Is lifetime maintenance becoming a thing of the past?
Court orders for maintenance are typically made to ensure that one of the divorcees’ financial needs are met. However, a recent court order for maintenance limited the payments to five years. Partner and divorce specialist, Chris Miller, explains how maintenance awards are decided.
How is lifetime maintenance decided?
Lifetime maintenance orders are increasingly rare, but they are still granted by courts if the circumstances of the particular case requires one.
The prevailing guidance on this comes from a 2015 High Court case, which states that they are appropriate when “the evidence shows that choices made during the marriage have generated hard future needs”.
For example, in a case where a wife has given up working during a twenty year marriage to care for children or manage the household, this may well limit her future earning capacity compared to what she might be paid had she pursued a career for that time.
She may also have become accustomed (reasonably) to a certain standard of living during that time and might be unable to realistically maintain that standard through her earnings alone.
In these circumstances, a court can take a view of what the wife’s future income needs are, compare these with her earning capacity and then grant her a maintenance order requiring her ex-husband to make up the shortfall.
However, the order may not be for life. Indeed, we have seen an example of this in the media this week after the Court of Appeal ruled in a dispute over maintenance between a husband and wife.
Case study: Waggott vs Waggott
Mr and Mrs Waggott divorced after a decades-long marriage. They had met while working at the same accountancy firm. When they married, Mrs Waggott stopped working while Mr Waggott went on to secure a successful and lucrative career.
As part of their divorce, it was agreed that Mrs Waggott would receive a little over half of the marital assets (valued in the tens of millions) and Mr Waggott would keep the rest. However, there was dispute over how much the husband should pay the wife in lifetime annual maintenance.
The family court initially ruled that Mrs Waggott’s annual income needs were £175,000. The court decided that Mrs Waggott could invest some of her capital to produce £60,000 of this and so made an order for Mr Waggott to make up the remaining £115,000 on a ‘joint lives’ basis.
In other words, he would pay this until one of them died or his ex-wife remarried.
Both sides appealed. In her appeal, Mrs Waggott applied for a higher award and suggested that it was unreasonable for her to have to invest or use her assets for income.
She also argued that Mr Waggott’s potential future income should be treated as a marital asset and that she should be entitled to 35% under the sharing principle – in other words, that it was an asset accrued during the marriage and thus should be divided between the divorcing parties.
Mr Waggott argued that the maintenance payments should be limited to five years – and the Court of Appeal agreed. They also agreed with him that it was reasonable to expect that the wife could use some of her substantial assets to make up the income shortfall.
What are the implications of maintenance orders for divorcing couples?
So does this judgement mean lifetime maintenance orders are now a thing of the past? No. It’s important to understand that every divorce case turns on its own facts.
In this case, Mrs Waggott was a millionaire following her divorce.
It might be reasonable for her to use some of her money to support herself, but it may not be a reasonable expectation for a wife in a similar situation but with substantially less money.
A lifetime maintenance arrangement might still be granted in those circumstances.
More broadly, the questions around whether lifetime maintenance orders are fair or appropriate feeds into the wider debate around the gender pay gap and income inequality.
Figures from firms forced to disclose their pay gap show that women are more often than not being paid less than their male colleagues.
One reason for this is because many women have taken career breaks or suffered financially as a consequence of joint decisions taken during marriage about childcare.
It seems fair that this contribution to the family – which very often enables a husband or partner to continue to increase his earning capacity – should be recognised in the event of divorce or separation.
Yet many countries now impose a limit on spousal maintenance and in England and Wales there is seemingly a trend towards courts granting fewer lifetime maintenance awards. So the question is where do we draw the line as far as fairness – to both sides – is concerned?