It’s very rare for ongoing maintenance to be paid in Scotland when a couple divorces or dissolves their civil partnership. But occasionally it may be paid for a short period of time. A ‘clean break’ is much more common. Read on to find out what’s involved.
- Understanding lump sum payments
- What is periodical allowance?
- A clean break instead of periodical allowance
- Insuring periodical allowance payments
Understanding lump sum payments
When you’re working out how to divide your property and assets, it might make sense for one partner to pay the other a lump sum so that things are divided fairly.
A lump sum payment can also be made so that one partner can buy a house after the divorce or dissolution of a civil partnership.
Paying a lump sum
A lump sum payment doesn’t have to be paid in one go, although it often is.
There are situations where it can be paid in several instalments.
For example, either the person paying the lump sum in instalments or the one receiving it can apply to the court to ask for the date or method of payment to be changed, if their circumstances change.
But you can’t ask the court to increase or reduce the amount paid.
What is periodical allowance?
Periodical allowance is only awarded if one person needs financial support and lack the capital to pay an enhanced lump sum for a ‘clean break’ settlement after divorce or dissolution.
In this case it might be paid:
- To allow one of you to adjust to the loss of the other’s support
- To allow one of you to cope with the cost of childcare for a child under 16
- Where one of you would suffer severe financial hardship because of the loss of support or income
When is periodical allowance paid?
If one partner is to receive periodical allowance, it would only generally be paid for a maximum of three years.
In very rare circumstances, it can be paid for longer, such as when the partner receiving periodical allowance has an illness or disability that means they would be in severe financial hardship without this payment.
In such cases, periodical allowance might be paid until they die, remarry or enter into a new civil partnership.
A clean break instead of periodical allowance
Periodical allowance is only paid if you or your ex needs financial support after divorce and there isn’t enough money for the enhanced ‘clean break’ order in the first place.
So that means it’s unlikely you could ask to turn a periodical allowance into a lump sum payment.
However, it’s possible if there’s a significant change of circumstances.
It means that instead of receiving ongoing payments, you or your ex-partner would receive a final lump sum payment through a clean break order.
Capitalising periodical allowance can only be done if you both agree to it or by applying to the court.
Insuring periodical allowance payments
If you receive periodical allowance, you should consider insuring the payments so that you continue to receive an income were your ex-partner to die.
This involves either you or your ex-partner taking out a life insurance policy on his or her life.
It need not be expensive and the policy can provide a lump sum or monthly payments if he or she were to die while you were still receiving periodical allowance.
Your next step
This article is provided by the Money Advice Service.
