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Renegotiating ex-spousal maintenance support amid cost of living crisis

Partner Toby Yerburgh, Head of Family Law, shares his advice on how to renegotiate ex-spousal maintenance support amid cost of living crisis.

 

2 minute read

Published 10 December 2022

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Up. Up. Up. Utility bills, mortgages and tax. Everything up. Everything except many people’s net incomes, which, if they are rising, are certainly not keeping pace with runaway headline inflation rates. This presents a very specific problem for those who blithely agreed to submit to an order annually increasing the spousal maintenance they pay to their ex-spouse by the rate of inflation.

For years this has been seen as a relatively benign way to ensure that an ex-spouse does not have to trouble the courts with a variation application some years down the line because their original maintenance package no longer meets their needs due to the effect of inflation.

Accordingly, many have been persuaded to agree this or had it imposed upon them by the courts. The latter is not invariable and, as with so much in this discretionary area of law, varies from court to court and sometimes from case to case.

A court is unlikely to say that someone should pay maintenance that financially cripples them.

But now, those who have ‘celebrated’ the anniversary of their original maintenance order over the past few months have found to their horror that they are required to pay, with immediate effect, up to a further 10 per cent on top of the amount they were previously paying.

So for someone previously paying £3,000 a month, the increase would be £3,600 a year. The equivalent of paying well over a month’s extra maintenance a year out of net income that may well be set to decrease due to likely tax rises.

This may well be a financial blow too far, particularly for those who have a second family to pay for.

Renegotiating

So what is the solution? First, do not panic. Maintenance is always potentially variable. If there has been a material change in circumstances, a court is unlikely to say that someone should pay maintenance that financially cripples them. Your ex-spouse will, if they seek advice, also be advised of this.

Accordingly, if the maintenance you would have to pay under a court order is no longer affordable or fair then you should try to negotiate a change.

Several of my clients recently have done exactly that. They have reached out either directly to their ex-partner or via their solicitors or used a mediator and made a convincing case for reducing the increase in their maintenance obligation to, say, 5 per cent rather than 10 per cent upon the basis that the former was unaffordable, unfair and would likely necessitate a variation application.

That said, very few people actually want to have to make a variation application as, apart from in the largest cases, the irrecoverable costs are likely to outweigh the benefits.

But in certain cases, such an application could also be used, for example, to argue that an old lifetime maintenance order should be brought to an end or have a term imposed. In such cases the costs may be worth it.

And, unlike in the original financial remedy case, costs do follow the event and Calderbank letters (a settlement offer that is marked ‘without prejudice save as to costs’) are taken into account when making costs awards.

So if you make a good offer early on, there is a considerable incentive on your ex to settle early.

But what if you are the recipient of spousal maintenance and you did not originally manage to obtain a clause linking your maintenance to inflation?

There are also many in this position. Well, again, the fact that maintenance is always variable helps you. If your ex-spouse is clearly living the high life while your own maintenance is being whittled away by inflation, then provided you are fully exercising your own earning capacity, the court may well have some sympathy for you.

If you get nowhere by negotiation or mediation you may wish to consider an application if you can afford it. If you cannot, and your ex is clearly well able to provide for you then a court may be persuaded to make a legal services order in your favour, which will mean that your ex will have to contribute to your fees.

In either case, negotiation and mediation should always be your first port of call rather than litigation, if you can possibly avoid it and hopefully the inevitable financial pain caused by the current cost of living crisis can end up being fairly shared with your ex-spouse.

This article was first published on FT Adviser in December 2022.

For more information, please visit our Family lawyers page.

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Longer Reads

Renegotiating ex-spousal maintenance support amid cost of living crisis

Partner Toby Yerburgh, Head of Family Law, shares his advice on how to renegotiate ex-spousal maintenance support amid cost of living crisis.

 

Published 10 December 2022

Associated sectors / services

  • Family and divorce

Authors

Up. Up. Up. Utility bills, mortgages and tax. Everything up. Everything except many people’s net incomes, which, if they are rising, are certainly not keeping pace with runaway headline inflation rates. This presents a very specific problem for those who blithely agreed to submit to an order annually increasing the spousal maintenance they pay to their ex-spouse by the rate of inflation.

For years this has been seen as a relatively benign way to ensure that an ex-spouse does not have to trouble the courts with a variation application some years down the line because their original maintenance package no longer meets their needs due to the effect of inflation.

Accordingly, many have been persuaded to agree this or had it imposed upon them by the courts. The latter is not invariable and, as with so much in this discretionary area of law, varies from court to court and sometimes from case to case.

A court is unlikely to say that someone should pay maintenance that financially cripples them.

But now, those who have ‘celebrated’ the anniversary of their original maintenance order over the past few months have found to their horror that they are required to pay, with immediate effect, up to a further 10 per cent on top of the amount they were previously paying.

So for someone previously paying £3,000 a month, the increase would be £3,600 a year. The equivalent of paying well over a month’s extra maintenance a year out of net income that may well be set to decrease due to likely tax rises.

This may well be a financial blow too far, particularly for those who have a second family to pay for.

Renegotiating

So what is the solution? First, do not panic. Maintenance is always potentially variable. If there has been a material change in circumstances, a court is unlikely to say that someone should pay maintenance that financially cripples them. Your ex-spouse will, if they seek advice, also be advised of this.

Accordingly, if the maintenance you would have to pay under a court order is no longer affordable or fair then you should try to negotiate a change.

Several of my clients recently have done exactly that. They have reached out either directly to their ex-partner or via their solicitors or used a mediator and made a convincing case for reducing the increase in their maintenance obligation to, say, 5 per cent rather than 10 per cent upon the basis that the former was unaffordable, unfair and would likely necessitate a variation application.

That said, very few people actually want to have to make a variation application as, apart from in the largest cases, the irrecoverable costs are likely to outweigh the benefits.

But in certain cases, such an application could also be used, for example, to argue that an old lifetime maintenance order should be brought to an end or have a term imposed. In such cases the costs may be worth it.

And, unlike in the original financial remedy case, costs do follow the event and Calderbank letters (a settlement offer that is marked ‘without prejudice save as to costs’) are taken into account when making costs awards.

So if you make a good offer early on, there is a considerable incentive on your ex to settle early.

But what if you are the recipient of spousal maintenance and you did not originally manage to obtain a clause linking your maintenance to inflation?

There are also many in this position. Well, again, the fact that maintenance is always variable helps you. If your ex-spouse is clearly living the high life while your own maintenance is being whittled away by inflation, then provided you are fully exercising your own earning capacity, the court may well have some sympathy for you.

If you get nowhere by negotiation or mediation you may wish to consider an application if you can afford it. If you cannot, and your ex is clearly well able to provide for you then a court may be persuaded to make a legal services order in your favour, which will mean that your ex will have to contribute to your fees.

In either case, negotiation and mediation should always be your first port of call rather than litigation, if you can possibly avoid it and hopefully the inevitable financial pain caused by the current cost of living crisis can end up being fairly shared with your ex-spouse.

This article was first published on FT Adviser in December 2022.

For more information, please visit our Family lawyers page.

Associated sectors / services

  • Family and divorce

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