Clean break vs Spousal Maintenance upon divorce– what does it mean?
Many people have heard of the term achieving a ‘clean break’ when dividing finances upon divorce, but do not realise that they could claim or be forced to pay ongoing spousal maintenance. Helen Clarkson explains the difference between the two.
What is a clean break?
A clean break in divorce means that both parties’ financial ties to the other are severed and there would be very limited reasons why a party could try to make future financial claims resulting from the marriage in the future.
Opting for a clean break would include all finances such as pensions, property and future income.
The court has an obligation in every case to consider achieving a clean break now or in the future. It is obtained via a financial order and if a clean break takes place now, no spousal maintenance will be paid.
What is spousal maintenance?
Spousal maintenance is usually required when one party is unable to meet their ‘needs’ on their income alone. Many are unaware that they could claim, or be forced to pay, ongoing ‘spousal maintenance’ after the divorce has taken place. If there are children of the family to provide for then this will have a significant impact on the parties needs and resources. Spousal maintenance can be paid in a lump sum or in monthly instalments. It should also be noted that spousal maintenance is payable in addition to any child maintenance that is due (see the Child Maintenance Service website for more information and an online calculator). However, any child maintenance being paid will need to be considered when calculating whether there are enough funds to pay spousal maintenance in addition.
When will spousal maintenance come to an end?
Spousal maintenance is more usually awarded for a specified term (usually to encourage the receiving party to maximise their earning capacity) or sometimes for life (usually if it has been a long marriage and the receiving party is close to retirement). Spousal maintenance can also be capitalised into a lump sum or offset against another asset. For example, a party could receive a lump sum to assist with a housing deposit, or a greater proportion of the family home in lieu of monthly maintenance payments. However, they would still need to prove that their income needs would be met if choosing the offsetting option and this is usually only appropriate where there is significant capital available for division and the parties’ seek a clean break.
A party could also seek a ‘nominal’ spousal maintenance order which prevent an income clean break and provides protection for the receiving party should they need to apply to the court to increase the level of maintenance in the future. This is usually seen where there a young children of the family but limits the risk to the party with a lower income as they are able to apply back to the court to increase the maintenance in the future if needs be.
In low income families, state benefits will also need to be considered in any calculations so to ensure that the receiving party would not be worse off if spousal maintenance is paid.
For higher income families, where needs can easily be met, the court would also consider what division would be ‘fair’. There are many factors that the court will consider when making financial orders including the standard of living enjoyed throughout the marriage.
Another often unknown principle is that the contribution of a spouse who stays at home to care for the home and/ or children is generally speaking considered equal to the spouse who is the financial breadwinner.
If you are unsure whether you should seek spousal maintenance or how much then our Family team at Trethowans would be happy to assist. We offer a free 30 minute no obligation initial consultation so please call us on 0800 2800 421 or get in touch here.