Spousal Maintenance: Opening the Can of Worms
by Fiona Snowdon
The credit crunch is a subject which is rarely out of the headlines. Rising unemployment, plummeting property prices, decreased access to credit and escalating debt are the unavoidable consequences of a recession that we must all endure. With finances being one of the most common causes of relationship problems, it is perhaps no surprise that couples are being rocked during these turbulent financial times.
A record rise in divorce has been reported in the US since the onset of the credit crunch, particularly in financial hubs such as New York City and Los Angeles. Business is booming for many US divorce lawyers with some reports of a 40% increase in caseload. As jobs are being lost and bonuses slashed, many wealthy spouses are making moves to secure their share of the matrimonial pot while they can.
But what does it mean for those people who are already divorced and have been hit by redundancy? What of the bankers who can no longer rely on their bonuses? Are they still expected to honour the financial agreement reached with their ex-partner when the economy was more buoyant?
The provision of spousal maintenance is commonly the greatest bone of contention for couple's seeking a financial settlement on divorce. It often comes as a shock to the higher earner to discover that the duty to support their partner extends beyond the dissolution of the marriage. Maintenance will usually be payable by one spouse to the other in circumstances whereby a spouse has insufficient income to cover their individual basic needs. This may be due to unemployment, nominal salary, disability or the fact that they are caring for a child. The spouse's reasonable needs will be assessed against their earning capacity. If there is a shortfall then maintenance will usually be required to top up the spouse's income. If there is a surplus of income, once both spouse's needs are met, then there may be room for the spouse to claim a share of that surplus on top of the basic figure.
The Court can make an Order discharging, reducing or increasing spousal maintenance if it is satisfied that:-
- there has been a change of circumstances of either party since the Order was made;
- since the Order was made the cost of living has changed to justify varying the Order. An Order can only be varied on this basis once every twelve months.
- where the original Order was made by consent, it was not proper or adequate for the support of the recipient spouse. In so deciding, the Court shall take into account any prior payments or transfers by way of spousal maintenance or property settlement.
- material facts were withheld from the Court or false evidence was given.
Proposals to vary maintenance often come with a fight. Especially if you are the party that is being forced to cut your cloth. It will always be preferable for individuals to reach an agreement privately to spare the costs of the Court process.
This comes with the caveat that any new agreement must be converted in to a new Consent Order. It will not be possible for one party to unilaterally vary the amount of maintenance payable. The new Order must then be lodged with the Court otherwise the old Order will remain in force. If this is not done, there is the possibility that the receiving party could seek to rely on the old Order to apply for back payments at the original rate.
If it is not possible for an agreement to be reached on variation of maintenance, an application can be made to the Court to determine the issue. Given the notorious delays in the Court process, the golden rule is that if you think your circumstances are about to change, the sooner you start the negotiations the better!
Fiona Snowdon is an Assistant Solicitor in the Family Team at Campbell Hooper Solicitors LLP specialising in all aspects of family law.