A Duxbury calculation refers to the method used to work out a lump sum that can be drawn by a partner as maintenance for the rest of their life. The idea behind a lump sum is that this can enable a divorcing couple to have a clean break. The Duxbury Tables are based on various assumptions, including life expectancy and inflation, to calculate appropriate maintenance sums.
The case below looks at the Duxbury tables in action. This extract can also be found in my new book, ‘Divorce & Splitting Up: Advice from a Top Divorce Lawyer’.
Mrs S was 52 and had two grown up children. Mr S was 53 and earned £300,000 net per annum. Their house was worth £5 million with no mortgage. Mr S had a pension fund of £1.5 million.
Mrs S required £1.5 million for her housing and had a budget of £100,000 per annum for her income requirements. She received an equal division of the equity in house (£2.5 million) and a clean break that took her surplus £1 million of capital into account. She would receive sufficient income, supplemented by a payment from her husband’s share of the house and his pension fund, to give her £100,000 a year for life.
This calculation was made by reference to the Duxbury Tables. The computation first arose in the case of Duxbury v Duxbury. The tables give a capital figure, assuming a net of tax income need for either a man or woman for life. The calculation assumes a relatively low rate of investment return, and that some capital will be spent so that on a part investment return, part capital spent basis, the sum provided will be spent at the end of the person’s life, which is actuarially calculated.
This is not the same as an annuity, which is much more expensive to provide. The Duxbury Tables do take into account an uplift for inflation. More specialist Duxbury programmes, such as the amount of capital required to provide a specific income up to or from a certain age, can factor in other capital income and pensions.
If you are about to receive a clean break in exchange for relinquishing your maintenance, you should ask your solicitor to check what you are receiving against the Duxbury Tables, to ensure that you will be properly provided for – and for many people, that means for life.
If you are representing yourself, you can access the Duxbury Tables by subscribing to At a Glance, a family lawyer’s “bible” published by the Family Law Bar Association. At the time of writing, At a Glance costs £50 and can be purchased from www.classlegal.com. Please note, however, that the contents of this book include lots of figures and tables, which may be daunting for the uninitiated. If in doubt, ask a lawyer for help.
Not every spouse will be in such a fortunate position. However if your spouse is earning a substantial income, if there is plenty of capital and if you are entitled to lifetime maintenance, I would be hesitant to advise a clean break unless it can be paid out in full. A bird in the hand is worth two in the bush, but what seems a vast amount at the time may not seem so sizeable ten years later!