Cost of living impact on initial assessment of spousal maintenance
Ofgem announced at the end of August 2022 that the energy price cap will increase to £3,549 per year for duel fuel for an average household from 1 October 2022. Even with Liz Truss’ announcement to limit this increase to an average of £2,500 per year, this will see a significant rise for most families. The Bank of England forecasts inflation to continue to rise in the coming months, peaking at 13.3% in Q4 2022, which will result in many other costs also continuing to rise. Although the cost of living crisis and rapidly increasing energy costs are at the forefront of people’s minds for a number of reasons, it is particularly important to consider the effect these issues will have on your financial position and ultimate financial settlement when separating and divorcing.
When considering financial arrangements following separation, couples need to factor in their anticipated living costs and income needs. These are detailed in schedules of outgoings and should account for any changes to lifestyle, such as childcare costs, increases in mortgage payments, rental payments on new properties, etc. The increased cost of living will, inevitably, impact everyone’s future outgoings, and these increased costs must be incorporated into the schedule of outgoings so that these can be factored into your financial settlement with your ex.
It is a well-established principle that if one person simply does not have sufficient income (when factoring in all earned income, state benefits, tax credits and child maintenance) to meet their reasonable outgoings, their ex can be obliged to continue monthly financial support, known as spousal maintenance. The payer of any maintenance will also need to factor these changes into their budgets as they will also have to deal with rising energy prices and costs too. These competing demands is what a Court will ultimately need to balance when considering whether spousal maintenance should be paid and if so, at what level and for how long.
By taking these contemporary issues into account in your financial disclosure, it will enable both you and your ex to best understand each other’s positions and put forward more appropriate and realistic proposals for settlement. If there are Court proceedings ongoing, it will also enable a Judge to better understand the financial landscape and inform the orders sought and ultimately made.
Our experienced family team are well used to ensuring the costs of living are adequately reflected in discussions about financial matters following separation. If you have any questions or concerns about your particular circumstances please do not hesitate to contact us.