Family Law, Divorce, Separation
Divorce and financial settlements
Working out the financial settlement in a divorce is often one of the most complicated and difficult areas of the whole process.
If you cannot agree
If you cannot agree on how your finances should be separated, you can turn to the court to settle the matter for you. Where possible, the court is under a duty to create a ‘clean break’ after the divorce, leaving no ongoing financial obligations between you and your spouse. However, where a financial gap between you cannot be balanced by transferring capital or assets, known as off-setting, the court may consider making an order for ‘spousal maintenance’.
- joint lives
The court will look at the information given in your financial statements to consider each person’s income needs and how you will meet your reasonable living expenses. If granted, a spousal maintenance order will obligate one of you to pay a regular sum of money to the other.
There are four types of spousal maintenance orders that can be made by the court:
A joint lives maintenance order
This is a longer-term order with an unspecified end date. ‘Joint lives’ does not actually mean for the rest of your lives. The intention is that the order runs until the payee remarries, one of the parties dies or the order comes back to court to be reviewed or terminated.
The onus to terminate this type of order rests with the person who is paying and one of the satisfying conditions must be met. Should that person die, the recipient will continue to be a dependent and could bring a claim against the estate. Life insurance policies could be taken out to protect against this.
Take care, difficulties can arise if only marriage has been specified as a terminating clause and your former spouse moves in with a new partner.
A term maintenance order
This will be phrased as a specific amount per month or per annum for a period of time or until a particular event occurs, such as the youngest child reaching the age of 18 or finishing full time education. Often there is provision for a gap year or a reduction in the maintenance when the child goes to university and the parent may start paying the child directly. The term can be extendable or non-extendable depending on the flexibility that might be required in the future.
A nominal maintenance order
This is more of a mechanism for future maintenance than a sum of money at the time the order is made. It keeps the payee’s claims open to see whether their circumstances change or improve in the future. A nominal order enables the payee to return to court to ask for actual maintenance at some stage in the future.
A temporary maintenance order
This can be awarded if you need some income from your spouse in the period after separation but before the final hearing. Prior to the decree nisi being made this is referred to as ‘maintenance pending suit’ and after decree nisi it is referred to as ‘interim maintenance’. At this stage your income needs will be looked at more strictly by the court in terms of what you actually need in order to survive until the final hearing.
Variations of orders
If either of your circumstances changes during the course of a maintenance order, you can apply to the court for a variation of the order. This could be an improvement or a reduction in your income. The order can also be changed if, in the future, you agree to accept capital or assets instead of ongoing maintenance. If the payments are not kept up, you will be in breach of the maintenance order, which may have serious consequences. If you are having difficulty in keeping up your payments, you should seek professional advice about reducing or terminating the payments by making an application to the court. If you are meant to be in receipt of maintenance and the payments have fallen into arrears, you will need expert advice as to how to enforce the maintenance payments and what action should or could be taken. Even if the payer is now abroad, there are reciprocal arrangements between most countries to enforce maintenance orders.