Capitalisation of maintenance is one of the ways in which a court can help to achieve a clean break between the parties following a divorce or dissolution of a civil partnership.
What is a clean break?
When a couple separate it can be a natural reaction to want to sever all or as many ties as possible between the two of them. There can also be a desire to make a fresh start without any ongoing financial commitment. With this in mind, it should be noted that the the court has a duty to consider the possibility of a clean break on divorce or dissolution.
When can it happen?
In making such a consideration one of the tools which the court has at its disposal is the capitalisation of maintenance. This involves making an assessment of future maintenance payments and then calculating a present day value for these amounts. This can potentially be a detailed and technical exercise but once the figure has been decided the court can order the payment of that amount as a lump sum instead of the ongoing commitment into the future.
This might be appropriate where one party has sufficient capital to be able to make such a payment there and then. Alternatively it is also an order which is open to the court during the period of the maintenance. So, if one party came into a sufficient amount of money for one reason or another (such as inheritance) they might decide to apply to the court to capitalise the remaining part of the maintenance in order to end the ongoing commitment.
The great benefit of this process is that it can help the parties to have a fresh start financially as well as the emotional benefits that that might generate. But it is not without risk. The whole process of assessing the value of future payments is fraught with the uncertainty as to exactly what that future will hold. For example, ongoing payments would come to an end when the person receiving them remarries. This highlights the importance of looking at all of the circumstances when considering whether the capitalisation of maintenance might be appropriate.
In the right circumstances capitalisation of maintenance can be a powerful means of helping the parties to achieve a clean break. But much depends upon the particular facts of each case and careful consideration needs to be made of the material and emotional factors which might be relevant not just at the time but also into the future.
Campions Solicitors have substantial experience of these issues.If you would like further advice or wish to discuss
in general please contact our Director Daniel Priest on DPriest@campions.co.uk.