23 April, 2020
Over the last few weeks our experienced and expert family solicitors have been approached to help guide clients through a wide range of family law issues during the Covid-19 pandemic.
There will be many ex-spouses who are bound by a Court Order to pay periodical payments or interim periodical payments (“maintenance”) to their former husband or wife. By the same token, the ex-spouse receiving maintenance will very likely be entirely dependent upon the full level of maintenance being paid to them. It follows that those maintenance obligations continue until they are otherwise dismissed by the relevant triggers contained in the Court Order.
In the challenging times of the coronavirus pandemic, both payers and recipients of maintenance may find themselves with reduced income and/or income needs. For example, a payer of maintenance may be subject to the furlough scheme or be reducing overheads in their own business which may include a genuine reduction in the remuneration they pay themselves. The impact of this is pure money management and budgeting ahead. Part of that budget, for a payer of maintenance is meeting essential financial obligations, one of which may very well be the terms of a spousal maintenance order.
“Whilst obligations under a Court Order must continue, a payer of maintenance who cannot sustain the payments for good reason must take the appropriate action in providing full transparency of their income means to justify the inability to meet their obligations. This is, in fact, a duty more than anything, so as to provide disclosure of a material change in financial circumstances.”
That transparency with the ex-spouse or their legal representative is the first step but caution should be exercised at all times because a mere tightening of the belt will not suffice; rather, an actual deficit between evidenced income from all sources against actual and clear financial obligations and outgoings is what will likely be more persuasive.
It is possible to apply to the Court during the currency of a spousal maintenance Order to seek a variation in the terms, including quantum of payments. It is not to say that any change in income means automatically results in the end of maintenance obligations or a reduction in the level of payments for example, but instead, legal principles as well as Court processes, if required, provide a mechanism by which a review of spousal maintenance can be performed to alleviate the financial strains genuinely inflicted by the ripple effect on day to day life – and ultimately money – of Covid-19.
The legal principles which would ultimately guide the Court require a full consideration of a number of circumstances specific to the case. These circumstances may include the original intention of the Order underpinning the spousal maintenance provisions, the other available financial resources to each person, the payer’s ability to pay (including the permanence or otherwise of any change in income), the recipient’s dependence on receipt and the meeting of the needs of both spouses and any children. The principles governing the law in this arena are fact and circumstance specific.
It is therefore important to consider the potential variation of a financial settlement whether you are the payer or recipient of spousal maintenance.
A word of warning however as a relevant footnote to potential variation of maintenance. The Court timeline is likely to be protracted at present unless the Court can be convinced of the urgency of any application before it. As with most legal matters in most legal disciplines at present, common sense and good communication must prevail. Would-be litigants and current parties to Court proceedings alike ought to be mindful about delay, costs and merits of any decisions or actions they seek to take. Only in rare cases at present would an application for immediate financial support be regarded as an emergency and even then proceedings will be by video-link. It is therefore worthwhile exploring alternatives to the Court process and the first step is to open up a fully transparent dialogue with the ex-spouse or their legal representatives.
In these trying circumstances, it is best to take advice from a specialised family lawyer and, in the first instance, to see whether a temporary fix can be negotiated on the basis that the court system is over-stretched and unlikely to be able to consider and determine a variation application expediently.
Ex-spouses who are in receipt of maintenance and who become aware that their ex-spouse has lost their job, may wish to consider and agree a temporary payment schedule which takes any reduced earning capacity into consideration on the understanding that the original level of the Court-ordered payments will resume once new employment is found, potentially, with any reductions made up later.
A further option for both parties could be to negotiate a lump-sum payment from other capital resources if they are liquid and readily available so as to fully ‘capitalise’ and pay off the spousal maintenance Order and thereby achieve clean break status or, alternatively, to satisfy maintenance obligations by temporary alternative means in place of the common monthly standing order (i.e. payments from savings to just meet the monthly obligations).
All options can be final or temporary arrangements set in place to manage the prevailing circumstances and without prejudice to the longer-term maintenance obligations for when the Covid-19 public health crisis is over and once a semblance of normality, if possible, can be resumed in the context of the wider economy, profits and income yields.
An application to Court should be seen as the absolute last resort, and only if you are unable to reach an agreement through other means. Communication and cooperation with the support of family law specialists is key in resolving matters away from the Courts. This is a time to take practical steps and former spouses should be focusing more on negotiating short-term solutions to any maintenance issues rather than engaging in longer-term litigation.
*The information set out in this article is correct at the date of publication (23 April, 2020). The effect of coronavirus on personal legal circumstances is a fast-changing area and so it is important to obtain legal advice to ensure you are properly protected.
If you have any questions regarding the impact of the Coronavirus upon you family matters or are seeking up-to-date legal advice on Family Law, contact Daniel Sanders on 01202 294 566 or email DanielSanders@steeleraymond.co.uk.
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