The cost of living crisis and index linked spousal maintenance orders
For most people, it is impossible to escape the cost of living crisis: either from the almost daily news coverage as the crisis continues, or from the very tangible impact that it is having on most families’ finances. But for separated families, the current crisis may cause an additional and unexpected headache aside from the obvious issue of having to finance two separate households.
Many orders for spousal maintenance, whether ordered by the court at the conclusion of financial remedy proceedings or reached by consent between the parties, will be varied on an annual basis in line with inflation (i.e. the amount payable is index linked). With the percentage change in the consumer prices index (CPI) sitting at 11.1% in October 2022, this could mean that there will be a sizable increase in the spousal maintenance payable and therefore it might have a big impact on a payer’s ability to abide with their maintenance obligations.
Conversely, where an order for spousal maintenance is not index linked and the sum payable is to remain the same regardless of the level of inflation, it may mean that a receiving party will realistically suffer a deficit to their income, as their costs of living increase but the spousal maintenance they receive does not.
Have a look at the final financial order and specifically the paragraphs relating to spousal maintenance (often referred to as ‘periodical payments’) to see if there is a paragraph that deals with annual variation to the periodical payments, as this will confirm when the variation date is, and what the percentage change or increase in payments is to be. This percentage change could either be in line with the retail prices index (RPI) or, more likely, linked to CPI which is the principal official measure of inflation in the UK.
First of all, you will need to calculate what the increase will be. There are a few online calculators that can assist with this or your family law solicitor could help.
You will then need to contact your ex-spouse to reach agreement on the variation amount. Your order may provide for the payer to contact the payee a certain amount of time before the variation date but if not, it is a good idea to be aware of when the variation date is approaching so that you can seek to agree the new monthly payment amount in good time and iron out any issues if they do arise.
If you are the receiving party and you are struggling to meet your needs with the amount of spousal maintenance that has been ordered, you should try and discuss this with your ex to see if they are able to assist. Do remember though, that if you are struggling with the rising costs of living, your ex may well be too.
Again, the first step is to try and discuss this with your ex. It might help if you can show them that you have not received a pay rise in line with inflation or to set out what your net monthly income and expenditure is, to show how you simply do not have enough money to meet the increase. Remember that by not increasing the payments you are in breach of the order, and if you cannot reach a solution with your ex amicably, then you will need to consider making an application to the court to vary the order downwards and you will also be at risk of your ex seeking to enforce the order through the court.
If you can, it is always best to try and talk to your ex first, either directly or with the assistance of an independent third party like a mediator. A mediator is impartial and neutral, will facilitate difficult conversations between you and might be able to help you with reaching a compromise. You can find out more about family mediation, and how the process works here.
If direct discussions between you do not work, or if mediation does not prove fruitful, or if these are not appropriate forums for you, then you may need to instruct a specialist spousal maintenance solicitor to correspond with your ex on your behalf. You should also consider whether another form of alternative dispute resolution, like arbitration, might be suitable. Arbitration is where you and your ex choose an arbitrator between you who will be presented with the facts of the case and then make a decision for you.
If no agreement can be reached through solicitors’ correspondence or another form of alternative dispute resolution, you may need to consider going to court to, depending on the circumstances, enforce the order or seek a variation to it (either upwards or downwards depending on if you are the payer or payee). But be warned, you will need to seek the court’s permission to enforce arrears that are over 12 months out of date (and will then need to convince the court that relief should be granted) and variation applications are often disproportionately costly.
The team at Family Law Partners are committed to a solution-focused approach, using alternative ways of resolving matters such as mediation, arbitration and the collaborative model, in order to minimise both the emotional and financial cost to your family. If court proceedings do prove necessary, we also have experience with both enforcement and variation applications, and if you would like to consider your options further, we will only be too happy to assist.
Hannah Gumbrill-Ward is an Associate family law solicitor in our Brighton team. If you would like to discuss your individual situation with one of our specialists, please contact us for a confidential, initial conversation.