If you've been hit hard by economic challenges caused by the coronavirus, you may want to review your divorce settlement following a change in your financial circumstances. What are your options?
Financial court orders made on divorce are intended to be final. There are very limited circumstances in which a court will consider "unpicking" an order after it has been made. Whether or not COVID-related financial changes would constitute grounds to challenge capital orders made on divorce will depend on the specific circumstances of the case, and it is advisable to get an early steer from your legal advisor before taking steps.
However, the one exception to that general principle is maintenance – that is, ongoing financial payments to an ex-spouse or for the benefit of children from a previous relationship.
The law recognises that it would be unfair on the payer of maintenance – and the recipient – to "fix" these payments, in case circumstances change (for instance, the payer loses their job or retires, or the recipient comes into significant wealth).
Reducing spousal maintenance payments
If your income has reduced significantly as a result of the pandemic or you are coming up to retirement, and can no longer afford to pay maintenance to your former spouse, you have various options. Ideally you and your ex-spouse would agree on any necessary reduction in payments, and document that agreement in writing. However, if you can't agree, you can instruct solicitors to help you reach a mutually satisfactory solution; use a form of Alternative Dispute Resolution such as mediation or arbitration; or ask the court to review the maintenance payments and settle the issue for you. Court proceedings are often a last resort and, from a costs perspective at least, it is best to explore other avenues first.
The UK courts have a wide discretion. Depending on your and your ex-spouse's changed circumstances, they could keep payments the same, vary them, change the period over which the payments are made, or temporarily suspend or even terminate them. Terminating the payments could involve ordering the payer to pay the recipient a lump sum in lieu of continued maintenance.
It isn't advisable to stop paying maintenance without either seeking the agreement of your ex-spouse or legal assistance. Doing so could put you in breach of your court order, and could result in further litigation. It's always better to take early advice from a solicitor on whether your changed situation – be that a significant reduction in income or impending retirement – could justify a review or even termination of your ongoing obligations.
Reducing child maintenance payments
Court orders providing for child maintenance payments which have been in place for more than 12 months are capable of variation via the Child Maintenance Service (CMS). It is generally much more straightforward to vary child maintenance than spousal maintenance, as the CMS has standard formulae for calculating maintenance for all payers earning up to £156,000 gross per annum. Whether or not it would be appropriate in your particular case to apply to the CMS will be fact-specific.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.