What are periodical payments?
Periodical payments (those sums payable on a regular basis after separation) are often the most complex part of financial arrangements following a divorce or dissolution. So what might bring the periodical payments to an end? Can an application be made for the payments to increase or be reduced?
Varying periodical payments
A variation or change to the level or duration of the periodical payments order might happen automatically because it was provided for in the original Court order, or it might form part of a new order due to a successful application being made to the Court to change the original order.
Various factors may render the original order out of date, e.g. changes in earnings, a sudden influx of capital, the start or end of a new relationship or inflation.
A variation to the level or duration of the original order might happen automatically because it was provided for in the original order by “indexation”. Indexation refers to the way that Courts commonly order maintenance awards to increase.
Making an application – what you need to keep in mind
The application to change the original order is called “an application to vary” and the changed order is called “a variation”.
Either party can make an application to the Court to vary the original order. However, this carries risks, with the Court having free reign to make variations, so predicting precisely what will happen is usually impossible. There are also costs involved. The order may go up or down and so getting the best input possible as to the strength of your case (either at Court or in the negotiations) is a crucial first task.
You can’t ask for a variation without showing that there has been a change of circumstance, so you have to show what each side’s position was when the original order was made. It is often harder to piece together the situation now. Whilst you will know your own financial situation, you are likely to know less about your spouse’s circumstances.
Different types of periodical payments
There are two types of periodical payment orders:
- Payments between spouses; and
- Payments for a child/children.
Payments to a spouse must end if the recipient remarries. The original order may also set out various events that will terminate the order.
Payments for a child/children can be made through the Child Maintenance Service (CMS) or payments made by virtue of a Court order. These arrangements are often highly technical because two organisations might be involved. The Court may have made an order, but for most people, there is the opportunity to involve the CMS too. The CMS order will trump the Court order and usually terminate it for all purposes.
Various structures may have been used in the original order to protect against that happening and leave the obligation within the Court system. The CMS usually falls away again at the end of August after A-levels and then responsibility is passed back to the Courts. Against this confused structure, there is encouragement to reach your own agreement. It is crucial to establish whether there is a right to apply to the CMS, as this will terminate the Court order after a short delay. There are also complex rules about how long payments can last.
How Nelsons can help
Getting the process right is crucial. Everyone’s circumstances are different and no one approach will be suitable for everyone. If you need advice on varying periodical payments, please contact a member of our Family Law team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.
The team will be happy to discuss your circumstances in more detail and provide you with more information about the services that we can provide along with details of our hourly rates and fixed fee services.
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