This is a query which I have seen come up on The Group Hug forum in recent weeks and it is also something which I regularly discuss with clients who are going through a divorce or dissolution. Do you have to get a different job?
I have prepared this blog to provide some answers to this question in the hope that it may assist those who may be going through a divorce or dissolution.
How does the Court treat income in a divorce or dissolution?
Initially, the Court will consider the existing financial resources of each party as well as those which they may have in the foreseeable future. This includes their current income and any increase in earning capacity which the Court believes is achievable for them.
What if I have not worked during the marriage or only worked part-time – how will the Court view my income and earning capacity?
Firstly, do not worry if you fall into this category since the Court is used to seeing this family set up and will, in my experience, be realistic about it.
In such circumstances, as part of any decisions they make on the finances, the Court will have regard to the fact that one of the parties in a marriage may not have worked for many years or may have only worked part-time.
They will often accept that this will limit that party’s earning capacity moving forwards, particularly if they still have the day-to-day care of young children. That said, if there are no children or if the children are in full time school or adults at the time of the divorce or dissolution, then the Court may find that it is possible for the spouse who is not working or is only working part-time to return to work – potentially full-time. They may also find that it is possible for them to take a higher paid job if they have a background or qualifications to make this achievable.
Ultimately, the Court will look to establish what the parties’ incomes and potential earning capacities are and these will be borne in mind when they consider the potential financial settlement including whether spousal maintenance may be payable and, if so, how much and for how long. They will also usually expect each party to maximise their earning capacity where possible, having regard to any childcare responsibilities and any limitations on the types of roles and income they may be able to secure.
In summary, when making decisions about the finances and maintenance, the Court will consider the parties’ incomes and earning capacity in a divorce or dissolution and look closely at the following:
- The parties’ current income and earning capacity;
- The parties’ reasonably foreseeable future earning capacity or potential earning capacity (if it differs from their existing income);
- Whether they may be scope for a compensation claim by one of the parties for loss of earnings or earning capacity during the marriage – usually for giving up work for the purposes of childcare.
What if I don’t want to return to work or increase my working hours to full time – can the Court make me do so?
Put simply – no.
The Court cannot compel you or your spouse to work or earn a particular income.
What the Court can, and regularly does, do is make decisions about earning capacities which are then considered when making a final decision about a financial settlement. This means that if the Court finds you can earn more by working or increasing your working hours, then the financial settlement may reflect what they believe you should, and could, be earning rather than what you are earning. This may result in you receiving reduced or no spousal maintenance after your divorce or dissolution and it could leave you without enough income to meet your outgoings.
Therefore, it is often advisable to demonstrate that you are willing to maximise your earning capacity by starting work if you have not worked during the marriage (and are able to do so) or by increasing your working hours or obtaining more lucrative employment. The Court are then far more likely to find that your existing income is reflective of your earning capacity rather than estimating the earning capacity which could prove to be unrealistic for you.
Obviously, there may be circumstances where working is simply not possible or practical for you. The best examples being if you have the day-to-day care of young children or if you have any health conditions which limit your ability to work, either at all or full-time. If this applies to you, then the Court will have regard to this in any decisions they make about your finances.
My spouse or I have quit jobs during the divorce and taken lower paid roles, a different job or stopped working altogether – what will the Court do about this?
For the most part, the Court are likely to take a dim view of anyone who chooses to take on a role with a lower income in anticipation of, or during, a divorce or dissolution unless there is very good reason for doing so. Such reasons are likely to be few, and far, between and the Court may take the view that this is a deliberate attempt by one or both parties to either bolster their claim for spousal maintenance (if they are likely to receive maintenance) or to reduce the maintenance claim (if they are likely to be paying maintenance).
It may surprise those who have not been through a divorce, but it is surprisingly common for one or both parties to alter their income positions in anticipation of, or during, a divorce or dissolution and it is therefore something which the Court is used to seeing and dealing with. As a result, rarely is it advisable to take such a step unless there are exceptional reasons for doing so.
If such action is taken, then the Court will firstly consider the previous income of the party concerned and compare this with the reduced (or nil) income they are now receiving. They will then look to establish what that party’s earning capacity is and will often find that it is similar to their previous income unless there is a good reason why this is no longer the case. The Court may then make decisions based on the higher earning capacity rather than the reduced income. Again, this may place that party in financial difficulties if they have given up a role with a better income and find it difficult to return to that level of income after the divorce or dissolution which may be necessary if decisions are made which require the higher income.
How will the Court make decisions about spousal maintenance (periodical payments) with my income or earning capacity information?
When making decisions about the financial settlement and possible spousal maintenance in a divorce or dissolution case, the Court will consider the income and earning capacity of the person who may be entitled to receive spousal maintenance and decide to what extent this should be considered. They will also have regard to:
- The receiving party’s age.
- The arrangements for the children and whether one has the role of primary carer.
- The length of time since the non-working party was last in the workplace.
- The qualifications and role in the marriage of the non-working or lower earning party.
- The non-working or lower earning party’s recent work experience.
- The availability of suitable jobs for the non-working or lower earning party.
The eventual decision about what level of spousal maintenance should be paid and for how long is highly discretionary and will be based on the reasonable needs of the party due to receive it.
What should I do next?
The issue of spousal maintenance (or periodical payments) is a highly complex and discretionary area of family law. For this reason, if you have concerns or queries regarding maintenance or your income and earning capacity, then you should seek specialist family law advice from a family law solicitor or legal executive at the earliest opportunity.
Myself and my colleagues at Summit Law LLP would be happy to talk through such matters with you. Our initial consultations are free of charge and can be used to discuss your options, cost estimates and potential next steps in your matter.
Thank you to Family Solicitor Matthew Thom of Summit Law for this though provoking blog. Find out more about Matthew and get in touch HERE in The Hug Directory
22nd September 2021