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Reasonable Reduction in Income

Posted by ConfusionReigns 
Reasonable Reduction in Income
September 16, 2022 12:12PM
I understand that in a divorce that both parties have a responsibility to maximise their earning capacity but I had some questions about how that is likely to work in practice because from what I've read in other threads here it sounds like it is more strictly enforced on the financially stronger party in a divorce (i.e. the slightest downward adjustment in the stronger financial party's income seems to be ignored in a settlement but a weaker financial party who has stayed at home to bring up children but now has capacity to work seems to benefit from very low to non-existent expectations that they will do so).

This brings up three questions in my mind that I'm grappling with before I start negotiating my financial settlement:

1) Expectations on Weaker Financial Party

My STBX was a SAHM for 7 years and has been a full time student for the past three years. She also works on weekends for extra income. This means the childcare has been split about 60/40 between us with her doing slightly more. The intended outcome of four years of study was for my STBX to get a job on graduation. Will the court normally have a similar expectation or are they more likely to treat her as a SAHM with a very long trajectory to get back into the workplace?

2) Expectations on Stronger Financial Party

I currently earn nearly £80k but I work in London so there is an expensive commute, the hours have become exceptionally long in just the past year (although flexible enough to perform childcare, I tend to have to go back to my home study a lot in the evenings) and I don't want this to be my life for the next 12 years. I've worked out that I could take a £20k pay cut to work in the county that I live that I wouldn't notice to my net income (every penny over that amount is spent on taxes, commuting or child maintenance). I think that local employment will prevent almost certain burn out and allow me to be closer on hand for the children in emergencies but how would a court treat this decision? Would it be considered a reasonable adjustment or would it look like a deliberate attempt to reduce my income?

This leads me on to my last question about fairness. Does fairness only consider money or does it also consider time? I'm concerned that if the expectation is on me to continue my London job, there will be an unfairness baked in where I have to work extreme hours including evenings when I'm not with the children whilst my STBX would not only have her evenings free but plenty of time in the day when the children weren't there too. It all seems a bit unfair.
Re: Reasonable Reduction in Income
September 16, 2022 02:16PM
1. Assuming your wife has been studying for a degree in preparation for employment (ie a degree in something like nursing rather than history of art) then, yes, it would reasonable to assume that when she has finished she will actually take up that employment.

2. It would look like a deliberate attempt to reduce your income.

On the last point, you should remember that in divorce courts are asked to adjudicate about finances not about quality of life.
Re: Reasonable Reduction in Income
September 17, 2022 10:36PM
The sort of unfairness I'd expected so no surprise there! Would hate to disturb my STBXW's smartphone addiction with a day job, I'd better carry on working 60 hours a week to make sure she can sponge off me instead!

In your experience though and considering a "worst case scenario," if you find a client has been kept on a mortgage for a house that they have no financial interest in because their ex refuses to get a proper job (even though they have capacity to do so), they're subject to a substantive spousal maintenance order that with child maintenance amounts to nearly half their income and they've been lumbered with all the debt, have you ever been able to work out why they don't just quit their jobs and make the whole house of cards collapse?

For example, if I ended up in that situation, my STBXW is still going to be utterly dependent on me to afford the mortgage payments. Out of a deep curiosity rather than any actual intent, if I just stopped working, what could a court actually do about it? The assets would already be in her hands rather than mine, I would have no income to pay any maintenance, she would default on the mortgage and get repossessed and I'd most likely go bankrupt (and have my earning capacity wiped out because my profession can't work when we're bankrupt). Given divorce settlements can be onerous and last decades whereas a bankruptcy lasts on a credit file for just six years, what is the stick that stops an exploited higher earner not taking this road to independence? It must have happened before, what's the outcome?
Re: Reasonable Reduction in Income
September 19, 2022 03:16PM
Well, if there is one things courts get very agitated about it is people who try to stick two fingers up to them. Judges are in general very intelligent and resourceful. How they deal with people like that very much depends upon on the circumstances so they will react as they think appropriate.

Within the context of settling financial matters arising from divorce there are three obvious things they can do (although, like I said, judges are resourceful so this is not a definitive list).

First, they can order transferred to the other spouse more than they otherwise would if they were dealing with a person not trying to frustrate them. This could involve all assets and pensions.

Second, they can order nominal maintenance for an indefinite period so that if and when the circumstances of the unco-operative spouse change the other can apply for substantive maintenance at that point even if it is years in the future.

Third, court orders are endorsed with these words, 'Warning: If you do not comply with this order, you may be held to be in contempt of court and you may be sent to prison, fined or have your assets seized'. Even bankrupts can be imprisoned.

Having said all of this, it is perhaps theoretical. In point of fact - regardless of what you may think - courts do actually try to be fair to both parties and to any dependent children of the marriage.For this reason they do not usually make orders which are grossly unfair to one spouse. They try to be fair. In the small minority of cases where the paying spouse is left with a heavy financial burden it is almost always because there is very little choice. Perhaps there just isn't enough income to go around or there are heavy expenses that need to be met such as school fees. In many cases both spouses come out of the process feeling equally aggrieved which is what sometimes happens when judges strike a balance. They do not go out of their way to penalise one spouse over the other.
Re: Reasonable Reduction in Income
September 20, 2022 10:30PM
It's interesting because much as those approaches sound like they could be useful for enforcement, they're all pretty useless unless there is enough money to go around in the first place. However, I guess small money cases would seldom bother with a solicitor let alone more than a rubber stamping at a court so those cases wouldn't normally be heard.

But from my perspective 1) would be fairly toothless if they'd already given my ex-wife 80% of my assets; 2) would be toothless if someone took the attitude "if I'm going to live in a bedsit, then I'll only earn enough to be someone who lives in a bedsit" and 3) would be toothless unless you had the funds to pay (without which it would be hard to send someone to prison given you couldn't prove they were deliberately not complying). Maybe they could be resourceful in other ways but it sounds like there's not a lot they can really do if the stronger financial party decides to just become lazy like the weaker financial party. The only thing I think they have on their side is our sense of responsibility to our children.

In my situation, for example, it's likely that my wife will get 80% of the assets because she's a loser. There's no nice way of putting it. She was lazy at school, lazy in her 20s, never had a career and is incapable of providing for herself. The only decent financial decision she ever made was marrying me, although unfortunately she's spent most of the money I ever made already so not many assets left to go around! So would her getting 100% of the assets rather than 80% be a threat? Not really.

Would nominal maintenance? Yeah, but it would also be a huge disincentive to work more than the absolute minimum required. I don't think my desire to work locally instead of in London is going to be a problem because the worst thing that will happen is a nominal maintenance order on the assumption that I start earning a higher income again, which I never will because I don't need to.

And would prison really be a threat in my case? Not really, because if a judge did that they would wipe out my earning capacity forever and my wife would lose hundreds in child maintenance a month. It would be a rather foolish move.

I'm going to proceed to find a less stressful local job reasonably assured in the knowledge that the worst it will cost me is 20% of our paltry assets.
Re: Reasonable Reduction in Income
September 21, 2022 10:28AM
Quite apart from the fact that you married this 'lazy' spouse she has actually given birth to and raised your children. Courts don't like people who shirk their responsibilities or who act deliberately in order to thwart the jurisdiction of the court. Like I said, judges are usually resourceful and intelligent people who will often find a way.
Re: Reasonable Reduction in Income
September 21, 2022 12:47PM
It might come as quite a shock to you David, but actually we've both raised them, about 50/50. In fact, I've probably done considerably more than half since the beginning of the pandemic and now they're all in school full time. It's quite normal in these modern times you know!

And on the subject of "shirking responsibilities" the advice on here implies that someone who is so lazy that they don't work at all have "needs" whilst someone who decides to switch jobs from a 60 hour one to a 40 hour one that might come with a reduction in income in order to have more time for their children is "shirking responsibilities." I'm sure there are still some judges out there who take these old fashioned approaches but I suspect a lot of them don't, especially the female ones who have their own careers. I might even stick my neck out and suggest someone who claims they can't work because they're looking after young children actually have to prove it these days (my STBXW tried the old "I can't work, what about the school holidays" nonsense on me and was slightly taken aback when I told her exactly how many days that was, how I'd already agreed with my employer to cover all but 25 days of them and how she could now have any job she wanted).
Re: Reasonable Reduction in Income
September 21, 2022 02:33PM
I don't think there is much point in continuing this conversation. You clearly have your own views regardless of anything I say. However, please note there is a difference between 'giving birth' and 'raising children'. I am sure that is a distinction which does not need to be explained to your wife.
Re: Reasonable Reduction in Income
September 21, 2022 03:04PM
I ignored "giving birth" because its entirely irrelevant to financial settlements, as many "breadwinner" female NRPs with lazy loser spouses will attest to. Ultimately divorce seems to give to weaker financial parties irrespective of whether they deserve it on the basis of a spurious definition of needs. But there are ways to play against the system, if justice so demands. For example, I can safely say I will be living in a non-REMO country if my STBXW is still trying to sponge off me when the children have grown up.
Re: Reasonable Reduction in Income
September 21, 2022 05:03PM
>>I ignored "giving birth" because its entirely irrelevant to financial settlements

No, in your opinion it is irrelevant which is rather different. In fact it is relevant to financial settlements as 'contribution' which is specifically defined as more extensive than contributions measured only financially. Most people would accept that giving birth to children is a significant non financial contribution to a family. One suspects that your wife's view of all this is very different from yours and a court will take into account her view of the situation as much as yours.

Having said that, this is getting no-one anywhere so it is time to draw a line under this.
Re: Reasonable Reduction in Income
September 29, 2022 08:38PM
Okay, we live in a Common Law country. We both know there's no reference to giving birth in the Matrimonial Causes Act 1973. So where in case law does it specifically say that giving birth is a contribution?

We both know giving up work is a contribution as is the raising of children, there is plenty of case law to support it. But specifically in relation to giving birth? There are no cases that I'm aware of.

What does matter is any impact on the income of the person who did the child rearing (in my wife's case, none whatsoever because she was always work shy and can just as easily get the same McJob that she had before our first child was born), where the children are going to live including their future needs (the same in both households because my wife can't cope with the children on her own for too long at a time) and any impact on earnings in the foreseeable future (more than addressed in the proposed division of capital).

I can see all this in case law but not physically giving birth. And of course there wouldn't be, it's utter nonsense for you to suggest otherwise. For if that was the case then someone could give birth to an unwanted child, abuse that child and be paid off for "making a contribution." Don't talk daft David.
Re: Reasonable Reduction in Income
September 29, 2022 10:19PM
Let us know how you get on in court.
Re: Reasonable Reduction in Income
September 30, 2022 01:12AM
Andyk Wrote:
> Let us know how you get on in court.

Oh, we won't need to go to court now, not after she met with her solicitor. Just like my solicitor hers told her:

- Any settlement is based on your earning capacity, which is x;
- Your earning capacity, child maintenance and asset split in your favour means you don't have a very strong case for spousal maintenance at all; and
- You have the capital and mortgage capacity based on your earning capacity to buy your own house, you won't get a Mesher Order for longer than the rest of the fix.

David here is the only solicitor I'm aware of who still seems to think courts will be overly generous and undemanding to weaker financial parties. All the solicitors I consulted and now the one my STBXW consulted all say being a SAHM after a divorce isn't really an option unless there is serious money around (i.e. salaries well in excess of £100k and a lot of capital). They also all say Mesher Orders are an absolute last resort riddled with problems. Maybe it's just the area we live in, but I doubt it.
Re: Reasonable Reduction in Income
September 30, 2022 03:16AM
Lucky you for avoiding court.

The courts are biased towards women. They can act much more vulnerable than we can.
Re: Reasonable Reduction in Income
September 30, 2022 10:02AM
>>David here is the only solicitor I'm aware of who still seems to think courts will be overly generous and undemanding to weaker financial parties.<<

You are very wrong about that. It isn't just a matter of opinion. It is a matter of law. Section 25 of the Matrimonial Causes Act and the first two subsections read as follows:

>>25 (1) It shall be the duty of the court in deciding whether to exercise its
powers .... to have regard to all the circumstances of the case including
the following matters, that is to say -

(a) the income, earning capacity, property and other financial resources
which each of the parties to the marriage has or is likely to have in the
foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the
parties to the marriage has or is likely to have in the foreseeable future;<<

That very much means that the court does take into account the needs of the financially weaker spouse and it is obliged to do so by statute.
Re: Reasonable Reduction in Income
September 30, 2022 02:21PM
I get that. and to be honest...im not trying to screw MY wife over.

HOWEVER! (this is my situation) She is refusing to work! Her solicitor claims she isn't well and under the care of a psychiatrist. Yet I have her recorded a few weeks ago telling me i needed to turn the TV off because she was on her computer, applying for jobs, and needed to concentrate.

That was when we were in the same house. we are not now.

Then they are complaining to court that I have tanked my income potential on purpose. Frankly she has left me with depression and anxiety and i just can't work a full day. I can fake it for a while, but i don't get the work done. I'm going to my GP to get signed off for reduced work schedule. I really don't see what a court can do if I can not work flat out for physical and mental reasons.
Re: Reasonable Reduction in Income
September 30, 2022 03:22PM
Evidence is what matters in such circumstances. No-one expects you to work flat out. However, if you cannot work a full day for physical and mental reasons that will usually require appropriate medical evidence that the condition is permanent and will not get better once the financial issues arising for the marriage have been formally and finally settled.
Re: Reasonable Reduction in Income
October 01, 2022 06:30PM
Yeah, sure David. Except your reading of "each of the parties" seems to be completely out of step with every other solicitor I've encountered. Every other solicitor pointed out its not just me who had to maximise my income but my wife as well and in 2022 that means getting the highest paid job she reasonably can for the hours she can work. I calculated she could earn a net income of £2.2k a month and her own solicitor presumably told her no chance of spousal maintenance on top of child maintenance because you can't prove you need it after you've maximised your income. She dropped her demand for it anyway.

I don't disagree with you that the law considers the needs of the weaker party, only that they don't let the weaker party laze around sponging off their ex. They're expected to do everything they can to earn their own income first and only if there is still a shortfall and an ability to pay by the stronger financial party will there be any spousal maintenance paid. In my case I suspect rising interest rates helped too as by having less of the capital my ability to pay her will be severely compromised too. Perhaps she realised I would demand a more even capital split (or burn through the capital fighting it in court) if she didn't back down. Either way she's given up.
Re: Reasonable Reduction in Income
October 01, 2022 06:33PM
If either of you are lying it will be a Barder event and you can reopen the claim against the other. Lying will nevertheless require evidence from whoever is claiming they can't work.
Re: Reasonable Reduction in Income
October 02, 2022 09:53AM
>>they don't let the weaker party laze around sponging off their ex.

No, they don't. However, that doesn't look to be what is happening here though, is it?

>>My STBX was a SAHM for 7 years and has been a full time student for the past three years. She also works on weekends for extra income.

Does any of that sound like lazing around or 'sponging'? On the contrary it sounds as though your wife is doing more than many people would to improve her situation.

For what it's worth a difference of opinion about earning capacity and the timing thereof is not likely to be regarded by any court as 'lying' or a Barder event.
Re: Reasonable Reduction in Income
October 02, 2022 01:30PM
A difference of opinion wouldn't be a Barder Event no. Differences of opinion would presumably be put forward in the original case or agreed between the parties. I meant if she was lying about not being able to work or he lied about stress (i.e. playing a poor me act) and then she got a job or he kept his old one, that could be a Barder Event. Then again, a court might have other options to account for these eventualities.

On the subject of earning capacity I have often seen you downplay the ability of weaker financial parties to improve their situation. I would ask you to please stop doing that as my wife read it and it caused delays in our negotiations until her own solicitor could explain why you were wrong and told her very clearly she needed to not only get a job but also to get a job that met her earning capacity. It also took her a long time for her to have it explained to her that spousal maintenance is needs based and not based on sharing as is sometimes implied on here.
Re: Reasonable Reduction in Income
October 03, 2022 11:32AM
I have never said that weaker parties should not try to improve their earning capacity if they can, Indeed, most people would notice that almost every post I write about the subject contains the phrase 'earning capacity' rather than earnings. There would be no point in that if it was not to emphasise that it is earning capacity that matters not earnings.

However, when, say, a wife has been a stay at home mother for ten years but she earned £x before the marriage it is not realistic to say that she immediately has an earning capacity of £X. She may or she may not depending upon all sorts of circumstances.

Section 25 of the Matrimonial Causes Act contains the word 'foreseeable' when applied to this. Most courts take the view that if the weaker spouse has a significant earning capacity but has been out of the job market for some time then it is reasonable to allow a period of time for that spouse to realise that earning capacity. That period of time will vary according to individual opinion but most judges are reluctant to be too prescriptive about when exactly that should be.

Having said that, there is no indication here that your spouse is or was lazy or intended sponging off you. On the contrary, 'My STBX was a SAHM for 7 years and has been a full time student for the past three years. She also works on weekends for extra income' suggests that is and was far from the case. That is what matters here not generalised assertions.

The same applies to your notion of what constitutes a Barder event. No matter how you dress it up your illustration is simply a disagreement about earning capacity which courts deal with day in or day out. It is not about 'lying'. Courts often make findings of fact about such things. If, say, one spouse is unexpectedly diagnosed with motor neurone disease a week after terms of settlement are agreed or after a final court order that can properly be described as a Barder event. There is a quantum difference in the two situations.
Re: Reasonable Reduction in Income
October 03, 2022 10:18PM
Again, I feel compelled to (partially) disagree.

I have deleted the rest of this post. I really cannot spend more time debating the opinions of ConfusionReigns.

Edited 1 time(s). Last edit at 10/04/2022 10:51AM by David Terry.
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