Divorce, Maintenance and Reducing your Payments
Should you apply for a downward variation in the maintenance that you are paying? Lags and gaps may force your hand with the current high inflation rate says FLiP Director, James Pirrie.
So many payers of maintenance live with that niggling question “Should I apply for a tail-off or termination of the maintenance order?”
Just finishing the case back when the first order was being sorted out seemed the only important thing. But as the months and years go by often you will wish that more time could have been spent on developing a clearer exit route to the maintenance being paid: when should it step down? by how much? should it terminate? or should it be allowed to continue to the end point?
The end point will have been fixed. It was often:
- When the first of the payer or recipient dies in orders made in the noughties; and
- A significant birthday around the payer or payee’s likely retirement (when pension arrangements can kick in) if ordered during the teenies.
Check the order; this is crucial information.
The basics on a maintenance order are that:
- The original award
- Is based almost always exclusively on need (and ability to pay), usually conceived of in the context of the standard of living during the marriage and the duration of that standard (shorter marriages often don’t justify long, high awards of maintenance … indeed the longer a maintenance award is set to last, the more cautious a court is likely to be about making a high order).
- Before the court makes its order it must assess whether there is evidence that shows that the recipient can adjust without undue hardship to the termination of maintenance – and where there is that evidence then it must make an order usually with a step down or termination (but often there will be the possibility of applying to extend the end point);
- The provision cannot last beyond the remarriage of the recipient party.
2. If an application to vary is made then:
- The first step is to consider whether there is now evidence of the potential for such adjustment;
- Then an assessment is made as to the award that is appropriate;
- Then a consideration as to whether that provision could be capitalised into a once and for-all sum.
This structure is likely to leave any payer of maintenance with the following questions, which might encourage the making of an application:
3. A long period before the maintenance payments are terminated by the existing order:
- If it is only a short period then usually you will sit back and wait for the end point rather than take the risk of an expensive, intrusive legal case because you can rarely be that sure of the outcome.
- But if the order is set to run for years, it becomes more compelling to apply to the court sooner to achieve a realistic correction to the order.
4. A relatively high level of child support:
- Where the recipient will be able to receive a lot of child maintenance anyway, they might not worry quite so much about protecting a relatively thin slice of spousal maintenance. Here it may be easier to agree a deal and solve the problem without high legal costs.
5. Where the recipient’s income has built up and is likely to build up further …
Here you would say that the recipient now has some or all of the resources they need to enable them to adjust to the termination of the award. Perhaps with a further additional sum or a slice of pension, a termination of the spousal order is possible.
6. Harder, but also possible, is where the recipient has a realistic earning capacity which they have not exploited or even tried to exploit by applying for jobs or developing a business.
- Here your case is that the recipient has the capacity to build resources such that they could adjust without undue hardship to the end of provision.
- You will need to have strong evidence as regards the availability of work that can be carried out:
- consistently with child-care arrangements (so your close involvement in such care and an established arrangement of support eg from grandparents will often be helpful) and
- realistically given the challenges of geography (the travel to work that cannot be carried out at home).
But do take care with such cases; there is increasing recognition that for many, later in life and without a strong and relevant cv, seeking to build a position in the world of work can be prohibitively challenging. Throw in health aspects or well-being aspects such as the menopause or geographical challenges (the distance from home to work) and the safety of travel and these cases may simply not gain traction with the court.
7. Where the recipient has inherited a substantial sum and in some situations where a spouse is [or should be] downsizing from a substantial property to release significant capital…
Again you may say that the recipient can adjust without undue hardship to the termination of the maintenance, because they can rely on the capital fund to meet their ongoing needs.
8. Where other changes such as children leaving home mean that costs can be radically reduced.
9. Where the recipient is in a committed cohabiting relationship.
- But if this is not admitted, sufficiently compelling evidence may be hard to come by. These can be frustrating cases to try to run.
A relationship can be committed and physical without involving cohabitation and asking for an order on the basis that the court should treat the relationship as one that is economically entwined one is a high bar.
10. Where indexation of the maintenance is being fully-followed up:
- If indexation increases are not being claimed then the real value of the spousal order is falling, that surely makes the continuation of payments somewhat easier to tolerate.
Conversely where the maintenance indexation is claimed in full this may be increasingly pinching your own lifestyle, because you are not receiving similar increases and/ or there is a time lag before you receive any earnings increases.
11. Where your own capacity to pay is reducing:
- For example where your income is not rising at the same rate, where you are facing challenges in funding your own life or where school fees that you have agreed to pay have increased.
- Conversely, where school fees have just ended and your own career and bonuses are going well, your application is going to need to be justified on other grounds which may need to be the stronger to convince a court to intervene in your favour).
Unemployment will demand immediate action – looming retirement where the order continues long beyond will demand a plan.
12. Where you were able to reach solutions quickly the first time around or where you have maintained a good relationship between you and have sorted things out in the past
- Here it is much more likely that you will be able to agree to sit down in the lower cost processes such as mediation and work out a solution together:
- It is where you face a very expensive and demanding process that you need to think much more carefully about whether to risk opening up this issue.
Where there seems to be an arguable case, then you will crave certainty as to the outcome. Unfortunately no lawyer is going to be able to give you this. First, we embark on this process together not knowing the full facts: even where you think that there is a likelihood of being able to prove one factor or another, the ground may shift as the evidence is unveiled. Secondly, a lot may turn on how each party’s oral evidence is given. But most important, thirdly, there are no fixed rules … very different views can reasonably be taken by different judges of the same facts as regards whether a person is fulfilling their earning capacity and the level at which needs should be ultimately be assessed.
It follows that finding a lower cost process will pay dividends for both the payer and recipient. In particular there is value in finding a forum in which to have a cards-on-table discussion at a time when each side knows that there are risks ahead and the search for a viable solution offers so much potential saving in terms of legal fees, avoiding the anxiety about – and the hard work involved in – the legal process and you can trade the risk of disappointment at the end of an expensive case for perhaps a low cost and good-enough solution that you can agree now.
See here for an outline of the process options that may serve you both well.
But even if a more positive approach cannot be agreed, the court’s process on a variation application is much faster than what may have been experienced first time around:
- The disclosure burden is lighter: form E2 is a much shorter form than the form E that you will have prepared to begin with;
- The first hearing is 6-10 weeks after issue; and
- The court is mandated to determine the issue at that hearing if it can do so. (Yes, usually it can’t but this gives you a flavour of the shorter, sharper process that applies).
In short, of course you will want to review your position as the information unfolds but hesitating probably makes the situation worse: higher costs, higher worry and greater delays. If you have a good arguable case then take advice and either recognise that this is not one to pursue or make the decision to carry it forward and do so resolutely.
At FLiP we can work with these situations therapeutically (providing counselling) in mediation, through lawyer-lawyer negotiations, within the collaborative process, with early neutral evaluation, as your arbitrator, or through arbitration or the court process and often in combinations of these processes.