ST_F_BRIAN

TALKING POINT
With the latest trend for revisiting
financial settlements in divorce
– or “top-ups” – Citywealth
wondered whether a clean break
is preferable to ongoing spousal
maintenance which leaves parties
open to requests for more money.
It turns out the options are
wider than it at first seems and
disagreements can be rife.
CLEAN BREAKS ARE A GAMBLE BUT
THEY HELP PEOPLE TO MOVE ON
Julian Lipson, partner at law firm Withers, calls clean
breaks an ‘educated gamble’ which may prove to be
right, but may prove to be wrong. “It depends on
how the parties' lives pan out in the months or years
afterwards,” says Lipson. “The payer's fortunes may
decline. The recipient may re-marry or come into
money. In either case, there is the possibility of one
party regretting the clean break. But there are just
as many occasions where both parties will welcome,
with hindsight, the finality of being able to move on
with their lives without ongoing ties or fears.”
Debbie Chism, partner at Stewarts, explains that
one of the advantages of a clean break is that it
leaves everyone inancially independent from one
another and the settlement will not be affected by
an early death or job loss. “A joint lives maintenance
order is vulnerable to all of those factors and could
result in it ending relatively soon,” says Chism,
“which would be to the payer’s advantage but
there is no guarantee. A fixed term, non-extendable
maintenance order, also known as a deferred
clean break, depending on the term, is also a costeffective
outcome for the payer.”
However, although clean break payment will produce
more money immediately, it has to last for the rest of
the recipient’s life, says Jane Keir, partner at Kingsley
Napley. “After a long marriage,” explains Keir,” wives
have a point when they argue that a significant part
of their overall settlement will be used up as the years
pass, meaning they may have less money to leave to
their children.” For example, Keir acted for a wife in
a high spending case, where there was not enough
money to afford her a clean break. “She received
substantial capital and ongoing maintenance,” says
Keir. “The husband had a very successful City career
and some five years later we applied to increase
the maintenance and for its remaining term to be
capitalised, thereby bringing about a full clean break
at a later date.”
All rights reserved - Copyright 2018
8
BY MARCELA KUNOVA
Divorce:
litigation vs. negotiation
CLEAN BREAK DIFFICULT WITH CHILDREN
Financial security after a clean break is even more of a concern if there’s a risk that
child care commitments will affect the ability of divorced spouses to maximise their
earning potential, says Barbara Reeves, partner at Mishcon de Reya. “For those who
do return to work following divorce, child care costs can be prohibitively expensive
and time out of the work place can make it extremely difficult to re-enter, even at
more junior levels,” she explains.
However, Reeves points out that this unresolved tension between the duty to
maintain and the imposition of a clean break is perhaps the most divisive aspect of
our matrimonial finance laws. “Many,” says Reeves, “including Baroness Deech in
the UK’s parliament, argue that our maintenance laws are anti-feminist because they
don’t encourage women to return to work.” Baroness Deech is campaigning for a
three year cap on maintenance.
That said, Reeves also admits that while most people view the end of the financial
relationship between a divorced couple as an obvious and necessary step to
emotional and practical independence, the reality is that often this cannot be
achieved. “The level of assets available for division and the requirement and expense
of childcare mean that one party simply cannot meet their living costs post-divorce
without receiving income from the financially stronger party.”
Generally, debates over the level of ongoing maintenance to be paid generate a lot
of tensions and legal fees both during the proceedings and afterwards; the payer
resents paying and the payee often feels hard done by and that they should have
been awarded more money for longer, according to Mary-Ann Wright, partner at
law firm gunnercooke. “That said, it should not be assumed that a clean break
should be achieved at all costs,” explains Wright. “Some ex-spouses simply prefer
to pay an ongoing maintenance, and I have also came across those who fear that
if they hand over a large sum to achieve a clean break the recipient may simply
squander the money.”
Chism also previously acted for a husband who was resistant to buying out his wife’s
spousal maintenance claims on a clean break basis because he strongly suspected
she would remarry in the not too distant future. “His instincts were spot on,” says
Chism. “She remarried within twelve months with the result that the maintenance
was automatically terminated, much to my client’s delight.”
WHEN BREAKS WORK
However, in Debbie Chism’s experience, a clean break is nearly always the better
option. “To be financially separated from the person from whom you have already
emotionally and legally separated allows both parties to move on with their lives. It
also means there are no future arguments about reducing maintenance due to job
loss, pay cuts or retirement.”
SOMETIMES THE LAW DECIDES
Julian Lipson concludes: “The choice is sometimes out of the parties' hands, as there is
a statutory obligation on the court to consider if a clean break can be achieved in every
single case and that is the preferred result, if it can be done fairly to both parties. Most
people would, if the numbers were right, choose a clean break. But, often, one party
feels either that they are being asked to accept a clean break which is too low, or to pay
one which is too high, and it is at that break point where disagreements emerge.” ST