Times are Changing for Those Receiving Monthly Maintenance

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Times are Changing for Those Receiving Monthly Maintenance

Are times changing for maintenance?

All maintenance orders have the potential to be varied (i.e. changed or altered). The reasoning behind this is simple: life is unpredictable and no court could ever build into a financial settlement all possible circumstances that could necessitate the review of a maintenance payment, either upwards or downwards. However, if an application to vary a maintenance order is made, this can come as a shock to the other party who will have budgeted for the future only to find their former spouse or civil partner is seeking to change financial arrangements that have been in place for some time.

Not every divorce settlement results in a clean break, i.e. where there is no ongoing payment made by one party to the other. There can still be a clean break where only child maintenance payments are made. However, there are a substantial number of cases in which one of the spouses or civil partners is entitled to receive monthly payments in their own right following divorce or dissolution, whether for a defined period or for so long as they and their former spouse/civil partner are still alive.

What might seem like guaranteed income can be altered if there is a significant change in circumstances. Conversely, although the paying party may have budgeted for a certain level of expenditure on maintenance, a change in circumstances could just as well lead to an increase in the payments due.

It appears that the courts are becoming less keen on the prospect of parties receiving long-term, substantial maintenance. Cases like SS v NS [2014] EWHC 4183 (Fam) appear to show an evolution in the thinking of the family court towards treating maintenance as being appropriate only to meet needs generated by the circumstances of the marriage (which generally means topping up the income of a person who has taken time out of work to raise a family) and otherwise only to alleviate significant financial hardship. Attitudes are hardening and those whose maintenance orders were made many years ago may face a less generous approach if a review comes before the court.

The problem with maintenance

The main issue with a maintenance order is that it is inherently uncertain. As mentioned above, it can be varied if either party's income or financial situation changes. Neither party can control what happens in the other's life (or to a lesser extent, their own life!) so it can feel a little like having the rug pulled from under you at short notice. The banking crisis of the late noughties and the subsequent downturn, from which certain sectors of the economy have still not fully recovered, brought redundancies, slashing of bonuses, wage reductions and falls in company profits.  Applications to vary maintenance orders made in better times will have been an unwanted by-product of this turn of events for many people receiving what they may have thought was a steady income. This works both ways; the person receiving the maintenance may have suffered a drop in their own income and find themselves unable to survive without increased payments.

In very many cases, the parties can come to an agreement as to what to do when one or other's financial circumstances have changed. The court does not have to become involved other than to rubber stamp a revised order to ensure that it is certain and enforceable in the future. However, for those that cannot agree, the court has to decide what reduction (or increase) is appropriate. The court has a very wide discretion to decide what order to make looking at all the circumstances of the parties. If there are still minor children in the picture, this will be the court's first but not sole consideration.

Applying for a change in maintenance

With an application to vary a maintenance order comes risks for both parties so it is not something that should be embarked upon lightly. Court proceedings can be very expensive and the cost-benefit ratio should be kept in mind at all times. As a very simple yardstick, think about how long it would take to make the money spent on legal fees and representation back in increased or saved maintenance payments. The situation could of course be so extreme that you cannot afford to leave things as they are.

Once an application to vary maintenance has been made, the court is entitled to consider ordering a one-off capital payment to the receiving party to "buy out" their maintenance claim and bring to an end the monthly payments, as well as simply varying the payments up or down. Such payments can be substantial and it is only an option if the capital resources are available.

In some situations, the court can attack a pension which was left previously "unshared" in the divorce settlement as an alternative to ordering a one-off capital payment. In other cases, a court might terminate the maintenance order resulting in no further payment at all.

Practical points

So what might happen if you are asked to consider altering an existing maintenance arrangement or if you find that you need to make a change, whether you are the paying or receiving party?

Take legal advice. A chance to discuss the matter with a family law specialist will enable you to consider the request (or your decision to make a request) in the context of your respective financial circumstances and the relevant law

In most situations of this nature, the first major step after this will be to exchange full details of each other's financial positions. This will include details of capital, pensions and income as well as outgoings. Solicitors will often advise that this exercise - known as financial disclosure - be undertaken using a standard court form (known as a form E). The use of a standard form ensures that both parties disclose equivalent information and that nothing is missing. A request for financial disclosure may not be met with great enthusiasm but the process is really important to make sure any proposed change is appropriate in the circumstances.

Your solicitor may well advise that you make a proposal in the hope that matters can be agreed. Another alternative could be for you and your former partner to attend mediation to try and reach agreement

If it proves impossible to reach agreement and mediation does not work then the court will be asked to decide the matter. The process is quite similar to that used to determine a financial settlement on divorce but with some modifications to the procedure

How we can help

JMW has helped many individuals deal with requests for a change in a maintenance arrangement.  This includes situations where incomes have risen dramatically since the making of the original order or where business failure has rendered the continuation of an order made during better times financially impossible.  We have a wealth of experience in this area and will offer sound, practical advice to resolve any issues as swiftly and amicably as possible

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