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Wednesday, Apr. 14th 2010

Boost for First Wives?

Headlines announcing that a man must pay a significant lump sum to his ex-wife may seem surprising, but the ruling makes sense.

It may seem unfair that a large lump sum is payable in relation to a divorce and separation that took place in the 1980s, especially when the husband has been re-married for a long time.

However, the first wife had a maintenance order which was expressed to last during the joint lives of herself and her then husband. A continuing financial obligation existed, irrespective of the second marriage.

The Court can capitalise a maintenance payment so regular payments stop and one final lump sum is made which effectively buys off the future maintenance payments and disposes of them.

The unusual feature of this case is the payment of the lump sum came from the husband’s pension assets, which were built up after he was divorced.

If this were a matter of distributing capital assets, the husband would have been able to present a convincing argument that those assets were created after divorce with no contribution from the first wife.

However, the husband’s pension was not regarded as a capital asset but as a continuing source of income, replacing his previous earnings, and from which it was possible for maintenance payments to be made.

The husband could pay maintenance out of his pension income, or a lump sum could be paid.

Nowadays, maintenance payments ordered for the lifetime of the parties are less common, and are often limited to specific period of time.

Paul Hunt is Head of the Family Department at Kirwans Solicitors

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