Appeal Judges Rule Against Life-Long Maintenance Payments

In what has been described as a ‘landmark decision’, judges at the Appeal Court in London have upheld a man’s appeal against the requirement to pay life-long maintenance to his ex-wife, reports the Daily Mail.

Kim and William Waggott separated in 2012 after 21 years of marriage, and had one child together. At a divorce hearing in 2014, Mrs Waggott was awarded around £10 million in cash and assets plus annual maintenance payments from her ex-husband of £175,000, which were to be payable for life.

She was not happy with this settlement and subsequently went back to court to try and get her annual payments increased by £23,000.

However, her husband lodged an appeal against the original decision, claiming that the court had been wrong to award his ex-wife life-long payments. He argued that this meant there was no financial motivation for her to ever return to work, whereas he would have to continue to work hard in a demanding job.

The Appeal Court judges have now found in Mr Waggott’s favour, ruling that the annual maintenance payments should only be paid for three more years so as to allow Mr Waggott to achieve a ‘clean break’ from his former wife.

Lord Justice Moylan said that if Mrs Waggott invested part of her settlement she should be able to live off the interest, and if this didn’t provide sufficient income she was capable of finding employment and earning additional income.

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Research Reveals the Financial Implications of Divorce

The emotional impact of divorce and separation is widely recognised and much has been written on the detrimental impact it can have on a family’s well-being.

Perhaps less widely recognised is the financial impact that divorce or separation can have on both parties. Some costs are obvious, such as legal costs and possible child or spousal maintenance costs. However, there are other potential costs that are less immediately apparent, and new research from Aviva has given an interesting insight into the extent of these costs and their impact on a couple’s finances.

Increasing Costs

According to Aviva’s Family Finances Report, 68% of couples have financial issues to resolve when they divorce or separate, and on average this process takes 14.5 months, which is three months more than in 2014.

The costs associated with divorce and separation have also increased, with UK couples spending an average of £14,561 on legal and lifestyle costs when they break up. This is an increase of 17% since 2014 when it totalled £12,432. Moving out of the marital home can add £144,600 to this bill on average for those buying a new property (16%), or more than £35,000 for those renting (51%).

Legal fees are the most common cost when a relationship ends, encountered by over half (54%) of couples, followed by setting up a new home (40%) and annual child maintenance payments (21%).

Housing Issues

Sorting out alternative accommodation following a split is a major issue for many couples. Nearly half (46%) of home-owning couples sell their property leading to both partners having to find a new home, in addition to those individuals who move out whilst their partner remains in the former joint home.

One in six (16%) buy a new home following separation, with an average cost of £144,600 per person, rising from £94,100 in 2014.

However, many can struggle to get back on the housing ladder, and 51% apparently move to the rental market after their divorce or separation, spending an average of £7,519 each year on rent.

Aviva highlights that with house prices continuing to rise across the country, renting post-separation could become a more permanent circumstance for many people. Of those currently renting as a result of their split, seven in ten (70%) feel that they will be unlikely to buy a property in the future.

Many people also find themselves unable to maintain their former standard of living and have to adjust to a reduced household income following divorce or separation. Around a third have been forced to dip into their savings, and 23% have had to borrow from friends or family to be able to make ends meet.

Impact on Retirement Income

Previous research has also highlighted the negative impact separation and divorce can have on pension savings and retirement income, particularly for women.

The study by Scottish Widows found that 70% of couples fail to take pension savings into account when agreeing their divorce. The study also found a general lack of understanding of how pensions should be handled during divorce, which might explain why so many leave it out of their divorce negotiations.

“Relationship breakdowns can leave people really vulnerable but, quite simply, they’re also throwing significant sums of money down the drain,” commented Catherine Stewart, Retirement Expert at Scottish Widows. “It is important that everyone – whether single, married or divorced – take steps to understand their finances and prepare for their independent future should a relationship break down.”

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