England, us approach alimony differently

 

            Posted on March 20, 2016  

              England, US approach alimony differently



Q.  
 I’m a citizen of England. Before I got married, I acquired a substantial amount of property through both my hard work and inheritance. I married an American woman. We jointly own a home on Nantucket in which we now live about half the year. We have other assets in the USA. The other half the year we live in the U.K.

Our 30-year marriage is at an end. The questions are: Should I file for divorce in Massachusetts or in England? Should I stop working and let the Executive VP take over the company?

A. 
 This column only addresses the alimony issues. Important tax issues will be covered next Sunday.

Both English and Massachusetts law requires the judges to make a complete and full divorce. As discussed in last Sunday’s column, both jurisdictions achieve half that goal by ordering a final division of property. The other half involves awarding alimony. Of course, if there were child-related issues – not mentioned by you – there would be additional factors.

In England, if you have enough assets to make a clean break, the judge will order you to pay a lump sum of “support” to your wife. That lump sum is determined by first deciding the recipient’s “reasonable needs”. About 2000-some English judges, having found the payor’s earning capacity is also a marital asset, determined a lump sum by using a “Yardstick of Equality”. In 2008, the English appellate court started to push back against that “yardstick”. So that issue is in flux.

Once the annual payment is determined, the English judge will consider “The Duxbury calculations.” Those tables assume a 3.75 percent investment-rate-of-return plus a 3 percent annual increase in the capital. Because those rates are higher than the reality of the current market, not much, if any, weight is currently given to these tables.

Next, the judge determines the recipient’s life expectancy and does the math. That sum is then reduced by an appropriate rate of return. Put another way, if the yearly needs/yardstick is $300,000, times your spouse’s life expectancy, less a discount for current value, your lump sum could be $7 million.

Massachusetts judges cannot make orders based on guesses about future events. So here, if ordered, alimony is paid only weekly or monthly. And, you pay until the death of you or your wife, her remarrying or cohabiting, or until you attain normal retirement age. When you reach 65 �, even if you’re still working full time, your alimony stops. But, if your ex-wife then proves by clear and convincing evidence that she still needs alimony, the judge can order you to continue to pay alimony, although the amount could go down, or up.

So which is better for you, the English one-time payment approach or the Massachusetts payment over time approach?

To paraphrase Polish poet Stanislaw Jerzy Lec, “No lawyer in an avalanche of laws ever feels responsible for the client’s decisions.”