One of the many remedies the Family Court can grant when considering a divorcing couple’s financial position is that of “periodical payments”, something that is sometimes referred to as “spousal maintenance”.
Many divorcing clients of mine are concerned, not only at the prospect of losing their family home (or indeed their ability to stay in it), but also at the prospect of having to fund their estranged spouse’s lifestyle. An award of periodical payments means that a party to a divorce has to pay a certain amount each month to meet the income needs of the other party.
The amount will always vary from case to case but the legal test tends to be the same: can the receiving party adjust to life after divorce without suffering undue hardship? This is then followed by a balancing act between the applicant’s needs each month versus the respondent’s ability to pay. At final hearings there is often a very thorough examination of monthly budgets to see who might be “overegging the pudding”.
Importantly though, awards of periodical payments result in an ongoing financial obligation for one party (often for several years into the future) when all other financial claims might be finalised – it is the polar opposite of a “clean break” that the Courts actively try to achieve in every case.
The Supreme Court this week published a judgement in the case of Mills v Mills which involved a divorced couple who agreed back in 2002 that the wife should receive £230,000 from the sale of the family home, plus £13,200 per year periodical payments from her husband. This maintenance award was expressed for their joint lives until her remarriage or further order.
Following a series of property transactions in which the wife may well have overreached herself, she found herself by 2015 with no capital, about £42,000 in debt and about £4,100 short of being able to meet her annual income needs.
The Supreme Court unanimously decided to reverse an earlier Court of Appeal decision and has declined to vary the 2002 periodical payments order upwards. It is a very discrete point, but it shows that people like Mr Mills cannot be held responsible for financial mismanagement at the hands of their ex-spouse several years later.
It also shows why financial clean breaks (ie where everything is tied up at the time the finances are resolved) are always sought after in every case barring undue hardship – the cost of litigating Mr & Mrs Mills’ case must have been very high indeed, leaving aside the uncertainty of the outcome.
Financial matters on divorces are often complicated, and there is no substitute for obtaining legal advice where possible – please get in touch with us on 0121 233 2042 or email firstname.lastname@example.org for further information.