Clean Breaks

A clean break involves a capital sum sufficient to meet the wife’s:

• capital needs; and
• an amount calculated to meet her income needs for so long as she may otherwise have required maintenance from her husband. 

The recipient of the lump sum is expected to spend not just the income but also the fund capital to meet her income needs. 

Actuarial tables have been produced which calculate the lump sum which if invested on certain assumptions as to:

• life expectancy
• rates of inflation
• return on investments
• growth of capital
• the incidence of income tax

will produce enough to meet the recipient’s needs for her life. These tables are known as Duxbury calculations.

Duxbury calculations example

A 53 year old female has a projected life expectancy of 32 years. In order to provide that female with £16,000 net of tax in each year, index linked, for the rest of her anticipated life, a capital sum would need to be paid to her of £259,000. If the annual net expendable sum rises to £20,000 the tables indicate a capital payment of £340,000.

These tables should be used as a very general guideline only. Discounts in these figures are generally negotiated because of a wife’s own earning capacity, the prospect of a future inheritance by the wife and the prospect of her remarriage and so on.

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