In some finance cases involving married couples, family practitioners use a method of calculation called the “Duxbury Calculation” which attempts to quantify the needs of a financially dependent party. This calculation takes into account the sex, age and amount needed each year to produce a figure which is intended to provide a single lump sum to meet a party’s needs, usually for the rest of his/her life.
The term derived from the case of Duxbury v Duxbury  1 FLR 7 . The calculation assumes that the lump sum paid will be invested to achieve a capital growth and income yield. This is assumed to be at rates after income tax has been paid on the yield and capital gains tax has been paid on the realised gains. This is then divided over the estimated life expectancy of the receiving party with the aim to have the lump sum exhausted at the end of that anticipated expectancy.
Duxbury calculations are used where the parties are trying to achieve a clean break but where one party has been financially dependent upon the paying party during the marriage to the extent that lifetime spousal maintenance would have been payable. There has been some criticism over the accuracy of this formula when there are young divorcing couples with a short marriage as the calculation results in a generous award whereas for older couples with a long marriage, this has resulted in a small award. This situation is also known to family solicitors as the ‘Duxbury Paradox’.
It is acceptable and considered normal practice to use the calculation as a foundation and to then adjust the figure by considering additional factors such as the potential and existing earning capacity of the dependent party, any children of the family reaching adulthood and thus reducing the need for a larger property, or the dependent party reaching retirement age and receiving the benefit of a pension.
When dealing with financial matters in a marriage breakdown, there are many complex factors which need to be carefully considered. If you are in the process of dissolving your marriage or about to embark on the process, it is vital that you obtain clear and accurate legal advice early on. Our specialist solicitors have the experience and knowledge to assist you. Serving Bedford, Northampton and Milton Keynes, our lawyers can help you with your family law and divorce matters. Contact us on 01234 889777 to take advantage of our free consultations.