Duxbury calculations

To determine how much one party should pay to the other in a lump sum, the family court may use a Duxbury calculation. The calculation produces a lump sum which, if invested to achieve capital growth, could be drawn in equal instalments and would last until the end of the recipient’s life. 

‘Duxbury calculations’ originate from the case of Duxbury v Duxbury [1987] 1 FLR 7. Here, Mr and Mrs Duxbury had been married for 22 years and upon divorce, they were keen for a ‘clean break’ financial settlement. They argued that a lump sum payment was the best way to secure this. 

Mr Duxbury was the higher earner and therefore it was intended that Mrs Duxbury receive the lump sum settlement. Mrs Duxbury’s accountant set to work creating a computer programme to calculate how his client could have a lump sum equivalent for the maintenance payments which would last until her death. The lump sum would therefore have to take into account matters like inflation and the recipient’s life expectancy. 

Thereafter, the process involved in working out the lump sum took on the case’s namesake and has been referred to as a Duxbury calculation. 

However, it is important to note that the Duxbury calculation is not used by the family court to provide a strict figure to be used. As per White v White, the calculation should be used as “a tool not a rule”. 

what does the duxbury calculation consider?

The Duxbury calculation attempts to work out a lump sum that will be used throughout the life of the former spouses and could, in theory, be drawn in equal instalments for the rest of their life. If the calculation has been made perfectly then there would be nothing left at the exact time of death. The calculation is based on various factors, including: 

• The yearly sum required by the recipient 

• The recipient’s life expectancy 

• Rates of inflation 

• Investment returns 

• Capital growth 

These factors inevitably require some assumptions to be made, which of course may turn out to be incorrect.  

The methodology of the Duxbury calculation is reviewed by the Duxbury Working Party, a committee of leading family lawyers and specialist professionals.  

how to use the duxbury calculation

The Duxbury calculation is made by consulting a Duxbury table, which can be found within the ‘Family Law: At a Glance’ volumes.  The Duxbury table has columns along the top setting out the annual net income needs required by the party. The annual net income needs tend to be calculated by putting together an annual budget. To the left, there are columns setting out the recipient’s current age and sex. 

Is the duxbury calculation right for me?

The Duxbury method works well where both parties want a ‘clean break’ i.e. they wish to completely terminate all obligations to each other and most importantly, where there are the means to settle the finances by way of lump sum settlement. As attractive as lump sums are, it is simply not possible to settle the finances by way of lump sum if there is insufficient capital. The Duxbury calculations can prove a useful negotiation tool if couples are trying to work out a settlement as they provide a good point of reference for appropriate lump sums. 

The courts will consider fairness in all cases and will be live to issues where the Duxbury calculation can achieve too generous an award for a young recipient who enjoyed a short marriage in comparison to an older recipient who enjoyed a long marriage. The court exercises a narrow discretion when considering whether a case should depart from the Duxbury tables when calculating a lump sum award. 

Although using the Duxbury table is relatively straightforward, it is worth remembering that no case is the same and there may be circumstances that render a case unsuitable for a Duxbury calculation. In all matters of family law, it is always wise to speak with a lawyer and take advice on the options available to you and the fairness of any potential financial settlement. 

If you are considering the capitalisation of your spousal maintenance payments, contact Vardags today for a free initial consultation with one of our expert divorce solicitors. 

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