Inflation and Maintenance Payments after separation/divorce

Inflation and Maintenance Payments

Paying spousal and child maintenance may be difficult due to the current financial uncertainties. With inflation rates and the cost of living hitting an all-time high, it is only natural to be concerned about your outgoings.

Balancing income and expenses can be a challenge for a person paying maintenance. As a result, a party can consider changing their maintenance arrangements.

If forecasted financial projections are to be believed, the inflation rate in the UK may rise to 10% in the coming years. Any person paying the spousal maintenance has to bear the brunt of the rise in annual inflation. Most ex-spouses cannot afford an increase in maintenance payments as they are not offered a corresponding salary rise from their employer.

The amount of maintenance payment is subject to increment if the provision for an automatic annual variation is included in the divorce settlement. Importantly, divorcing couples have to include rules in the financial settlement to protect maintenance payments and ensure increments in line with inflation rates.

Index-Linking Provision For Maintenance Payment

Depending on the terms of q court order, spousal or child maintenance payments can increase in line with inflation or remain the same. Financial agreements drafted after taking sound legal advice often include index-linking provisions.

The said provision sets out the rules for annual increment in maintenance according to the rise in inflation. Some court orders follow an automated system of increase while index-linked orders are tied to either Consumer Prices Index (CPI) or Retail Prices Index (RPI).

What Happens if the Index-Linking Provision is not Implemented?

Often, index-linking provisions in financial settlements are not implemented, however, that does not mean that the recipient has waived their rights or cannot claim increases in the future. These provisions are legally enforceable, and the recipient party can seek to have them implemented.

Most parties can negotiate to pay all unimplemented increases or only a specific percentage. If the paying party does not agree to pay the additional amount, the recipient can move to the court to claim funds.

What Happens if the Former Partner Can Not Pay Increased Maintenance?

Since maintenance orders are legally binding, a former partner has to make the maintenance payment whether or not they can afford it, unless the agreement is formally varied.

If the paying party is having a hard time paying for the increased maintenance, arrange a meeting with an ex-spouse to work out a solution. Consult a mediator to reach a financial settlement that works for both the paying party and the recipient. If all else fails, get in touch with a family lawyer to assist you with this.

Disclaimer:

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Connaught Law and authors accept no responsibility for loss that may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Connaught Law. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Connaught Law.

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