older divorced couple discussing maintenance variation with a lawyer

What do you need to know about maintenance variation in later life? What are the benefits to choosing capitalisation instead?

As divorce lawyers, probably one of the most difficult and sad situations is seeing clients having to litigate over maintenance variation in later life. Capitalisation can offer more peace of mind.

Reasons for disputes over maintenance variation

Sometimes, a dispute arises over maintenance that was ordered as much as 30 years or more ago. Clients who are then in their 70s and 80s, and often not in the best of health, find themselves embroiled in litigation over whether the maintenance should increase or end.

If maintenance was ordered at a stage where the payer was in well-paid employment, often their retirement may give rise for the issue of reduction or termination of maintenance. Whether that happens depends on the pension and capital position of both spouses, but this whole situation can be very stressful for clients, just as they were hoping to enjoy their retirement.

Can you apply for maintenance variation more than once?

Even if the maintenance is varied by agreement on one occasion, if there is a maintenance order that lasts for life (often called a “joint lives order”) then there is nothing to stop either spouse applying to vary the maintenance on many occasions. We have dealt with a number of sad cases in which those variations are still going on, into people’s 80s.

This can be overwhelming and stressful for both sides, and it is for this reason that the issue of achieving a clean break through capitalisation is often sensibly addressed either at the outset of a divorce or on an occasion such as retirement or the sale of a business.

What is maintenance capitalisation and what are the benefits?

The Matrimonial Causes Act 1973 gives the court the power to not only make spousal maintenance orders but also to capitalise them on a one-off basis leading to a clean break. This is a technical area and one in which early legal and financial advice should be sought.

In calculating how much is needed to capitalise a maintenance income stream, the court commonly uses tables called Duxbury which use estimated rates of return and life expectancies to calculate the lump sum needed. This can vary as the tables are revised annually, but often the sums involved are less than may be expected and the benefits of capitalisation for both ex-spouses can be huge.

Firstly, there is so much peace of mind in reaching a final solution, knowing that there can be no more variation applications.

Secondly, the capital should provide the receiving ex-spouse with so much more security and protects them if the payer dies before they do. If this happens with an on-going maintenance order, the surviving ex-spouse faces a very unfortunate legal dispute with the executors of the estate (often being their joint children) to try to get provision from the estate to substitute their maintenance.

All of this uncertainty can be avoided by an appropriate capitalisation of the maintenance order but this provision needs to be carefully calculated and thought out as once done, a capitalisation is legally binding and cannot be revised, apart from in wholly exceptional circumstances.

If you would like advice about maintenance variation and capitalisation, or any other family matter, please get in touch and our Family team would be happy to assist you.