Tuesday, September 04, 2012

Family Lore Clinic: How to do a Duxbury calculation


(This is the first of a new series of posts in which I will attempt to answer questions asked by readers. Family Lore Clinic is aimed primarily at non-lawyers, but may also be of interest to lawyers new to family law.)

Before answering the question, I should first explain what a Duxbury calculation is. The name derives from the case Duxbury v Duxbury [1992] Fam 62, in which the wife's accountant devised a computer programme that calculated a lump sum for her which could theoretically be drawn in equal inflation-proofed instalments (i.e. to use as income) for the rest of her life, so that nothing would be left on her death. In other words, it was intended to capitalise her maintenance claim, so that there could be a clean break.

The calculation is based upon various assumptions, including life expectancy, uniform rates of capital growth and inflation, and a consistent taxation régime. Using these assumptions 'Duxbury tables' can be prepared, setting out the lump sum required for various net incomes, at various ages. Obviously, the assumptions are subject to change from time to time, and therefore the tables will change.

To make a Duxbury calculation is relatively simple. Assuming you do not have a computer programme to do it, you will need an up-to-date set of Duxbury tables. The FLBA publication At A Glance - which I reviewed here - contains a set. Across the top of the table are figures for various net income needs, ranging from £10,000 to £300,000. Choose the one you seek, and look down the column for the recipient's current age and sex, and you will find a figure (in thousands) for the lump sum required. Thus, for example, a sixty year-old woman with a net income need of £30,000 will require a lump sum of £444,000.

Note that Duxbury calculations are only estimates, and that courts are not bound by them.

2 comments:

  1. John, thanks for posting this guide but I thought Duxbury calculations had largely fallen out of favour after White v White and Miller;McFarlane?

    ReplyDelete
    Replies
    1. Yes, prior to White they "were commonly the determinant of awards", as At A Glance states. That is no longer the case, but they are still used, for example as a guide when capitalising a maintenance order.

      A quick look round the net prior to writing the post indicated that there were still a number of people wanting to know about Duxbury calculations, so I thought the post might be useful.

      I was going to mention your point in the post, but thought it was too much detail! :-)

      Delete

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