is divorce a free lunch

Do some people really believe that divorce is their meal-ticket for life?

The complaint that some wives see marriage as a ‘meal ticket for life’ is not new.

It seems to be one of those perennial things that the popular press picks up on from time to time. So often the tabloid headlines sensationalise a complex factual and legal situation, but it is not without effect.  

In the early 1980s a campaign by many of our more popular newspapers led to a series of changes in the law to encourage and enable a clean break between divorcing couples, that would allow them to go their own separate ways without continuing obligations to each other.

As the current President of the Supreme Court put it, “Independent finances and self-sufficiency are the aims” with the “ultimate objective to give each party an equal start on the road to independent living.”

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Unfortunately, in many cases this ultimate objective cannot be achieved. In most divorce cases there are inadequate resources to meet the needs of both parties and, given the overriding principle that the interests of the children are paramount, a continuing financial dependency often goes on for many years.

The Case of Waggott -v- Waggott

In the case of Waggott which recently came before the Court of Appeal, the issue of the amount of maintenance for a wife and the length of time that it should be paid came to be considered once more. In this case there were more than enough resources to go around. When the case first came before the Court the Judge decided that the wife was entitled to £8.3 million in capital and continuing maintenance of more than £100,000 a year. Both parties were aggrieved by the decision. The wife considered that she had not received an adequate settlement, while the husband was particularly concerned by his liability to pay maintenance indefinitely.  

How to protect your maintenance payments in divorce

It is, perhaps, unfortunate that during the case the wife’s barrister mentioned the expression “meal ticket for life”. In fact, legally, this case was about something quite different and indeed quite novel. However, the inevitable media reporting of the decisions picked up on the barrister’s comments with headlines along the lines of ‘Meal Ticket for Life Claim Backfires!’

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Is Earning Potential a Matrimonial Asset?

Actually, this case really concerned whether earning potential was a matrimonial asset, or not. For some time now, it has been established that the starting point for dealing with matrimonial assets on divorce is that they should be divided between the couple equally. What exactly is a “matrimonial asset” has been open to numerous arguments, but they can be broadly categorised as assets that have been built up during the marriage, or the “fruits of the marital partnership”. The previously decided cases had concerned the division of capital assets. Here, the wife suggested that the earning capacity of the husband was an asset in which she should be entitled to share.  

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There was certainly no doubt that the husband’s income was substantial and a considerable proportion of this was made up of performance -related bonuses. The wife argued that the husband had built up his position in his employment during the period of the marriage and that it was this that enabled him to have the earning capacity that he now enjoyed. She also suggested that if he were able to enjoy that earning capacity in the future, without her being able to make any claim in respect of it, he would have an unfair advantage over her in terms of their future life.

The wife’s arguments

Ingenious though the wife’s arguments were, they did not convince the Court. As the Judge pointed out, if an earning capacity was a matrimonial asset a roughly equal sharing would be likely to include continuing claims by one party on the other in every case where one had better prospects. Such an outcome would be entirely against the statutory requirement that there be a clean break if possible.

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The Court was more impressed with the husband’s suggestion that the original Judge had been too generous in awarding the wife maintenance for an indefinite period. The Appeal Court noted that the wife would have very substantial capital and should be able to get employment, if she wished, in the none too distant future.

financial health and divorce

While her earnings would not be of the same order as the husband’s she would be able to adjust, without undue hardship, to the maintenance payments coming to an end. Accordingly, the Court allowed the husband’s Appeal and limited his liability to pay maintenance to payment up to 2021. The Court also directed that the wife should not be allowed to ask for that time limit to be extended, adding to the certainty of both party’s positions.

Why you should start planning your financial future during your divorce

One other important point that was mentioned by the Court of Appeal was the fact that most of the cases that reach that Court involve couples with very substantial assets. However, the Court pointed out that it was in the interests of all concerned if every case, regardless of the assets involved was decided in a consistent way, using common principles. How far that is practical is another question!

By Nicola Ingram of the Family Advisory Bureau

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