Standard of Living and How it Impacts on Divorce
What does the lifestyle of a couple during their marriage mean if they later divorce?
The celebrities are making headlines again and this time it's the turn of Robert De Niro and his ex-wife. Although Bob and his wife didn't divorce in this Country their subsequent issues may raise questions for many people on this side of the pond, that may be worried about their own situation.
The papers are reporting that Bob is paying his ex-wife considerable sums in 'alimony' which means he has to pay her a proportion of his income. It's reported that he has to do that because of the lifestyle she had when they were together, and she is entitled to have that lifestyle maintained for her. For Bob this could mean that he has to continue to work, even when he may not want to, so that he can pay an income to his ex-wife.
I do not know the basis of the law in so far as it applies to divorces in the USA and so how accurate the newspaper reports are, is beyond my knowledge although this is not an analysis of the law in the USA.
Do we have similar provision in the law in England? Yes, we do, to an extent.
When couples divorce in England, and there are financial arrangements to be made for a settlement, the law is enshrined in the Matrimonial Causes Act (MCA) 1973, Section 25. That statute is quite old and over the years a body of case law has developed which gives guidance on how the Courts have treated applications for financial provision and what that might mean for outcomes in these types of cases.
Of course, every case is judged on its own merits and there isn't necessarily a formula that can be applied that will provide an answer as to the suitable outcome in each case. Section 25 of MCA 1973 provides a list of factors that are to be taken account of when looking at what financial provision may need to be made. The list is not exhaustive and contains the provision that where a Court is making a decision, all the circumstances of the case are relevant, and the Court has discretion to make such order as it deems fit in order to achieve fairness. What that tends to mean in practice, is that there are boundaries within which an outcome may be reasonable and outside of which, an outcome may be considered less reasonable, or unfair.
One of the factors that is to be taken account of is the Standard of Living during the marriage. Our law also suggests that a clean break between the parties should be considered, wherever possible.
It can perhaps be readily understood that when a marriage ends, if it's possible to provide for both parties to move on from their relationship with financial independence, that may be best for all concerned. Sometimes though, the circumstances are such that it's just not possible to achieve that.
Sometimes, to provide for the needs of both parties and appropriate sharing of matrimonial assets, it's just not possible to have a situation where both have financial independence, or a clean break. Perhaps one party to the marriage has always earned considerably more income than the other and will continue to do so. To cut the other party off from a share of that stream of income after the divorce, may not produce a fair outcome.
Balance needs to be carefully considered here though because it can be hard to expect someone to continue to work, only to then pay a proportion of their income to their former spouse. Even when those relationships end without acrimony, does anyone really want to go to work to support someone that they no longer have that sort of relationship with?
These days, orders that provide for a former husband or wife to carry on paying a proportion of their income to their former spouse, are not that common. They do happen more often in cases where the parties to the marriage are wealthy and perhaps one of those parties is the high earner. In those sorts of circumstances, the lifestyle issue does carry more weight and there can be an element of ensuring that someone's lifestyle, particularly after a long marriage, doesn't suddenly drop so much that they are unduly penalised by the end of the marriage.
It is rare though to have an outcome where one party pays income to the other, in cases where there is a lot less money and both parties are working. Often, the parties share their assets in such a way that a need to pay a proportion of income is removed. This is the clean break in practice and most people want to have that financial independence from one another.
The law in relation to financial issues when a relationship ends can be tricky to understand and apply to individual circumstances. Experienced Family Law Specialist solicitors can provide much needed advice on what financial outcomes should look like. That advice can act as a useful guide to achieving settlements. Family Law Solicitors that are members of Resolution - First for Family Law, will assist with advice so that settlements can be achieved with minimum dispute.
Tracy Cross – Partner & Head of Family