Video: How to request a pension valuation on divorce

May 14, 2012 in Disclosure, Form E, Pensions by DivorceFT | No comments

Completing Form E within divorce proceedings is difficult enough but one of the main mistakes is to underestimate the length of time it takes for pension providers to cough up the pension information.  But in the first place, it helps to submit the correct document: this is Form P (Pension Inquiry) to each pension fund holder. Using Form P is essential, otherwise the pension providers will not know the context of your request is a divorce and therefore will not give you the information needed for Form E.

Here is a short video on:

  • how to find the Form P for free on the internet;
  • the relationship between Form E and Form P;
  • how to complete Form P.

Form P is essentially used for the majority of private pension funds.  A different pension information request form is used if you are, for instance, in the armed services,  a police officer or a teacher.  As ever, I can always post on these exceptional circumstances if there is enough interest.

Tags: , ,

Pension Service delays for divorce calculations

May 9, 2012 in Pensions by DivorceFT | No comments

Pension computer says 'No'

Almost invariably, when consulting a family divorce lawyer, you will be told that pension sharing may be an option in your financial settlement.  You will asked to obtain the capital value of your pension fund which may be a private pension, a company pension scheme or public sector pension.

What can be forgotten is that the capital value of a State Second Pension (S2P), also called an Additional State Pension should be obtained.  It has, in my experience, been overlooked by lawyers who should know better.  If a spouse has not contracted out of the old style SERPS scheme and put their NI contributions into a private, personal pension then the value of the State Second Pension may be very tidy indeed.  Especially someone who may have had a working life of 30 plus years on a full-time basis.  This fund can also be split or at least taken into account when dealing with other capital assets in a marriage.

Delay

Well, after the recent delays in obtaining pension capital values for public sector pensions, I am now receiving letters from the Pension Service telling me that computer upgrades are going to cause a delay in the production of the information needed for the State Second Pension valuation.

Unfortunately, the letters do not tell me or my clients how long we may have to wait.

If anyone from the Pensions Service happens to read this blog post please feel free to let me know if you have any idea how long the delay will be.  And don’t say it’s like a piece of string…

Tags: ,

Child maintenance orders and the CSA

April 28, 2012 in child maintenance by DivorceFT | No comments

Equality of arms and divorce outcome can be undone by a CSA assessment

Every divorce should result in a clear financial settlement.  Whether the family court order is given by consent or handed down by a judge at final hearing, each spouse should have negotiated a divorce settlement that makes sense in the round.  No one wants a coach and horses to be driven through a delicately balanced court order just months after it is given.  It wouldn’t be fair, surely?

This is the situation facing Jane, who asks me:

Please can you tell me whether I am able to take my ex husband back to court to enforce the court order for child maintenance that the CSA have reassessed and reduced.  There has been no change in his circumstances other than a salary increase but he no longer wants to pay what was agreed in our settlement and has reduced payment by £300 per month. He only pays for the children, I have no claim on pensions etc. and he does not pay me maintenance. I gave him £20,000 on divorce based on what he would pay for the children. He has now been able to disregard the court order but, of course, has not returned any of the money I gave him. It just seems unethical to me and leaves us in dire financial straits.

I would like to know whether the CSA have the final say on this matter or whether I can go back to court to challenge their decision.

Jane’s child support enquiry reflects one of the great problems for divorce clients who have reached what is hopefully a carefully balanced divorce settlement taking into account capital claims and income claims, including spousal maintenance and child maintenance.  The problem is this: even if there has been a family court order for child maintenance made at the time of divorce, provided the order was made after 3rd March 2003 and has been running for more than one year, then either spouse is able to ask the CSA to deal with the child maintenance aspects.  The child support element of the family court order is therefore made redundant.   The family court can no longer deal with the child maintenance element.  That carefully crafted and balanced family court order is now in danger of looking very lop-sided.

It would appear from what Jane tells us, that the £20,000 lump sum she agreed to pay her ex-husband was more than she would have agreed to, if she had known that the amount of child support maintenance she would receive in the short to medium term would be reduced.  I do not know how much Jane was receiving under the original court order but I’m guessing that the reduction of £300 a month is an absolute killer.

Jane`s ex-spouse will now be assessed to pay child support by the CSA until the children reach the age of 17 (or 19 if they are in education or vocational training).  The family court will have no further role to play on child maintenance – unless there are some exceptions, such as the costs of meeting the needs of a severely disabled child, which do not appear to arise in Jane’s circumstances.

Jane tells us: I gave him £20,000 on divorce based on what he would pay for the children. He has now been able to disregard the court order but, of course, has not returned any of the money I gave him. It just seems unethical to me and leaves us in dire financial straits.  I have not seen the order Jane obtained from the family court, I do not know whether it was given after a disputed final hearing or by consent.  If solicitors were involved then as advisers for Jane they should have warned her of the possibility of her ex-husband being able to involvethe CSA at a later date.  Clearly, Jane`s ex had calculated that he would pay less under the CSA regime than the amount of child maintenance he had agreed to meet under the family court order.  It is important to note that the family court cannot give an order for child maintenance unless both parents are in agreement for the order to be made.  So, if I understand Jane correctly, there may well have been an arrangement for the payment of 20,000 provided that child maintenance at the agreed level continued to be made.

The value of (good) lawyers?

This is where the lawyers are meant to earn their corn.  If Jane had divorce lawyers (and was not self-repping) she should have been told in words of one syllable that her ex-husband could go to the CSA.  Those same lawyers should have explored with Jane certain arrangements that could have been recorded in the family court order that would have protected Jane against the possibility of the CSA becoming involved.  One such mechanism would have been for Jane’s ex-husband to agree to make up, on a pound for pound basis, any shortfall in the amount of child maintenance ordered by the court once the CSA became involved.  There are a number of solutions that could have been explored but if Jane had divorce lawyers at the time and is unclear how she has been left so exposed she should contact them and ask for an explanation.

In short…

So, on the facts known to me, Jane cannot go back to the family court.  The CSA deal with matters now.  However, Jane is entitled to ask the CSA to check that her ex-husband has given full financial disclosure to the CSA.  I do not know the details of the case.  The CSA assessments are based, in the main, solely upon the net income of the non-resident parent.  But Jane may want to ask the CSA to investigate further, and ask for what is called a ‘variation’, if any of the following scenarios apply:

  • Her ex has capital assets (but not business assets or equity in his home) over £65,000.  If so, the CSA may deem the asset to produce an income of 8% per annum and this will be factored into overall income and increase the maintenance assessment.
  • He is taking dividends through a company rather than a wage or retaining significant capital in his company which could be taken as income
  • He is diverting income elsewhere, such as through a new partner
  • Her ex has a lifestyle that is clearly inconsistent with his declared income to the CSA.

 

 

Tags: , ,

Divorce proceedings and Form E changes

April 17, 2012 in Form E by DivorceFT | No comments

Statement of truth for new Form E

There’s nothing like a rule change in the world of family law and divorce proceedings to get me excited. What divorce procedure rules could change this time, I ask myself?  Could it be the binning of the wilfully old-fashioned and plain stupid requirement for one spouse to put all the blame for the breakdown of the marriage on the other spouse before a divorce can be granted?  Sadly no.  This Government, like the others before it, has no backbone.

The tinkering is all about making the language of law a bit clearer.  One (apparently minor) change is a further assault upon the Latin words that lawyers (but mostly, clients) still love to use.  There shall be no more mention of the word AFFIDAVIT.  Absolutely verboten.  Forget you ever used it and call it a Statement instead.  This means that clients will no longer be SWORN to their affidavits but rather VERIFY their statements of truth.

Now, don’t get me wrong: I’m a modern kind of guy.  I can make my own sandwiches, iron my shirts and think it’s perfectly proper for grown men to cry (under certain, rigidly defined circumstances).  But what is wrong with Affidavit?  It rolls off the tongue nicely, especially after a few practice sessions; it sounds vaguely grand, dustily majestic and quite deserving of the gravitas associated with being SWORN to it.  But no, it has now gone the way of the Dodo.  My clients don’t want statements of truth, they want the full monty AFFIDAVIT.  It is a serious process and they want to be seen taking it seriously.  A statement of truth is the cheap, shiny toilet paper painfully encountered in your local park’s public loos.  An AFFIDAVIT is a plump roll of three-ply cushioned velvet found in the Ritz cloakrooms.

I feel much better now that I’ve got that off my chest.  When I calm down fully, I will deal with the changes brought about which have some relevance to the patient readers of this blog.

Tags: , ,

UK Budget 2012: impact on divorce and family law

March 22, 2012 in child maintenance, spousal maintenance by DivorceFT | No comments

Contains more than the Chancellor’s sarnies

Mr Osborne’s UK Budget 2012 impacts on us all: but here is my kneejerk reaction to the changes that may be relevant for divorce cases,  and family law.  The Budget is portrayed as fiscally neutral but are there any nasty surprises in there for family lawyers and their divorcing clients?

    • Income tax personal allowance threshold is raised. For spouses on low income, working part time, this is a marginal improvement.  The Chancellor claims 2 million people will be taken out of tax altogether.  We will see.
    • Tax benefits, child benefits and housing benefits appear to be linked to CPI instead of RPI which is a clever, cumulative cut in the true value of these payments going forward.  I highlighted the CPI/RPI ruse in a previous post.  Expect lawyers acting for wives to continue to press for their client’s spousal and child maintenance payments to be linked to RPI to mitigate the impact of a realworld devaluation in child benefit and tax credits as the years go by.  Lawyers for the husband may argue the inflation link should be to the lower CPI measure ”If it’s good enough for Mr Osborne…”
    • The big headline for Child benefit is threshold at £50,000 and taper up to £60,000.  A parent with 3 children earning £60,000 will lose approximately £2,400 per annum by these changes.  This will need to be factored in to any negotiations on child maintenance payments if an anticipated future pay rise sees the loss of such benefit. 
    • Spousal and child maintenance will continue to attract no tax relief at all to the person making the payments.  The person receiving the payments will not pay tax upon the same. 
    • NewBuy scheme on new build properties up to value of £500,000 could be helpful for individuals who have left a matrimonial home and who need to re-house themselves.  A deposit of between 5% and 10%  will be enough to secure a property instead of the market standard of 20%.  In matrimonial cases where liquid capital is tight, this could be helpful.   
    • Public sector pay is to made ‘more responsive.’   Not clear how this is going to pan out: some commentators say public sector workers in the North of England could find their pay frozen.  Differentials will presumably grow, quite intentionally, between workers in the same jobs but in different parts of the country.  I would certainly want to know whether my client was going to be finding themselves in a ‘more responsive’ part of the jurisdiction if spousal maintenance or child support issues were in question.  If I am acting for the payer of maintenance in those circumstances where the value of their pay is going to be eroded, I would be resistant to agreeing any RPI link at all.
    • VAT exemptions will remain on food, clothes and books.  Anyone raising kids knows just how much the little darlings cost so this is a relief for those on tight budgets receiving modest child support maintenance payments.

That’s it folks.  For now.

 

Tags: , , , , ,

Arrears of maintenance following divorce

March 19, 2012 in child maintenance, Enforcement, spousal maintenance, Variation maintenance by DivorceFT | No comments

Many a mickle makes a muckle

Spousal maintenance issues following divorce continue to dominate my post bag.  In particular: the automatic variation of maintenance following a divorce financial order by reference to the RPI.

What has been genuinely illuminating to me as a family law specialist is the extent to which there is boundless room for confusion over the interpretation of a maintenance order, whether spousal or child support.

This week’s postbag:

John (not his real name) had read some of my blog posts and then asked:

Re: Variation of Maintenance agreement. Could you clarify how it works for second and subsequent years.  My ex-wife and I disagree. She says that the shortfall is cumulative. [further details omitted to avoid personal identification]
The details provided by John made it clear that he had been paying the maintenance ordered by the court but, for whatever reason, the link to the RPI which was intended to increase the amount of the maintenance each year, had gone by the wayside. So, the sum of maintenance approved by the court in the original order has not been increased, as was intended by the order, for three years.  John and his ex cannot agree  how the shortfall created in the past is calculated or applied so they can get back on track.

The solution

I suggest the art of the practical.  Strictly speaking, the non-payment of the inflation-linked increase each year constitutes arrears.  For example, let’s say the original sum ordered by the court is £1800 per annum.  At the first year anniversary the application of the RPI link, if it is applied, would have increased the original sum.  Let’s imagine it is by £150 per annum.  So the second year sum of maintenance is £1950 per annum.  Upon the second year anniversary let’s imagine the RPI increase is £250 per annum.  The increased sum paid is therefore £1950 plus £250 = £2,200.  Continuing on this path, the third anniversary is (let’s say) an increase of £400.  That is, £2,200 plus £400 = £2,600.

I have laid out below how the missed RPI increase every 12 months would accrue  following an original order for maintenance.

So, by month 48 the arrears would be £1350.  This needs to be paid by John to bring the maintenance up to date.  If John refused, his ex could apply to the court to enforce the non-payment and ask the court to fix the payments at the correct level for month 48.   However, where there are arrears that are more than 12 months old, John’s ex would need to ask the court for permission to recover these older arrears.  John may ask the judge to remit (waive) the arrears older than 12 months.

In reality, the legal costs of going back to court would be prohibitive if there is no access to legal aid, and it would be stressful.  Better, surely, to fix the correct amount at month 48 so it is at the right level going forward and prevents any further arrears building up.  Then, the older arrears could be paid in a series of lump sums over the next year or 18 months.  So, divide the arrears by 12 or 18 and add on to the present monthly payments of maintenance.

Remember, if John and his ex are finding it hard to negotiate the precise way to get themselves back on track, they could consider a mediation session to help them get it sorted.  One session should do it.

Tags: , , , ,

Child support and maintenance after divorce

March 16, 2012 in child maintenance, Enforcement, spousal maintenance, Variation maintenance by DivorceFT | No comments

Who knows what the future holds?

My postbag continues to bulge with divorce enquiries focussing on child support issues and spousal maintenance.  The conclusion of a divorce does not, of course, mean the end of disputes or problems over child maintenance or the intepretation of family law court orders. Here is my most recent query:

Following a very messy and financially costly divorce, a court order was made that included a RPI increase at the insistance of the petitioner. The only alternative I had was to go througth a full court procedure which could have significantly increased the fees that at that point were spiralling out of control. The date of this increase is in effect from 20012 (this is the actual date on the court paper). My ex wife has not ‘reminded’ me about this probably because she is still being persued by her solicitor for the oustanding fees that she ran up during the divorce-since the divorce she has instructed other solicitors in an attempt to entangle me in more nonsense which I refuse to engage in. I normally direct the new solicitor to the original one where the fees remain oustanding and this tends to silence the correspondence for a while until a new instruction is generated.

I have and will pay the monthly child maintenance fees until my child reaches the age of 18 or until she leaves full time education as stipulated in the court order. It was my ex-wifes solicitor who drew up the order and maintenance payments will cease approximately 2018 but as stated the increase id documented as 20012-what are my options?

To begin with, I’m not sure whether the order referred to above contained spousal maintenance and child support (maintenance) or just child maintenance and this attracts the RPI increase.  But, no matter, since the principles remain the same for either order (with one exception I’ll return to below).

    • the order is made against the payor so it is enforceable in case of default.  I consider that this includes any failure to comply with an RPI increase ordered by the court (even if it was by consent).
    • the purpose of the order is two fold - an automatic increase in the maintenance each year prevents it losing its true value over a period of years and it makes it unncecessary for the parties to have to apply back to the court for a variation (at significant legal cost) in the amount being paid.

Your options

Carry on as you are. 

    1. But you know the increase is due and the defecit will build up.  You may (eventually) receive a solicitor’s letter asking for payment at the new level (and threatening enforcement).  If you ignore it and an application for enforcement is made, be very careful as you could end up on the wrong side of a costs order.  Especially if a judge decides it is not a case of ‘can’t pay’ but ‘won’t pay’.
    2. The application back to court could be for a variation of the amount of maintenance as well as enforcement.  Your ex may think you could afford to pay more and ask for the increased amount to be index linked as well.  If this happened you are entitled to ask the court to decrease the amount and it will be a question of fact as to whether the judge thinks the original amount under the order should go up or down, or remain the same.  It is possible for an attachment of earnings order to be made at the same time (if you are not self-employed) as a way of ensuring that the right amount is paid each month going forward.
    3. If, by the time your ex made an application to the court to enforce or vary, your arrears were more than 12 months old, your ex would have to ask permission from the court to recover any arrears older than 12 months.

Apply back to court yourself

If you are struggling to pay the original amount you could apply back to the court yourself to vary the amount downwards and ask the court to ‘remit’ (waive) any arrears that may have built up.

Or, just pay the new amount

You could calculate the increase in the maintenance , start paying it and have a quiet life.

I mentioned an exception above.  This is where the order is for child support/ maintenance.  This would only be in existence if you and your ex agreed to the order.  In the absence of agreement, the family court has no jurisdiction in child maintenance issues (with some further exceptions, I won’t mention here!).  In the absence of agreement, the CSA will deal.  It is possible for either party to an agreed child maintenance order in the family court to wait, to all intents and purposes, a period of 15 months from the date of the original order and then ask the CSA to take over so the family court will no longer deal with the child maintenance element.

Tags: , , , , , ,

Can my ex make a claim against my estate when I die?

March 6, 2012 in spousal maintenance by DivorceFT | No comments

Interesting question received recently:

In the Consent Order I am ordered to pay my ex-wife spousal maintenance of £0.01 per annum until, the death of my ex-wife, remarriage of my ex-wife or further order terminating payments.

My question is:

If I was to remarry in the future and die before my ex-wife, would she have any claim on my estate? This is obviously a concern of my current partner as she owns the home we live in together and is loath to allow my ex-wife claiming part of this (which she has rightfully bequethed to her two children) should I die. What are the chances of a successful claim?

And the answer:

Well, the answer lies partly with a statute called: The Inheritance Act (Provision for Family and Dependants) Act 1975 (I’ll just refer to it as the Inheritance Act!).

In theory, yes, your ex-wife can make a claim against your estate for so long as she has the benefit of her nominal (£0.01) spousal maintenance payments per annum.  I am presuming that the consent order did not dismiss her claims under the Inheritance Act (unlikely but I have seen it happen in badly drafted orders).  It does not matter if you re-marry, your ex-wife would still, potentially be able to make the claim.  However, as is clear from the consent order, she would lose the benefit of her nominal maintenance order if she re-marries, dies or you have a further order from the court (this would be a variation order).  If her nominal maintenance order came to an end in any of these circumstances then the ability to claim against your estate also comes to an end.

The odds of a claim?

Although I cannot (and do not) give specific advice on this blog, I would only observe that the nominal spousal maintenance payments were awarded to your ex-wife on divorce because she must have had sufficient income means of her own to not need more substantial payments from you.  The reality would therefore be that if you were to die, she would not suffer financially by losing the £0.01 per year.  She is therefore unlikely to be advised to make any claim against your estate.

But… if your ex-wife were to have the benefit of a varied maintenance order against you in the future, let’s say £5,000 per annum because of a change in her circumstances, then she may be advised to make a claim against your estate under the Inheritance Act.  The variables as to whether she would go ahead are numerous, not least the size of your estate. Incidentally, your present partner (and perhaps your future wife) will not have her capital assets exposed to your ex-wife’s claims under the Inheritance Act so long as they remain in her sole name, such as her property in which you both live.

A warning…

But just be aware of one little known feature of the Inheritance Act.   If, at the point of your death, your own a property jointly with your partner or future wife, and you were to die, then your share passes automatically to your partner/wife.  It becomes her property absolutely.  In those circumstances you might think the property would then be safe from your ex’s Inheritance Act claim.  But it is possible under an Inheritance Act claim to ask a court to bring back into your estate, the value of your share in that property so it can be the subject of a claim.  Not often used but available to the court if required to do justice to any claim.

Tags: , ,

Enforcement of Maintenance video

March 4, 2012 in child maintenance, Enforcement, spousal maintenance by DivorceFT | No comments

Here is a video: setting out the forms referred to in my last post on this subject:  enforcement of maintenance by attachment of earnings.

 

 

 

 

Tags: , , , ,

Enforcement of maintenance: Attachment of Earnings Order

February 25, 2012 in child maintenance, Enforcement, spousal maintenance by DivorceFT | No comments


Maintenance payments can be enforced by an attachment of earnings order

 

It is all well and good to obtain an order for spousal or child maintenance but what can you do when the person ordered to pay it, won’t pay?  I received the following enquiry:

Could you help me please find information to support an application to the court for an attachment of earnings order which I should like to apply for as my ex-husband does not comply with the RPI increases, and refuses to pay by standing order.

This cry for help is referring to the situation where the payer of maintenance (what lawyers call periodical payments) is paying the amount of maintenance originally ordered by the court but is not increasing the amount each year using an automatic upwards variation linked to the Retail Prices Index (RPI).  If you’re not sure what I’m talking about but think it might apply to your situation then just click on the Category for “Spousal Maintenance” on the right hand side of this web page.  This will bring up my previous posts on maintenance and I hope you can follow them without too much trouble.

In the present case, it is possible to make an application to the Court for an attachment of earnings order so that the employer is compelled to deduct the maintenance from the payer’s wages and send it directly to a specialist administrative unit at the court who will then pay it to the person with the benefit of the maintenance order.  This procedure exists and is available to just about anyone who is owed money by another person.

The ex-husband’s refusal to  apply a court ordered annual increase in line with the RPI will create arrears.  Please note: if the  arrears are more than 12 months old then it will be necessary to apply to the court for leave (permission) to enforce these older arrears.  

The application will be made back to the county court which made the original order. The request for the order will be made on Form N337.

New procedure….

The Attachment of Earnings form N337 is not very well suited to dealing with arrears of maintenance.  It needs to be amended accordingly.  Also, strictly speaking the amount to be deducted in the attachment would be limited to the modest amount of increase attributable to the RPI uplift that the ex-husband is refusing to pay.  But it would be better for the court to specify the new amount (the original amount plus the RPI uplift) to be attached.  Unfortunately, Form N337 is not very flexible.

I am going to presume the application is to enforce the payment in a county court.  The maintenance would be a ‘qualifying periodical payment order’ under the Maintenance Enforcement Act 1991 (‘MEA’).  I mention this because I am not sure if the ex-husband in this case was originally ordered to pay the maintenance by standing order or if the order was silent and the ex-wife simply wishes that he would pay by standing order because his payments are erratic.  The MEA is helpful because section 5 (a) allows the court to specify that the payer of maintenance must do so by standing order.  The Application to enforce payment of maintenance can therefore contain a request that the payments are made by standing order.

The Family Proceedings Rules 2010 (FPR) normally require a person making an application to the court to have attended a mediation meeting first but it IS NOT required in the present case since it deals with enforcement.  But I would recommend sending a recorded delivery letter to the ex-husband setting out his breach of the order and the amount required to put it right and asking for those arrears to be paid within 14 days.  State that otherwise there will be an application to the court and a copy of the letter will be attached to the court application.  Point out you will ask the court to make an order for costs in your favour.

The FPR have introduced new rules for the enforcement of existing orders including those for payment of money. This is dealt with under Part 33 of those rules.   By all means, if you are fairly certain that an attachment of earnings is the right application then you can just complete Form N337  and send that off to the court.

But…  if you are not entirely sure that an attachment of earnings is the right type of enforcement then your application to enforce the payment could be submitted on Form D50K to accompany Form N337. Form D50K is entitled: “Notice of Application for Enforcement by such method of enforcement as the court may consider appropriate”.  The whole point of this form (and it is a welcome change to the court’s approach) is that it allows the court to consider the most appropriate method of enforcement. If it appears to the judge that another method is more appropriate then the payer of maintenance will be ordered to attend court so the relevant information can be gathered.   So  it is possible to pursue a different type of enforcement instead of having to submit a wholly new application.

You will need to pay a court fee but you may be able to get a fee reduction by completion of a  EX160 fee remission form.

I will post a video flagging up the forms mentioned in this post here.

Tags: , , ,

« Older entries