The last 30 years has been marked by an extraordinary growth in awards made to wives on divorce. Retirement, as the recent case of Wright shows, is a time for change and review.
Wright has drawn into focus the common feature of divorce law in England in recent years, joint lives maintenance. Subject to some regional differences, a wife, following a marriage of moderate duration and with children (but not necessarily so), is likely to receive an award of maintenance for joint lives, that is until she or her former husband die.
The story does not end there as, following the ex-husband’s death, if the former wife can continue to show her dependency, she can make a claim against his estate.
In reality, as in the case of Wright, the level of maintenance is likely to be reviewed on retirement or as retirement approaches, a time when the ex-husband’s income is likely to reduce. On review the divorce courts have the ability to reduce, extinguish or capitalise the income payments.
A former husband who has accumulated significant wealth since the marriage may find that this new wealth is under attack by a former wife seeking to turn income into capital. The common approach to establish the appropriate capital figure has been is the Duxbury calculation. The calculation provide an amount, which if invested and drawn down over the expected lifetime of the wife, would provide her with a fixed income. The approach is subject to the uncertainties of life and death; if you live beyond your actuarial life expectancy there will be problems as you will find that the Duxbury fund has run out.
An example of Duxbury in action would be a former wife aged 65 who at the retirement of her ex-husband is receiving £30,000 per annum. The Duxbury calculation shows that she would need £385,000 to achieve the same income until death.
On any review the court is able to look at all of the resources of both former spouses to establish whether the income stream at the time of retirement was appropriate and if the assets or income of the former wife should be used by her to reduce the lump sum payable.
Perhaps little thought or sympathy has been given to ex-wives on the receiving end of joint lives orders. Whilst a former husband is free to remarry whoever he likes the former wife cannot. Cohabitation is likely to lead to an argument for a reduction in the payments whilst remarriage will extinguish the income stream. Commonly known as the remarriage trap, many ex-wives simply cannot afford to remarry (someone with insufficient wealth) and lose their income stream.
Sophisticated divorce settlements can include provisions allowing former wives to establish new relationships by agreeing that there will be no change to the maintenance payments during the first year or so of cohabitation.
Husbands have also been known to offer a dowry or lump sum payment to their former wife if she remarries. If the wife is receiving £30,000 a year (often index linked) for 25 years the total cost is at least £750,000. A payment on remarriage of £250,000 in the first ten years or so following divorce (or perhaps a sliding scale) can look like an attractive solution for all.
Remarriage of the former spouse being the Holy Grail for many ex-husbands, the generous/cynical/practical will consider the divorce settlement as an opportunity to provide a former spouse with an entry to the dating world again, some offering gym memberships, generous clothing allowances and even the fees of exclusive matchmaking agencies.
If remarriage is such an issue, what do the courts make of a husband with a young wife claiming that she will be remarried in no time and therefore undeserving of a large award? Guidance comes from the 1966 case ofBuckley v John Allen where the judge was asked to tackle this issue. Speaking from the heart he said “I am wondering what is the evidence on which I must act. Am I to ask her to put on a bathing dress; because the witness box is calculated to disguise the figure…has marriage been an entirely happy experience? It seems to me that this particular exercise is not only unattractive but is not one for which judges are equipped. Am I to label the lady to her face as attractive or unattractive? If I have the temerity to apply the label, am I likely to be right? Supposing I say she is unattractive, it may be that she has a friend who disagrees and has looked below the surface and found a charming character. The fact is that this exercise is a mistake.”
As husbands who divorced in the last 20 years come to the end of their working lives, the very real prospect of a return to the divorce courts loom. The already overstretched court system is unlikely to cope, which possibly might, at last, encourage a government to look at updating the outdated 1973 legislation that we still work with.