upon a payee’s remarriage.
The court is also under a duty, on a case-by-case basis, to consider whether a ‘clean break’ is appropriate, i.e. the financial obligations of each party towards the other terminate as soon as just and reasonable after the grant of decree absolute, which dissolves the marriage. If a clean break is appropriate, there will either be no spousal maintenance, or spousal maintenance will be limited to a term. A clean break is more likely to be appropriate in cases involving a short marriage, where both parties have reasonable earning capacities (whether prospective or actual), and/or where the parties’ respective income needs can be met from capital.
Whilst spousal maintenance payments are usually made monthly, in cases involving substantial capital assets, it may be possible to ‘capitalise’ a term of maintenance. In such cases, the court has the power to order a lump sum of additional capital, in satisfaction of a spousal maintenance order, to achieve a clean break.
Where a term of maintenance is required, in deciding the most appropriate duration, the court will consider whether, and when, the payee will be in a position to adjust to financial independence without undue hardship. This is case specific, and can be influenced by the ages of any minor children for whom the payee has primary care, the length of the marriage, and the time required for the payee to re-train and/or re-enter the job market.
Spousal maintenance orders are unique in that they are capable of variation (upwards or downwards) if there has been a significant change in circumstances on the part of either party. Unless an order contains specific provision that a term is non-extendable (known as a ‘section 28(1A) bar), a payee may also apply for the extension of a term of maintenance if they have “exceptional justification” to do so.
Vardags work exclusively with high and ultra-high net worth clients, tailoring our approach to achieve the most favourable outcome on a case-by-case basis. We have vast experience acting for payers and payees. Alongside our in-house forensic accounting team, we are able to assist with evaluation and assessment of income streams, and mount and defend arguments in relation to contributions and the analysis of income/budgetary needs.
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