What happens if you have agreed to a spousal maintenance order, and a decade or two later, life has moved on for both of you, the children have left home, but you are still paying a joint lives order? Does life indeed mean life, or are other options open to you?
We have written previously about how courts decide whether spousal maintenance should be paid, how much and for how long, when considering a financial division on divorce. We will now look at what happens to those orders as the decades pass.
Maintenance orders are not permanently fixed at a particular amount. The idea behind spousal maintenance is that it plugs a gap in the other party’s financial needs. It may be, therefore, that this need diminishes or increases, over time, depending on how life unfolds for you both.
You are entitled to apply to court for the joint lives order to be reassessed at any time. The amount that you should be paying will be re-examined, taking into account all the circumstances at the point that the court is looking at the case. Your respective personal and financial circumstances at the time of the re-examination will be a key factor in the court’s decision.
The amount that you will be ordered to pay will be based on the financial needs of your former spouse. The court will decide how much your former spouse needs to live on, and then decide how much of that sum can they meet themselves, through earnings, or other assets. Your respective retirement plans can play a key role in this, as pension plans may plug the financial gap once those pension pots become accessible at age 55.
The amount of money that your former spouse needs to spend each month may include rent. What happens if your former spouse is living in rented accommodation because they did not buy a house with money given to them for that purpose in the original proceedings? Is it fair to include rental payments as part of an individual’s financial need in that case? This question will be answered by the Supreme Court in the case of Mills v Mills [2017] EWCA Civ 129. The parties in that case separated in 2000 after 15 years of marriage and reached an agreement as to how they would deal with their finances. The Wife retained the bulk of the capital, £230,000, to rehouse on a mortgage free basis. The Husband agreed to pay spousal maintenance at £13,200 per annum on a joint lives basis, which means until either of them died, or the Wife remarried.
The Husband applied to court to reduce the amount or cancel the payments entirely. The Wife applied to increase them. Both parties applied to capitalise the orders, which means that if affordable, the Husband would make a once and for all payment, instead of paying monthly sum. The judge decided that the Wife’s basic income needs were £2,982 per month and her net income was £1,541 per month, leaving a shortfall of £1,441 per month but concluded that the payments should remain at £1,100 per month. The Wife then appealed this judgment and the Court of Appeal ordered that the Wife should receive an increased £1,441 per month from the Husband, to plug the gap. Part of the reason that the Wife needed £2,982 was to pay her rent, as she had not used the £230,000 to rehouse mortgage free, and that money had been spent elsewhere. Is fair to take the Wife’s rent into account as part of her financial needs, when she did not buy a mortgage free house as planned? This is the point that the Supreme Court is going to answer.
We have extensive experience of dealing with variation and capitalisation of joint lives and term maintenance orders. Please contact us if you would like to discuss your particular situation with us.
Money by Duncan
