Divorce and Money
On marriage, a couple are financially responsible for maintaining each other. A couple entering a civil partnership agreement take on the same responsibilities.
Financial responsibility does not end on divorce but the courts will, wherever possible seek a clean break. A clean break is where all financial obligations cease. A clean break is not appropriate where:
- There are young children of the marriage.
- It is a medium-long-term marriage and one spouse’s earning potential is a lot lower than the other’s, perhaps due to being the home-maker and caring for the children.
The courts will take all income into account, including working tax and child tax credit, child benefit and entitlement to welfare benefits (such as housing benefit and council tax benefit, although these will be reduced if maintenance is paid).
The principle is to assess each party’s income needs and their ability to meet those needs. Where there is a surplus of capital or income the process is simple. Indeed, where there is a surplus of capital, this can be used to capitalise one spouse’s income needs. This is achieved by calculating the spouse’s estimated lifespan and income shortfall and determining what level of capital is required to purchase an annuity sufficient to meet those needs. In this way a clean break can be achieved.
Who Gets What on Divorce
Most often Capitalised Maintenance is not an option, there is insufficient income and capital to meet both party’s needs. The Family Law Courts then have to decide the fairest assessment possible.
Nominal Maintenance Order
The Family Law Courts will often order a nominal maintenance order. This means that the spouse will not receive any maintenance but the facility is there to return to court to request maintenance if circumstances change in the future, this is particularly important if there are young children.