In the current economic climate, where separating couples can find it difficult to sell the former matrimonial home or have difficulty in raising finance to buy their spouse’s share of the home, clean break settlements are not always possible. So how is spousal maintenance calculated?
Both spouses should complete a Form E outlining current income needs, giving details of current outgoings and current income from salary, shares, benefits and other sources. Both spouses also have the opportunity to explain if these are likely to change in the near future. Courts use the information given on the forms as the basis for their spousal maintenance decision but are generally aware that some spouses may try and exaggerate their outgoings. For example, Heather Mills apparently claimed to need an annual income of £3.25 million, based on her lifestyle as the wife of a multi-millionaire, but was assessed as having an income need of £600,000 per annum, less than a fifth of the amount she had claimed.
Courts have to consider three elements when considering spousal maintenance:-
1. the parties’ relationship-generated needs, e.g. does one spouse need more income because they are the residential parent and have childcare costs,
2. compensation for the relationship-generated disadvantage, e.g. if a spouse has given up their career to care for children in a long marriage,
3. sharing of the financial assets of the marriage, e.g. if a spouse worked part-time in expectation that the pension achieved by the spouse working full-time would be equally shared.
The courts do have a lot of discretion and leeway when considering maintenance. The length of the marriage will be taken into account – if two spouses with more or less equal earnings divorce after a very short marriage, there may be no maintenance to pay. However, after a long marriage where one spouse has given up their career to work part-time or to care for children, they are more likely to be awarded maintenance. Similar considerations are made when the court considers pensions. If two young spouses divorce after a short marriage, individual pension pots may not be shared as both spouses have potential to earn a full pension. If one spouse switched to part-time work so had less opportunity to earn an equal pension, then the pension earned by the full-time working spouse may be shared. Even where the pension needs to be shared, it may be possible to set-off other assets against the pension, e.g. transferring investments into the other spouse’s sole name, which could keep the pension intact. Although children’s maintenance and support payments are considered separately, the court may take into account that the residential parent will be limited in what hours they can work and the distance they can travel to work because of child care needs.
If you have any queries about maintenance and the financial implications of a divorce, please contact Alistair Dobson on 01858 445480 now or complete one of the on-line forms.
