Clean break or spousal maintenance?
The decision to opt for a clean break or spousal maintenance can be a complex part of resolving a financial settlement in a divorce, so we asked Solicitor Phoebe Hill from our London office to explain the difference between the two and some tips on which option to take.
What is a clean break?
A clean break means that you wish to end all financial ties or claims between you and your ex as soon as possible upon divorce. If you have a clean break, there will be no spousal maintenance to be paid.
You can opt for a complete clean break which can include all capital, pension and income claims.
Or, you can have a clean break on capital, in that you are ending all claims against each other in terms of assets, property etc., but you keep your claims open on income, for example, if one of you is financially supporting the other by paying spousal maintenance.
The only way you can obtain a clean break is to have a financial order that the Court has approved. This also prevents your ex-partner from making any further financial claims against you in the future.
What is spousal maintenance?
Spousal maintenance is when you have agreed, or the Court has ordered that one spouse pay the other an income every month.
This often happens if one spouse was reliant on the other for financial support and cannot support themselves financially without this assistance. For example, if one spouse was the primary financial earner but the other had to stay at home or had a limited income as they were looking after children.
In this situation, the person at home may argue that they are entitled to spousal maintenance as they cannot support themselves financially now that the marriage has ended.
Spousal maintenance is only applicable for married couples, and it is more common for couples who have been married for a long time in contrast to short marriages.
If spousal maintenance is payable, the amount and length of maintenance would need to be agreed upon. For example, the wife would pay the husband £500 a month for three years.
The financial settlement can also include conditions on the maintenance payment, including if the spouse who was receiving payment lived with a new partner for six months or remarried, then the spousal maintenance would end earlier.
If you have children involved, the spousal maintenance is separate from any child maintenance assessment that you can calculate on the child maintenance website.
Can I still have a clean break if I am paying spousal maintenance?
Yes, you can; however, it would be a delayed or deferred clean break. Using the example above, you could have a spousal maintenance clause that the wife has to pay the husband £500 a month for three years, after which there would be a clean break, and the husband would not be able to seek any further payments.
Capitalising maintenance payments
Another option for those who want a clean break immediately is to choose to capitalise your maintenance. This means you acknowledge that there is spousal maintenance to pay, but instead of paying it monthly, you pay a lump sum as part of the financial settlement and then have a clean break.
This can only occur if there is enough money to effectively “buy out” the other person’s maintenance claim. If a clean break were included, this would mean that neither party could make any further income claims against the other.
Capitalising maintenance payments may be attractive for one party if they want the security of a lump sum and do not want to rely on their ex paying them a monthly amount.
It can also be beneficial to the paying party; for example, they expect their income to increase in the future, so they would prefer to end the claims now through a clean break rather than keeping them open.
How do you calculate how much spousal maintenance you should pay?
Spousal maintenance aims to help the financially weaker party adjust to their financial position after divorce. The courts would expect the final arrangements to be fair with the idea that both parties, particularly in a long marriage, should have the same kind of standard of living as each other after the divorce.
The courts used to have a “Joint Lives” order when the paying party continued to make payments until either they or their ex-partner dies. However, these are now very rare, and the courts are increasingly opting for fixed-term maintenance payments which are reasonable and specify the length and amount of maintenance.
As part of the financial settlement process, you and your spouse should always exchange full financial disclosure so that you are both satisfied that you have a complete and thorough understanding of the marital pot.
This should include an income and expenditure budget so that you can roughly calculate what you both may need monthly once the divorce has occurred and you are living separately.
You can also use this to compare your income needs and what maintenance may be realistic based on the income and projected income available.
How do you reach an agreement on what should be paid?
As mentioned above, there are several factors to consider when calculating how much spousal maintenance should be paid. This includes the amount, the term and any conditions of payment.
You should also consider whether the amount will be recorded as a fixed amount or a percentage of the spouse’s income. For example, will it consider any future bonuses or pay rises? What happens if the person who is receiving the payment starts to earn a greater salary themselves?
It is possible to get spousal maintenance increased or decreased at a later date if circumstances change. It is also possible to put a “bar” on the spousal maintenance, preventing the other person from making any further applications to the Court to vary the amount or term of maintenance they receive in the future.
This might not be applicable for all cases, particularly for cases with younger children when the courts may consider it appropriate that the spouse could return this matter to the court if circumstances were to change.
Spousal maintenance should be dealt with at the same time as the financial settlement. I always recommend that you do not deal with any element of the financial settlement in isolation, as agreeing on one aspect may have direct consequences upon another.
This is particularly important if you are considering whether there are sufficient funds to capitalise your spousal maintenance.
Ways of reaching an agreement
A financial settlement upon divorce can be negotiated and agreed upon through some of the possible forums.
Direct conversations between you and your ex-partner regarding how you wish to divide the matrimonial assets, income and pension.
Mediation, where a qualified independent mediator creates the right environment to have progressive conversations to reach a financial settlement.
Solicitor correspondence, when your solicitor has an active role, including exchanging financial disclosure with your ex or their solicitors and then being able to advise you on possible settlements and negotiate on your behalf.
Collaborative law or round table meeting involving your solicitors as a form of hybrid between mediation and solicitor correspondence so that you, your solicitor, your ex and their solicitor all attend a meeting together and aim to try a reach a financial settlement.
Court proceedings may be necessary if you are unable to reach a financial settlement with your spouse. Arbitration and private court hearings can also be discussed as other available options at this point.
Please remember that regardless of how you reach an agreement, it will not be legally binding until you have had it drafted into a financial order, also known as a Consent Order and had it approved by the Court.
Please also do consider insuring your spousal maintenance payments if you are receiving this from your ex-partner. This can be done via a life insurance policy.
Get in touch about a clean break or spousal maintenance
If you would like advice on whether your financial settlement in divorce should have a clean break or spousal maintenance, please contact our Client Care Team to speak to one of our lawyers here.