In this video, Wills and Tax Specialist Lee Young looks at the different types of LPAs, whether you need one and what to include.
The law relating to matrimonial finances is based around the Matrimonial Causes Act 1973 (subject to some much needed amendments) but does it now reflect today’s society and the financial needs of the divorcing parties?
Changing times
The assumptions regarding “traditional roles” of a husband and wife within a marriage are long gone from the 1970’s. As such, successive court’s have done their best to accommodate changing times, but over time certain types of order have come in and out of fashion.
One area that has undergone many different interpretations and trends over time is maintenance (officially titled periodical payments).
Many former husbands have found themselves subject to orders that were worded as "for life" or "until further order".
More recently, courts are far more considered in their approach to putting time limits or triggers. This has led to periodical payments reducing or ceasing. Where does that leave the former spouse dependant on these ongoing commitments as their lives change, possibly having a new family or wishing to reduce their working hours as they approach retirement?
'Meal ticket' divorce ruling indicates less generous spousal maintenance
A high-profile divorce ruling this week has highlighted a change in the courts approach to these questions and may signify a shift in how courts regard maintenance and future payments.
Meal ticket for life
The case, Waggott v Waggott, has been dubbed by the media as the ‘meal ticket for life’.
Kim Waggott, a trained accountant, is the ex-wife of William Waggott, a Director of travel firm, TUI who had multiple affairs during their twelve year marriage.
Mrs Waggott argued that she was entitled to a share of his "post-separation" future earnings in addition to a divorce settlement of just under £10m.
Annual maintenance payments
On 11th April, the Court of Appeal ruled that annual maintenance payments from her ex-husband of £175,000 for life, should in fact end after three years.
Mrs Waggott had asked the Court to approve an increase in annual payments, but Mr Waggott challenged the original award.
Clean break
Lord Justice Moylan in the Appeal Court said Mrs Waggott could make up the shortfall from losing her annual payments by investing around 10% of her initial payment and using the interest. The judge is reported to have commented "Any extension of the sharing principle to post separation earnings would fundamentally undermine the court’s ability to effect a clean break".
Periodical payment orders
Simon Immins, an Associate in our Family Law Team, has increasingly represented a number of former spouses in the last couple of years in these situations, with periodical payment orders which were worded ‘for life’ or ‘until further order’. He has been successful in getting many of the orders reduced or dismissed.
Simon comments “The Court of Appeal’s rejection of the principle, that earning capacity is a resource to be shared between spouses upon the breakdown of a long marriage (where both ‘breadwinner’ and ‘homemaker’ have made full and equal contributions) is a welcome and clear guide to solicitors who are faced with contradictory case law."
He continues "Payments that support a divorced woman throughout her life, following a split, used to be common, but these have been phased out. Judges are now more likely to say women are capable of working and supporting themselves.”
Less generous spousal maintenance
It is widely viewed within the legal industry that this judgment is a considerable indication that the law relating to spousal maintenance is less generous than before.
The judgment may also produce a consistent approach across the country. It is fair to say that maintenance orders which are seen as standard in some parts of the country, are unobtainable in other areas.
Our Family Team are happy to discuss any issues that this raises for you. If you have any questions, you only have to ask us at Frettens. Please call 01202 499255 and Simon or a member of the team will be happy to chat about your situation and your particular requirements.
