The Cost of Living & Spousal Maintenance
28th February, 2022
A "cost of living crisis," the "year of the squeeze," and a "cost of living catastrophe," are just some of the many headlines you may have recently read about in articles or seen on TV.
It has been reported that the cost of living is set to increase this year with inflation already reaching 5.5% in January, which is the highest it has been since March 1992 and it is forecast to be around 7% by spring, national insurance contributions at 1.25% and gas and electricity prices rising dramatically. This in turn has brought about a lot of uncertainty in respect of managing income and expenditure.
Some people who may have the cost of living changes at the forefront of their minds are those that have been through financial remedy proceedings and are subject to a Court Order of either paying or relying on spousal maintenance. They may be left in a quandary as to whether:
- They can afford the payments they are obliged to make (payer); or
- If the agreed amount is now not enough (payee).
In such cases, the below will be of use to you.
Varying Spousal Maintenance
It is recognised in law that if there has been a material change of circumstances, it may be that what was once determined an appropriate amount of spousal maintenance, now requires varying.
In such cases, it may be that the payer and payee, together, can agree to a temporary or permanent change of spousal maintenance. However, if either party is faced with hostility or unwillingness to enter into discussions or fail to agree to vary the spousal maintenance, then a solicitor can help with negotiations which may resolve matters, or failing which, an application to Court.
The Court has the power under the Matrimonial Causes Act 1973 to vary or discharge an order for spousal maintenance, including maintenance pending suit, an interim order for maintenance, a periodical payments order or a secured periodical payments order.
As part of the application process, the parties will be required to provide details of the change of circumstances and their finances.
After consideration of all circumstances of the case, which will include the financial needs and resources of both parties, the Court will assess if any variation should be made and if so, from which date the variation should take effect.
The Court will also consider the appropriateness of implementing a clean break following a period of time which would not cause undue financial hardship to the payee.
Capitalisation of Maintenance
The Court will also contemplate whether there should be a capitalisation of spousal maintenance and this is another option each party should think about. This is whereby the spousal maintenance payments are consolidated into one lump sum payment.
A lump sum can carry both positives or negatives for the payer and the payee which is largely dependent on the individual facts of the case. A family lawyer will be able to talk you through the pros and cons and advise accordingly.
As the cost of living increases, it is unknown what effect this will have upon the finances of an ex-spouse, so if circumstances warrant negotiations or an application, it may be for security, that a lump sum would be preferable rather than either party carrying the financial uncertainly that a payer may suddenly be unable to make payments (which could have a detrimental effect on the payee) or if the payee should be successful in a future application for an increase of spousal maintenance (which would be undesirable for the payer).
Maintenance Pending Suit
The cost of living rise may also be affecting those who are in the process of divorcing, embarking upon financial remedy proceedings, either at the early stages or have not yet secured a final order and are faced with financial difficultly. In such cases, it is possible to apply for maintenance pending suit or a variation of the amount that has previously been awarded on an interim basis.
This topic has recently been considered in “ALVINA COLLARDEAU-FUCHS v MICHAEL FUCHS” which has attracted a lot of attention. The Judgment, on 9 February 2022 reiterated the importance of assessing reasonableness and the standard of living the parties enjoyed prior to separation, when making a decision.
When considering to make an application to vary spousal maintenance/maintenance pending suit, the timing is an important factor. It could harm the case if the person applying waits for a long period of time following the change of circumstances, and in such cases, it may be better to act sooner rather than later.
The decision of the Court based on applications in respect of spousal maintenance is discretionary, meaning there is an inherent risk involved. There are also different rules about costs orders, to consider, depending on whether the application is for variation or maintenance pending suit. This is why if the above is relevant to your circumstances, you should consider seeking specialist legal advice from a solicitor who can assist you based on the facts of your case.
At Ward Hadaway, we have specialist divorce solicitors, who have sound experience of representing both the payer and payee, in applying and defending applications for variation of spousal maintenance and maintenance pending suit, and consequently we can provide you with the advice you need and assist you at each step of the way, using both legislation and current case law to present your case via negotiations or in Court.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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