Inflation and maintenance payments: What is the position?
Many child maintenance orders will change in the annual review provided by the Child Maintenance Service. But what is to be done for spousal/civil partner maintenance awards that no longer fit requirements?
For lots of people, high rates of inflation will mean checking back over their court orders to see how to manage the situation which may be made much harder by changes in cost of living. Many orders have cost of living increases attached to them (RPI or CPI “indexation”). See here to work out how your order may have changed (or indeed how the value of your order has eroded because it hasn’t).
Indexation may protect the recipient but it may be devastating for the paying party. Where there is no appropriate indexation then the recipient is likely to be struggling as the cost of everything goes up.
On the other hand, just the passage of time may mean that an order that has been just about viable for years may now need looking at again.
When clients come to me talking about varying their maintenance arrangements, here are the first four things I tell them about the court’s approach – of course in practice it is all a bit more complicated than this; but these points get us off to a good start:
1. This is not a time to put right whatever was done wrong in the original order: The only thing up for discussion is a change in the maintenance arrangement. Given that maintenance is almost only likely to have been awarded to meet needs, really this is a pretty black and white discussion: All we are here to consider is:
- resources on the one hand: what is there? What, realistically could there be, (for example by either side taking steps to fulfil their earning capacity or sell an overlarge property, perhaps?)
- Needs on the other: what is needed? What adjustments to spending have to be made?
2. The court is most likely to approach this question (and therefore parties, trying to settle the case should have uppermost in mind) in this way:
- What was the intention of the original order?
- What has changed? How has that intent been undermined by what in fact has unrolled in the parties’ lives?
- What provision should now be made in response to that shift?
- Additionally, it must run the test again (that the court should have operated in the first arrangement): “Is there evidence that the recipient can adjust without undue hardship to the termination of the maintenance regime? If so, when?”
3. Gather your information: So, it follows that we can’t really get started without having:
- The original order; but also
- Evidence of the situation at the time the order was made; and
We are likely to be stumbling around in the dark until we have some better idea about the situation now [in what circumstances do you and the other party now find yourselves?]
So before taking advice, look out the information that will be needed for that advice to be focused:
- the “d081” or “statement of information” if you did the deal before court;
- your barristers’ position statements if you did the deal at a financial dispute resolution hearing (and ideally a note of what the judge said);
- and if you went all the way to a final hearing then find the barristers’ notes (and the court’s judgment if one was given).
Also, if you can prepare a summary of your situation now, perhaps looking at health/ capital/ pensions/ dependents and other financial obligations and of course your income.
See here for further information, including more about the process and our top tips.
4. Be careful! We generally recommend pursuing a variation only where there is a clear case. The costs may be significant. The outcome is uncertain. The courts are tending towards greater meanness in their awards now than was the case, say in the noughties and early twenty-tens – but none of this can be predicted.
5. Come at this as if on borrowed time and trying to find a solution! Legal advice is expensive. When the first order was made, everything was in issue … but now the canvas is about maintenance only and so is relatively smaller: what makes it worse is that no-one can tell you what the outcome will be: no situation can be predicted accurately. It follows that it is all too easy to spend lots of time negotiating, thinking, putting arguments and responding to correspondence … and that means that it is all too easy for costs to rise disproportionately.
And that is why we thought we would share our thoughts on process, which is part 2 of this blog: getting into the right process if you need to vary maintenance is likely to be crucial so you are not at risk of spending as much as you are arguing about. Getting the mindset right is half the problem – but how do you actually start and conclude the discussions with your ex? Read part 2 of this blog here to find out.
To learn more about FLiP’s unique approach to divorce and separation, please contact us at E: email@example.com or T: 020 7420 5000.