It’s well-known that the courts of England and Wales are amongst the most generous in the world when it comes to post-divorce financial support – but what does this actually mean for those getting divorced? And how do they make their decisions.
No set formula, general principles and a discretionary system
Unlike some other countries, the courts in England and Wales do not have a set formula for dividing up assets on divorce. There are general principles, such as capital being split 50:50, but because we have a discretionary system, a judge can vary the principles if there is justification for doing so. Each case is decided on its own facts and although the general principles will be applied to each case, one case may be decided very differently to a similar case because of a difference in the key facts. This means that no solicitor can ever give you an exact figure you can expect to pay/receive in a settlement, only a general indication.
Capital or Income
We are all familiar with the terms capital and income, but what do they mean in terms of a settlement? Capital is a large one-off sum that is paid, for example as part of clean break settlement (more on this later) and income is a regular payment made over a longer period.
The courts are very keen on clean break settlements whereby a one off payment and/or transfer of property is made between the parties. The idea is that after the transfer/payment, the parties have no further claims on each other and can move on with their lives, all financial ties between them severed. This is not always possible or fair so in many cases spousal maintenance is awarded.
What does spousal maintenance mean?
The key objective of spousal maintenance is to provide financial assistance for the spouse in the weaker financial position. This may be because they sacrificed their career prospects for the mutual benefit of the parties, e.g. to raise children, or because their earning potential will not allow them to match the standard of living that they had within the marriage. The court can expect some financial sacrifices to be made but would not expect a massive shift in the quality of life of the parties unless it is unavoidable. A spouse used to multiple holidays each year, a large home and car would not be expected to move to a bedsit and take the bus while their former partner continued to enjoy a large income. England and Wales is a highly discretionary legal system when it comes to family law and therefore there is a wide variation in the awards of spousal maintenance it makes. Some spouses are given no maintenance at all, some are given maintenance for live. More commonly the awards are somewhere in between and maintenance is payable for a set period, say 2 years or 5 years, to allow a spouse to return to the workplace, re-skill, or to allow children to start school and free up time for their parent to work.
What factors do courts consider in awarding spousal maintenance?
Unfortunately, there’s no clear cut answer regarding this question given that each divorce case is highly fact-specific. However, listed below are some of factors which are often taken into consideration by the courts:
- Awards should be based on the party’s need
- Contributions made by the spouses during the marriage (i.e. did one spouse give up a career to look after home and children?)
- Marital standard of living (i.e. did the family enjoy a high standard of living, average standard of living, etc.?)
- Duration of marriage (i.e. a shorter marriage may mean that a couple is younger and not financially entangled yet and can get a clean break, in which case it is not desirable to make an award for ongoing maintenance)
- Future earning ability of the spouses (i.e. it may be harder to re-enter the workplace for a spouse who has been a homemaker for 15 or 20 years)
- A complete financial evaluation of all assets of the spouses including property, pensions, etc. should be considered
The court may find that it is justified to award maintenance but the couple want a clean break. In those circumstances maintenance can be capitalised. This means that it is paid as a lump sum, minus a deduction for early receipt.
The more challenging areas…death and re-marriage
Where a spouse paying maintenance dies it is possible in many cases for the recipient to make a claim against the estate of the deceased for the maintenance they would have received.
As for what happens when the former spouses remarry, the general rule in is that the spousal maintenance award payments will come to an end when the recipient remarries but not if the payer remarries. It can also be written into an order that payments end if the recipient co-habits with another partner without marrying, typically for 6 months.
For more information regarding spousal support, please contact a family law specialist at Grayfords.