It’s rare to pay ongoing maintenance in Scotland when a couple divorces or dissolves their civil partnership. It might be paid briefly but a ‘clean break’ is more common.
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. This can help to make sure 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. 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 an order against one party to pay a regular income to the other after divorce or dissolution. It is an award that can provide a person with an income for certain potential future financial needs.
It can be awarded up to three years from divorce – or longer if it’s necessary to relieve one party from serious financial hardship.
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.
If one partner is to receive periodical allowance, it would only generally be paid for a maximum of three years. Very rarely, it can be paid for longer. For example, when the partner receiving periodical allowance has an illness or disability that means they would be in severe financial hardship without this payment. In these cases, periodical allowance might be paid until they die, remarry or enter into a new civil partnership.
When is periodical allowance awarded?
Periodical allowance is only awarded if one person needs financial support but the other person doesn’t have the capital or transfer of property, or pension sharing wouldn’t be appropriate, or sufficient lump sum for a ‘clean break’ settlement.
A clean break instead of periodical allowance
Periodical allowance is only paid if you or your ex-partner needs financial support after divorce or dissolution and there isn’t enough money for a ‘clean break’ order during the proceedings.
This means it’s unlikely you could ask to turn a periodical allowance into a lump sum payment. But it is 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, it’s worth considering insuring them 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 their life.
It doesn’t need to 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.
