spousal maintenance

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My ex is cohabiting

January 25, 2016 in spousal maintenance by Alan Larkin | No comments

Postbox

My virtual postbag has another enquiry regarding an ex-partner who is now cohabiting:

MP tells me:

We are about to sign the paperwork regarding our financial settlement but my ex husband is lying about the fact he is cohabiting… does that make a difference for me as far as the financial settlement?

I receive a great deal of traffic about the effect of cohabitation in the context of divorce financial settlement.  I probably don’t have a lot more to say on the issue here except that this enquiry is interesting in respect of the obligation on each party to a divorce to tell the truth about their financial circumstances.  That obligation to be full and frank about any change in relevant circumstances carries on until the point an order is approved and sealed by the family court.

MP feels certain that her ex husband is lying about the fact he is cohabiting and asks whether this makes a difference as regards the financial settlement.  I can’t really answer that question as I don’t know the circumstances.  But I can say that MP’s ex needs to tell the truth about his circumstances because MP may feel that her ex’s new partner has a reasonable amount of income and can share expenses with the ex.  In other words, this new partner represents an income resource to this ex.  That may be relevant to MP’s circumstances if she is in need of spousal maintenance from her ex.  If MP has lawyers then they can advise her upon the situation.

From the sound of it, MP is about sign ‘the paperwork’ on her financial settlement.  This sounds like a consent order.  Any consent order needs to be submitted to the family court for approval and be accompanied by a Form D81 – also known as a Statement of Information Form.  One of the questions on the form requires a declaration as to whether either party is cohabiting or intends to cohabit. MP’s ex, when he signs this D81, must tell the truth.  His lawyers, if he has them, must ensure that he understands his obligations in this regard.

It is open to MP, if she feels strongly about this point, to refuse to sign the consent order or the D81 form until her ex provides a truthful response.  She will need to be guided by her lawyers.

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Child maintenance and cohabitation should not be linked

August 16, 2014 in child maintenance, spousal maintenance by Alan Larkin | No comments

 

Postbox

 

My virtual postbag brings me a question from P: a common question about the relationship between the payment of child maintenance and cohabitation.   P obtained a consent order dealing with financial matters arising out of divorce.  The only problem being that her ex has interpreted the terms of the consent order in a way that has a detrimental financial impact upon P.  She tells me:

“Paragraphs 2&3 are relevant. My ex-husband believes that because I have been cohabitating with my new partner for 12 months (2c) he has no legal obligation to pay child maintenance (paragraph 3).”

There is often confusion on the part of maintenance payers between spousal maintenance and child maintenance.  Spousal maintenance is paid by one spouse to the other after divorce.  Lawyers refer to it as spousal periodical payments.  Let’s have a look at the relevant paragraph in P’s consent order that requires her ex to pay her spousal maintenance:

screenshot of consent order

 

OK.  So we can see here that there is a reference in paragraph 2 c to P’s spousal periodical payments terminating in the event that she cohabits with another for a period of 12 months.  Cohabitation with a new partner can be a common terminating event for spousal maintenance.   Let’s then look at an entirely separate paragraph dealing with child maintenance (referred to as periodical payments):

 

screenshot

 

The order requiring P’s ex to pay child maintenance to her for the benefit of their child is entirely separate (as I would expect) from the paragraph dealing with spousal periodical payments.  The payments of child maintenance cease when the child reaches age 18 or ceases full time secondary education.  The payments of child maintenance DO NOT CEASE if P cohabits with another for a period of 12 months.  Unfortunately, P’s ex has misunderstood the terms of the order.  He has linked the child maintenance and cohabitation.  It is P’s spousal periodical payments that have ceased (or will cease) upon 12 months of cohabitation.  This has nothing to do with child maintenance.  But that misunderstanding has a serious financial impact upon P’s child.  The payment of child maintenance and cohabitation are not linked in this consent order.

Perhaps P could refer her ex to this blog post so he can see how the confusion has arisen.  He should then reinstate the payments of child maintenance for his child.  At the end of the day, these payments of child maintenance are not for P’s benefit but for the child.

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Inheritance Act Claims

January 10, 2014 in child maintenance, spousal maintenance, Uncategorized by Alan Larkin | No comments

 Inheritance Act 1975

My virtual post bag brings me a very sad enquiry involving potential Inheritance Act claims. I will refer to my enquirer as ‘C’ – who tells me:

My ex husband died by suicide a couple of weeks ago, I have custody of our 2 children 14 and 16 years old. We had a maintenance agreement for many years, however last year he lost his job so my maintenance payments stopped. However in our divorce/maintenance papers it states that a provision has to be made in his will to support his children should he die.

Now I have never seen his will and have no idea what it states or even if there is a will. He remarried a few years ago. I nor my children has NO relationship with his wife to the point where his children have not been invited to his invitation only funeral. Due to the lack of maintenance for the past year I have no funds to engage a solicitor to help me, so I have been reading as much as possible online where I came across your site. How can I

1) Find out if a provision in his will for his children has been made

2) What can I do if there is no provision or will?

I know you cannot give me personal advice but any suggestions of where I can start would be gratefully received.

What an awful situation for all involved.  It is particularly sad to read that C’s children will not have the opportunity to say goodbye to their father at the funeral. The death of a parent at their age will be very hard on them and the particular circumstances of the death doubly so.  I sincerely hope that the children will be able to make their farewells in due course in a manner appropriate and helpful for them.  C and her children may obtain assistance from the Childhood Bereavement Network which has a helpful directory of local services across the country.

Inheritance Act Claims

As C recognises, I don’t provide legal advice on this blog.  And, in this case, as in so many others, I am not in possession of all the information.  But I can make observations of a general nature which may help C, her children, and others who find themselves in similar positions.  It is likely that a number of potential Inheritance Act claims arise.  By Inheritance Act, I am referring to the Inheritance (Provision for Family & Dependants) Act 1975.  Have a look at my previous post on a query involving the Inheritance Act for more details.

  • It appears that that both C and her children could have Inheritance Act claims. But, in relation to C, she may only make a claim if she has not re-married. C may claim because she is an ex-spouse of the deceased who had the benefit (even if not being paid) of a spousal maintenance agreement still in existence at the point of death.  The children had child maintenance agreements of some sort.  It is, of course, very important to know whether the maintenance agreement was a private arrangement between C and her ex (perhaps in the form of a deed) or whether the family court gave an order, even by consent, setting out the terms of the maintenance payments.
  • The fact that the deceased may not have been making payments before and at the time of death does not stop C making a claim on her own behalf as a dependant.
  • C’s children, being minors, would need a Litigation Friend (someone who can step into their shoes for the purposes of legal proceedings) in order to take advice about any possible claim or to ask solicitors to take steps on behalf of the children in any court proceedings.  It is likely that C could also act as Litigation Friend in any proceedings on behalf of her children.  There can sometimes be a potential for a conflict of interest between a parent who is claiming against an estate and that parent’s children who are also claiming.  This may mean in some cases that there are separate solicitors for the ex-spouse and her children.  And the Litigation Friend may be another relative who can exercise judgement independent of the parent.
  • Whilst the court may allow Inheritance Act Claims to be brought, it does not mean that they always succeed.  Crucially, much will depend upon the size of the deceased’s NET estate (i.e., what is left after all the debts have been paid).  If it is relatively small, it follows that there will be little to go around and a court may be reluctant to interfere with the Deceased’s Will by diverting funds away from the widow and towards an ex-wife.  The children’s financial position would, however, still deserve serious consideration even in a small estate.
  • Whether a claim will be successful does not just depend upon the value of the estate.  The court will have to look at the circumstances of C, her children, as well as the widow, and any other beneficiaries under a Will who may lose out if C makes a claim.
  • C is not sure if her ex had a Will.  The quickest way to find out (but I’m not saying it’s the easiest) is for someone to ask the widow.  I have no idea if the relationship between C and the widow is a good one.  Let me guess, from what C tells me, that the relationship is poor or non-existent.  But the widow could be asked, perhaps sensitively by a third party if necessary, about the Will.  But, otherwise, I’m going to presume that C will get little or no information or response from the widow and therefore has to consider how best to protect herself and her children.
  • C tells me that in the “divorce/maintenance papers” it states that provision had to be made in the deceased’s Will to support his children in the event of his death.  I haven’t seen the agreement (or the court order if this is what it is).  It is possible to give an undertaking (a form of solemn legal promise) to make provision in a Will for somebody else on certain terms.  Such provision may even be irrevocable – that is, once you have made the change to your Will, you can never undo it.  If you tried to undo it or, after your death, your estate tried to retreat from your undertaking, the person or persons with the benefit of the undertaking can apply to the court to enforce that benefit.
  • I don’t know if the provision agreed to be made by the deceased in his Will was for a specified amount for the children – it it was for a specific sum and the Deceased’s last valid Will does not contain this provision then at the very least, the children should recover that sum from the estate.
  • C needs to find out if her ex has a valid Will.  The deceased re-married of course, which would have had the effect of revoking his prior Will (unless it was drafted in a certain way).  I wonder how many people know that?  So, there is the possibility that the deceased made the provision in his Will, as agreed with C, for his children, but then re-married without being aware that he had revoked his Will.  So, after the remarriage, it is to be hoped that the deceased then made a new Will and remembered to include the provision for his children.  The question is whether that provision is reasonable.  If the NET estate is worth £100,000 and he has left £100 to each child, it may be imagined that a court would not regard that as being “reasonable provision”.
  • But what if C’s ex did not make a new Will after re-marriage?  In this case there would be an intestacy.  The present rules on intestacy mean that ex-spouses do not benefit at all.  Children will only benefit if the estate is worth £250,000 or over.  If the estate is worth less than this then only the widow will benefit.  But remember that Inheritance Act claims can be brought where the operation of the intestacy rules means that reasonable provision will not be made for a claimant.  So if the deceased estate is intestate, and is worth less than £250,000 meaning the children get nothing, they can claim under the Inheritance Act.  As can C.
  • One issue that can arise is the value of the deceased’s home.  If it is jointly owned legally and beneficially with his widow then upon his death the property would be automatically transferred into her name.  If this is news to anyone then have a look at my post explaining the crucial difference between beneficial joint ownership and a tenancy in common.  If the property has automatically been transferred to the widow by the death of the deceased, then its value (which may of course be significant) will not appear in the NET estate.  It is possible in certain circumstances when applying under the Inheritance Act, to ask the court to exercise its powers under Section 9 of the Act to bring the value of the property belonging to the deceased (nominally 50%) back into his NET estate so any claimants can have their claims satisfied.

Next steps for C?

It would be prudent for C to consider the following action:

  1. Contact the widow, preferably in writing  so there is a dated record, to enquire about her ex’s Will and the provision that has  been made for the children, as previously agreed, and putting the widow on notice (respectfully and politely) about C’s possible claim as a dependant.
  2. If the children are beneficiaries under any valid Will, then the executors must let C (as the parent) know that the interest is in place and the value of any specific legacies (a fixed monetary sum or item of property).  If the interest is in the residue of the estate (what is left after all the debts are paid and the specific legacies have been met, then C will be informed in due course.  It is likely that the ex will have left the residue of the estate to his widow but, again, I simply don’t know.
  3. Straight away, C should look back at her divorce papers to see what record she has of her ex’s pensions and the addresses of the trustees or administrators.  I don’t know whether C had any pension sharing orders or not at the point of divorce.  In most pension schemes it is possible to make a nomination of a spouse or children to receive death in service benefits should you die before receiving your pension.  Although no longer a spouse, C should advise any relevant pension schemes of the existence of her minor children in case her ex made a nomination to their benefit.  Even if her ex did not make such a nomination, pension trustees can exercise their discretion in favour of spouses (probably not ex spouses but you don’t know if you don’t ask) and children.  This step needs to be taken quickly in any event.
  4. The suicide may have invalidated any insurance policies – I don’t know.  But in some cases, parents who have to pay maintenance agree to take out insurance to cover the loss of the payments in the event of their death.  This agreement would normally be detailed in a court order.  If such an agreement, and a subsequent policy, is invalidated by the suicide, then it should act to strengthen the likelihood of successful Inheritance Act claims, provided there is still a reasonable amount of value left in the estate.
  5. C can make an application for a Standing Search of the probate registry.  This will tell her when an application had been made and granted for her ex’s estate to be administered, either under a Will or under the intestacy rules.  If an application has been made, C will receive a copy of the Grant and a copy of the Will.  It is unlikely that a grant will have been applied for already but the usefulness of the standing search is that it stays in place for 6 months so if a grant is given in the next 6 months, C will find out about it.  C can renew her standing search for a further 6 months each time.  C has six months from the date of the grant of representation to make any claim against the estate.  A claim outside of this time may not be successful.  This is called a limitation period and should not be ignored.  The standing search is a nominal fee – £5.00 the last time I had to use it for a client.
  6. C should try to obtain legal advice.  This area is complicated but C may be able to get a free consultation with solicitors local to her.   C will have to make sure that they have experience of Inheritance Act claims.  If it appears that there is a potential claim on C’s  behalf and/or her children, her lawyers may be able to obtain funding from a litigation provider or may be prepared to fund the case and take their fees at the end if it is successful. As far as I am aware, there is no longer any legal aid funding for such cases so it is necessary to think through what other funding options may be available.  Although legal aid is  still available for mediation, I have not heard of many mediators dealing with Inheritance Act claims.  Even the mediators who are also family lawyers, probably have little experience of Inheritance Act disputes.

I hope this post provides C with some assistance.

 

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Financial planning in family law cases

April 15, 2013 in child maintenance, cohabitation, Financial planning, Pensions, spousal maintenance by Alan Larkin | No comments

 

Family lawyers should import financial planning

Family lawyers should import financial planning advice

I still surprise some of my clients, sitting in front of me with a pressing need for legal advice on a family law matter, when I take an avid interest in the identity of their other professional advisers and enquire about the financial planning that I expect to see in place.  I suppose they expect me to launch into questions about unreasonable behaviour or compromising comments on their spouse’s Facebook timeline.

I’m always surprised that they are surprised.  I wouldn’t dream of dealing with, say, a client who is facing divorce proceedings who owns a business, without talking to his or her accountant or financial planner.  I will want to understand how the business, and the family unit, ticks and how both may be affected by the advice I will be offering.

As a family lawyer dealing with divorce, civil partnership or separation issues I always have one eye on the financial planning issues that will arise in a case.  When I refer to financial planning, I do not mean sitting down with a divorce client and simply subtracting the outstanding mortgage from the value of the matrimonial home to work out the net equity.  No, I mean something much more sophisticated and, in general terms, beyond the skill set (and regulatory authority) of lawyers.

I will set out just a few examples.

Financial planning in divorce and civil partnership dissolution

With the exception of the most straightforward of divorce cases, perhaps one where there are no children or little or no assets, I would look to import financial planning advice for my clients.  The following scenarios are familiar ones:

  • The family home may need to be sold but this will involve exploring realistically the mortgage capacity of each spouse.  How much can be borrowed and what would be taken into account by a mortgage lender as income?  Will bonuses count?  If a wife is to receive maintenance payments from her husband after divorce, will this count as income in her name and improve her ability to obtain a mortgage advance?  
  • How much money will there be to live on: now, in five years’ time, or at retirement?  When family lawyers sit down with their clients to complete financial disclosure they need to detail all the outgoings their client will face.  Speaking frankly, for most lawyers, this has always been a bit of a chore.  There’s nothing exciting about working out utility costs or the public transport costs for your client to get to her new job.  Where’s the law in that?  So it tended to be done in a pretty slapdash way.  But this exercise is crucial.  The outcome impacts directly upon your client’s quality of life after divorce. It deserves some time and attention.  Financial planners use fairly sophisticated cash flow software that models the fluctuations in income and outgoings for clients over a long period of time.  In other words, they properly plan for the future.  This data is invaluable for the family lawyer who wants to negotiate the best outcome for their client in any divorce settlement.
  • Never mind the family home, what about the pensions?  How many times have I had a client say to me: “My husband says it’s not worth bringing pensions into it. We should ignore them”.  It is surprising how often pensions appear to be ignored.  I don’t ignore them.  I have them valued and then I decide whether they can be ‘ignored’.  Pension valuation can be difficult.  And let me make one thing clear.  £100 of pension funds for a female client is not the same as £100 for a male client.  You see, women live longer (just have a look at the figures kept by the Office for National Statistics).  So that £100 for a woman has to stretch further.  In simple terms, it will not yield as much income in retirement.  And here is another common refrain: “My husband says we should split the pensions in half.  That’s fair”.  Well it’s sounds fair, but it probably won’t be in the long run.  Any family lawyer who fails to obtain advice from an appropriate expert, such as a financial planner, with the relevant pension expertise, is selling their client short.
  • Maintenance payments for a spouse or children may have been agreed.  But what happens if the payer of maintenance dies?  I don’t understand why more lawyers don’t obtain advice for their clients on cost-effective insurance policies to pay out in the event of death.  This solves any cash flow problems for the ex-partner who would otherwise struggle with the financial burden of any children of the marriage.  And it also helps to prevent claims against the estate of the deceased under the Inheritance (Provision for Family and Dependants) Act 1975.

Financial planning for cohabitants

  •  The law in England and Wales does not provide adequate protection for couples who have cohabited, in some cases, for many years, and even had children.  Living Together Agreements can provide a sensible financial planning exercise for the relationship ahead.  It is particularly important where property may only be owned by one party or there is a common purchase but with unequal monetary contributions.  It is crucial for Wills to be put in place if proper provision is to be made for the other partner.  It is also possible to put in place nominations for death benefits under certain pension entitlements.  Life insurance, again, can become a sensible step to take to ensure that untimely death does not leave partners or children in the lurch.

I am fortunate in my day job as I can call upon my colleague, Sam Jermy, a financial planner, to help my clients.  The need to import financial planning advice is so integral to the family legal work that my firm undertakes that we formed a joint venture with a firm of chartered financial planners.  A free initial consultation is perfect to identify the issues that I need to concentrate on in obtaining the best outcome for my clients.  I appreciate that not everyone has access to a chartered financial planner.  But, if you find yourself encountering some of the issues raised in this blog post, ask your lawyer if financial planning advice is needed.  Don’t leave it until the doorstep of the court or the drawing up of the negotiated settlement – an opportunity for prudent and informed financial planning will have been missed.

STOP PRESS: I’m pleased to announce that Sam Jermy, a financial planner with Family Law Financial Planning, has offered some guest blog posts on the financial planning  work he conducts with family law clients.  In keeping with the vast Divorce Finance Toolkit budget at my disposal I have agreed a package of chocolate digestives and tea for Sam’s blogging contribution.  If I judge his blog posts to be particularly helpful for my readers I will even let him dunk the biscuits.  Watch this space.

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Maintenance increase by the RPI

January 9, 2013 in spousal maintenance, Variation maintenance by Alan Larkin | No comments

Many a mickle makes a muckle (so long as you don’t ignore inflation)

If you have done the hard work of agreeing maintenance upon divorce and have sensibly put in place a mechanism to automatically increase the payment each year by the rate of inflation, then pat yourself on the back.  You’ve done all you can to avoid having a huge row with your ex each year about the amount of any annual maintenance increase and the prospect of an expensive return to the family court to argue the toss in front of a judge.

But, as I have discovered from my virtual postbag over the last two years, the scope for argument and misunderstanding still exists.  I have just heard from Lianne:

I wonder if you would please help solve an issue between my ex-husband and myself.

I am due to receive an annual RPI increase from 1.1.13. (date stated in my Court Order).

I receive my monthly maintenance payments on the 16th of each month.
Can you please clarify which months RPI figure is the one that should be used? My ex is saying that it should be the one for Sept. 2012 as the Court date is the first of the month.

My view is that it should be the figure for Oct. 2012 regardless of whether the increase is for 1st or the 16th of the month, as it is the actual month that is the deciding factor not the date of the month.

Thank you for your time and attention.

Well, I’m with Lianne on this one.  The normal mechanism is to use the RPI figure for the month three months before the month in which the maintenance is to be increased.  So that would be October.   For any visitors of the blog for which that sentence reads like gobbledegook, you will have to read the other posts and comments on this subject using the RPI tag in the Cloud Tag on the left hand side of the page.  The important thing to note is that the increase in maintenance is based on the increase in inflation in the preceding (or as near as dammit) 12 months.  There is always a lag before the Office for National Statistics can calculate each month’s RPI figure and then release it to the public.   So it is common to take a figure three months prior to when the increase is due because the RPI figure should be in the public domain by then.

If anyone wants to work out how to calculate an RPI increase then look no further.

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Child support: arrears of maintenance

November 27, 2012 in child maintenance, spousal maintenance, Variation maintenance by Alan Larkin | No comments

I have visited the topic of child support on many occasions. My virtual postbag this week has several examples of one common scenario: where the husband and wife start off by getting it very right, with an appropriate order for child maintenance upon divorce, but then, somehow, it goes very wrong.  The sad thing is, it goes wrong, very often, because of a basic misunderstanding. Most of this should be avoidable.

To the postbag…

Suzanne writes:

 

I have a court order (payable by standing order monthly) which has been running for 8 years. After the first year my ex husband refused to pay the yearly increase, and has been paying the same amount ever since. I have now requested that he increases the maintenance but he still refuses to do this.  Can you please advise what the yearly increase should be as I have no alternative but to take this back to court.
Also will he have to pay the arrears?

I have re-married two years ago, would this affect the payments?

Child maintenance

Suzanne later confirmed to me that this is a case of child maintenance.  In which case, Suzanne’s re-marriage is of no consequence whatsoever.  The child maintenance must be paid in accordance with the terms of the court’s order.  It is a great pity that the ex-husband has failed to observe the increases each year ordered by the court.  In the first place, the order for child maintenance would only have been in a court order if the husband agreed to the family court having jurisdiction for dealing with child maintenance (instead of the CSA).  Secondly, he would have agreed to the yearly increases (normally by reference to inflation measures like the Retail Prices Index) as he must have recognised that the cost of living – especially in relation to kids – only goes up and never down.  So his refusal to honour the increases he agreed is disappointing.  As I have commented before, the costs of bringing up children is usually underestimated.

Suzanne has asked me what the yearly increase should be.  Unfortunately, I cannot calculate that without knowing the amount of the original award, the date it was awarded and the mechanism used in the court order to determine the yearly increase.  But, I have laid out in previous posts how to calculate the yearly increase and also how to calculate the amount of arrears that have arisen when the yearly increase is ignored.  Click on “RPI” in the Tag Cloud on the left hand side of the web page: this will bring up all my previous posts on this issue. 

One issue here, if this is a child maintenance order, is that in the case of a disagreement over the amount of child maintenance, the family court responsibility comes to an end and the parents will have to look to the CSA.  The usual scenario is that one parent wants to receive more or one parent wants to pay less.  This would require a variation of the original order for child maintenance and this variation must also be by agreement.  But, in Suzanne’s case, she is not talking about changing the amount of the original order but rather simply requiring that her ex pays the yearly increases he promised. Suzanne, if she gets legal advice, may be told to apply back to the court to enforce the payment of the arrears.  But you have to get the court’s permission to recover more than the last 12 months of arrears.  The application is made on Form D11 (Family Procedure Rules, 2010, Part 18).  Suzanne would need to set out her calculation of how those arrears had arisen.  This is not that easy but look at my previous posts in the Tag Cloud for “RPI” and “Child Maintenance”.

The alternative for Suzanne if she wanted, would be to refer her ex-husband to the CSA so they could carry out a fresh assessment of the amount of child maintenance to be paid.  The CSA would not be able to recover the arrears for Suzanne under the court order but I suspect the ex-husband would end up paying more towards his child or children under a CSA assessment than under the court order which is now 8 years old and has not been increased each year.  The CSA may refuse to act though if Suzanne’s child or children are too close to the age of 17 (when CSA responsibility comes to an end).  I don’t have enough detail here to make any further comment.

So, if Suzanne took legal advice, it may well be that she should apply to the court to enforce the arrears.  Remember, that her ex could refer himself to the CSA and if they took responsibility for the situation then the family court order dealing with child maintenance comes to an end, and with it, any prospect of recovering any arrears.  So Suzanne may want to get her application into the court for enforcement first, and recover as much of the arrears as possible.  Since her ex will then have to disclose his present income in those proceedings, she can ask her legal advisers to calculate how much he would pay if the CSA were involved. She can then take advice upon whether to refer the child maintenance to the CSA from that point onwards if the award would be higher than she presently receives under the family court order.

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Separation no bar to divorce finance claims

October 30, 2012 in cohabitation, Pensions, spousal maintenance by Alan Larkin | No comments

Separation

Separate but not apart in absence of divorce

Any divorce lawyer will tell you that it is better to obtain advice about an appropriate financial settlement upon divorce than simply let things drift.  People’s lives move on, sometimes for the better, sometimes for the worse, but any delay of years can usually make it harder to sort out (never mind agree) an appropriate settlement.  Even when ex-husbands and wives are trying to negotiate financial claims many years after the separation they can get a nasty surprise to learn that the family court will value assets at today’s prices, not six or seven years ago if that happened to be the date of divorce or separation.

My postbag has a plea from Tina:

I left my husband six years ago, and have been living with a new partner.  I never divorced. I am on the bread line – used all my life savings to help support my new partner, even bought him 3 cars.  I’ve no income at all.  My new partner’s on very low income.  We live in rented house, and new partner is talking about leaving me now. I’ve no security. My husband still has his own business, and promised inheritance from his uncle. Could i be eligible for sposal maintenance? My husband was also left his mum’s house, which i didn’t get a penny from. Plus I’ve no pension, and I’m 52.  I had a heart op two years ago. Thank you.

There is so much about Tina’s situation that I do not know about.  Readers of my blog will know that the devil is always in the detail when it comes to the family’s court’s jurisdiction which takes all circumstances into account.  As usual, because I cannot and do not offer advice on my blog, I can only make some observations about Tina’s desperate situation:

  • I do not know the length of the marriage .  The longer the marriage, the more likely the presumption of the court to consider it reasonable for Tina’s husband to make financial provision for her, despite the significant period of separation;
  • I do not know whether Tina raised children with her husband during the marriage: is Tina’s lack of pension provision because she was busy bringing up the children?  A factor that would weigh heavily with the court.
  • When did Tina’s husband receive his mother’s house?  I presume this was an inheritance?  The inheritance is likely to be significant, especially if Tina and her husband already owned their own property and the mother’s house is a surplus asset.
  • Tina’s health is not good at the moment and she does not appear to have any earned income.  Her health may severely limit her ability to get paid work.  This would concern the family court.
  • There is mention of the husband’s business.  Was this a business he had during the marriage?  Was it a company and did Tina have any formal interest in the business, such as a shareholding?  Did Tina make an indirect contribution to the value of the business by dint of the marriage?  This business could be hugely significant in any divorce but I don’t have any information.
  • Tina mentions the ‘promised inheritance’ from the husband’s uncle.  This is only a promise and the uncle could change his Will at any time.
  • Unless there are very valuable assets in the marriage, it is likely that a court would deal with a financial settlement on the basis of ‘needs’.  This means that a court may compel Tina’s husband to use any assets he may have built up after Tina left him to satisfy Tina’s financial claims in divorce.  The husband’s inheritance from his mother may also have to be partially used.
  • Tina and her husband are not divorced.  There has not been a financial order from the court.  Tina has not re-married.  This means that the financial claims: property adjustment, lump sum orders, spousal maintenance, and pension sharing orders, are all still open to Tina.
  • Although Tina has been co-habiting with her new partner for six years, this does not have the same weight as a marriage in the eyes of the family court.  In any event, Tina seems to have spent her life savings supporting this man so he can hardly be viewed as a valuable resource to Tina whose existence should prevent her from reaching a divorce settlement with her husband.
  • Tina may well want to go and obtain advice immediately from a family law solicitor who offers legal aid before that scheme dries up  in April 2013.  The solicitor can advise upon initiating a divorce and also a financial settlement and may also want to explore how Tina’s housing situation can be secured should her present partner leave her.  Is the rent paid to a private landlord or to a local authority or housing association?  Steps may be taken under the Family Law Act 1996 to prevent Tina’s partner from relinquishing the tenancy and therefore making Tina homeless.
  • I doubt Tina can take any further steps against her present partner for the monies she has spent on him.  As co-habitees, neither has any financial responsibilities to the other.
  • Tina may also wish to consider booking an appointment with her local CAB to have her situation assessed by a welfare rights benefits adviser, particularly in view of her health.
I hope my observations are helpful and I wish Tina well.


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Divorce calculator: Journey Costs

October 26, 2012 in child maintenance, Form E, spousal maintenance, Variation maintenance by Alan Larkin | No comments

Journey cost calculator for Divorce Finance Toolkit

I like calculators. They are really useful when you’ve run out of fingers to count on.

This is a journey cost calculator. In many divorce and separation cases the earned income has to stretch a long way. Here are a few scenarios where this calculator may prove useful:

    1. If you are divorcing and making a financial claim you will probably have to complete a financial disclosure questionnaire called a Form E. It asks for all sorts of information on people’s finances and one of the sections in particular is called income needs. Invariably, at first attempt, many people underestimate their true levels of expenditure. This calculator can help to focus on the true cost of the mileage that may be clocked up in getting to work.
    2. Or, you are negotiating with your ex over the amount of spousal maintenance or child maintenance that should be paid. One of you may require a car to get to work. That wage may be providing for maintenance payments. The cost of getting to and from work can be significant with the cost of fuel at the moment. This calculator may help to show just how much is being spent. This unavoidable cost could be factored into the discussions.
    3. Or a level of maintenance has been agreed and in place for a number of years but the paying or receiving party has a change of circumstances involving more motor travel, perhaps in relation to a work relocation. So the calculator could assist in showing why the change of circumstances means an adjustment in maintenance is required.
    4. Another scenario is where contact to children is being discussed. One of the parents may have to do a fair bit of mileage over time picking up or dropping off the kids for contact. It is a cost that could demonstrate why the parent paying maintenance will struggle unless this essential expenditure is taken into account. Or, for instance, if it is a mother working part-time and doing most of the motoring around to allow contact, why the maintenance she is receiving may need to have an element in it to cover this cost of travelling.

Ideally, I wish I could find a calculator that would allow road, tax, servicing and insurance to be incorporated but no luck so far.

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How does cohabitation affect divorce settlement?

August 13, 2012 in cohabitation, spousal maintenance by Alan Larkin | 15 comments

How does cohabitation affect divorce settlement

Stranger on the shore: the significance of the cohabitee

 

How does cohabitation affect divorce settlement?  How does it affect my imminent divorce or the payment of spousal maintenance payments?  The vexed questions surrounding cohabitation usually cause a bulge in my virtual postbag.  The common scenario is as follows: there is a divorce and one spouse pays maintenance to the other.  The spouse paying the maintenance moves in with a new partner, often with a new family.  The new family struggles financially, and the ex-wife refuses to settle for reduced payments.  Years after the divorce, resentment festers on both sides, often crystalising about this time of the year when one ex seems to be able to go on a ‘swanky foreign holiday’ whilst the other contemplates a day trip to Butlins with packed lunches all round.

I think it is difficult enough for ex-spouses trying to get on with one another in a post-divorce world with the difficult issue of the maintenance order that goes on and on (and on).  But at least there is resolution of a sort for those who have dissolved their marriages and been given their financial orders.  So spare a thought for those whose divorce or financial proceedings appear to have dragged on for years, outliving Government administrations and Take That comeback tours. How can you plan a life with a new partner when the legal obligations for your previous spouse (and the children you’ve had together) have not been put to bed?

To the postbag…

Sinead contacted me recently and this is her query:

I have read your blogs on co-habitation after a divorce where the person recieving maintenance etc has gone on to live/marry etc and how this affects the level of maintenance paid. How does it work the other way round?

My partner (of 7 years), separated 71/2 years ago, divorced almost 2 years ago is currently going through the throws of financial settlement. He has 2 adult children and a 10yr old. The 10yr old currently lives with his ex wife in the old family home. He has continued to pay the mortgage/endowments on the family home and cleared many joint debts throughout this period (equates to about 75,000 to date). He was retired from the army 2 years ago with a pension and lump sum. He has not had work since. The lump sum has now all gone (living costs and paying debts etc mentioned above) and his monthly income does not cover his outgoings if he continues to pay the mortgage etc on the family home. As a consequence I am now supporting him (and as such payments to his ex wife!) – I am on a reasonable salary, almost paid off the mortgage on my house and have substantial savings (I had the misfortune of losing both parents and inheriting as well as having saved my whole working life) I have 3 children of my own that I support independently from my partner.

Will this have any influence on the likely award to the ex wife? (with her salary and benefits she brings home about the same as my partner) or will his financial status be looked at independently?

How does cohabitation affect divorce settlement?

Well, the first thing I should say is that it is always difficult in matrimonial settlement cases to isolate maintenance claims from capital claims.  Each marital settlement needs to be viewed as a whole. The existence of a new relationship, especially one of cohabitation is a fraught issue.  The cohabitant is not one of the legal parties to the divorce but their presence, like that distant stranger on the shore, is hard to ignore.   I have been critical of the way in which the courts presently deal with committed cohabitation where the receiver of maintenance (after a divorce has been granted and a financial order given) is able to pool resources with a new partner and still receive substantial maintenance from their ex.    But Sinead’s case deals with a situation where the financial settlement has not been achieved and there is no financial order yet.    With this thought in mind I can offer the following observations:

    • Sinead’s partner was divorced 2 years ago (by which, I assume, a Decree Absolute was granted by the court dissolving the marriage).  This is before there has been a financial settlement, either a consent order or an order given by a judge in the absence of agreement.  This is unusual.  If lawyers are involved, in most cases, they will agree not to apply for Decree Absolute until the court has given a final order dealing with finances.  However, the prejudice, if there is one, would likely be to the ex-wife in this situation as she will automatically lose the right to widow’s benefit and possibly certain dependent’s benefits under the Army pension in the event of Sinead’s partner dying before the financial settlement is agreed.
    • what about pension sharing orders? Even though this army pension is in payment it can still be subject to a pension sharing order.  Expert advice is required (normally from financial advisers instructed by lawyers) as the valuation of armed forces pensions, like police pensions, is not straightforward.
    •  Sinead’s partner has retired from the army.  He took a lump sum but has expended this over the course of the last 2 years in meeting income needs (probably both his own and also his ex-wife’s).  Generally speaking, it is never a good idea to meet income needs out of capital.  Sinead’s partner will no longer have this capital cushion.  I do not know if he has any other savings.  But now the capital has gone, and since I am told he has not worked since retirement, how can he maintain the payments made to the ex-wife, especially the mortgage payments on the former matrimonial home?  Sinead cannot be expected, and legally, certainly is not required, to subsidise her partner’s ex-wife.  But if things carry on as they are, this is effectively what she will end up doing.
    • What about the former matrimonial home? I am presuming it is jointly owned by Sinead’s partner and his ex-wife. It would appear there were 3 children of the marriage but only one of them, a 10 year old, still resides at the property.  Is the size of the property surplus to the needs of the ex-wife and child?  Could they downsize and do so now before the child enters the early years of secondary education when a move could impact upon educational attainment?  Would there be sufficient equity following a sale to allow the ex-wife to purchase a new property free of mortgage charge, or with a much reduced mortgage, that would place less reliance upon the ex-husband’s income (which must come from his pension payments).  If there are lawyers involved in this case, I suspect that they will identify the potential sale or retention of the family home as key in this case.  But to let the situation drift on as it has been doing helps nobody here.
    • I do not know the length of this marriage or the ages of Sinead’s partner and his ex-wife.  Judging by the age of the children I deduce that it is a ‘long’ marriage. This can dictate the length of any spousal maintenance claims.  So, it may be more likely that this could be a joint lives spousal maintenance claim.  That is, Sinead’s partner may have to pay spousal maintenance to his ex-wife until he dies, she dies, she remarries, or the court relieves him of the liability by a further court order.  There may be an argument that the ex-wife should not receive any spousal maintenance at all if the incomes of ex-wife and ex-husband are roughly similar.  However, I would imagine that a court would expect at least nominal maintenance to be paid to the ex-wife because there is still a minor child of the marriage residing with the ex-wife.
    • I should also mention that I do not know which area of England & Wales the ex-wife lives in.  Two courts, 100 miles apart, can produce significantly different outcomes based on the same set of facts.   Talking to family lawyers from different parts of the country, it is clear that some courts seem content to award spousal maintenance for short periods of time after divorce whilst others insist upon joint lives orders.  I would not say there is a North/South divide on this issue but it is clear that there are regional disparities (even though the law is the same!)
    • It is interesting to note the long period of separation without a financial settlement (sealed by a court order) being put in place.  This long delay almost invariably makes it harder to reach agreement.  For instance, Sinead’s partner has been paying for the mortgage and endowments on the former matrimonial home.  His lawyer may say that if these monies have come out of his pension capital then he should ask for a credit for those payments (say 50%) to be taken account of in the financial settlement.  This argument would be based on the fact that he had increased the value of the capital assets of the marriage (the home and the associated endowment policies) by depleting his own capital (from his pension lump sum).  But the devil is always in the detail.  The ex-wife’s lawyers may argue that the mortgage  and endowment payments were in lieu of the proper spousal maintenance and proper child maintenance that should have been paid to the ex-wife and children over the 7.5 years of separation.  And, for all I know, the mortgage may be an interest-only mortgage which does not reduce the amount of capital borrowed over the term of repayment.  So it’s fingers crossed, that the endowment policy will be substantial enough at the point of maturity to pay off the outstanding mortgage sum.
    • If the capital assets of the marriage are modest and the income of the parties is also modest, then this may be characterised as a needs case.  That is,  there may not be enough capital within the marriage, to meet the housing needs of the ex-wife and Sinead’s partner.  The ex-wife may argue that she needs more than 50% of the capital in the home (once the mortgage is paid off) because the housing needs of the 10 year old child will be resting on her shoulders. (And the court will give first consideration to the needs of any minor children of the marriage).
    • The complication in these circumstances is that Sinead’s partner has been cohabiting with Sinead for a significant period of years.  The fact of cohabitation with a new partner by one spouse is taken into account by the court and I think the weight that may be attached by a court to this cohabitation will work itself out along the following lines:
      • Is the new partner a potential income or capital resource?  In this case Sinead has built up her own capital by dint of hard work and has also inherited capital from her parents’ estates.  Sinead receives a good wage.  She has in effect subsidised the ability of her partner to continue the payments to the ex-wife.  If Sinead was in a position of having no capital, living in a rented property with her partner, and entirely dependent upon benefits, then we may safely say she would be an added responsibility for her partner rather than a capital or income resource for her partner.
      • Even if the new partner does have capital and income resources, is there a competing demand upon the new partner’s resources that should effectively cancel out the resources?  In Sinead’s case, yes, she has three children of her own and they unarguably would have first call upon her resources.
      • How long and how committed does the cohabitation appear to be?  A few years of on/off cohabitation is not going to really impact upon any court’s consideration in a divorce financial settlement.  But Sinead’s case is somewhat different.  There appears to be some 7 years of cohabitation.  A court may think that is a fairly settled situation.  Perhaps a court may think it could give more of the capital in the matrimonial home to the  ex-wife because the husband’s housing needs have been addressed by living with Sinead.  The reality, of course, is that Sinead could ask her partner to leave her house the day after any such divorce settlement was agreed.  He has no security of tenure in Sinead’s property (on the information provided by Sinead).  So, he does still have housing needs and some entitlement to the capital in the former matrimonial home.
      • Is it likely that Sinead and her partner will marry?  Any such intention would have to be declared by Sinead’s partner at the point of submitting a financial consent order (presuming there is an agreement) to the court for approval.  If marriage is likely, then Sinead will appear to the court to represent a more solid capital and income resource for her partner and the ex-wife will probably seek more of the capital in those circumstances.

Sinead will probably want to keep her capital savings separate from her new partner until (and even after) his financial settlement is resolved.  She will not be thinking of giving her partner a share in her own property.  After all, she has her own children to think about and prioritise.   She may well be asked by the ex-wife’s solicitors (via a request to her partner) to give disclosure of her financial means so they can gauge whether she really does represent a resource that should be taken into account.  Sinead does not have to provide detailed disclosure but may consent to provide a headline figure for her net income and her net capital.  It would be prudent, however, to state that Sinead does have three children to maintain with her income and there is no legal obligation upon her whatsoever to support her partner or, indirectly, his ex-wife.

Sinead may, if she sought legal advice, be told to have a cohabitation agreement with her new partner or, if she plans to marry him in due course, to have a pre-nuptial agreement.  So the answer to the question: “How does cohabitation affect divorce settlement?” is “It depends on the facts in each case”.

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Enforcement of maintenance orders abroad: USA

May 20, 2012 in child maintenance, Enforcement, International famlly law, spousal maintenance by Alan Larkin | No comments

Child support enforcement

Over the hills and far away

It is not uncommon for divorce proceedings in the English jurisdiction to involve a spouse who lives abroad and child support issues are usually one of the main concerns.  How do you obtain a divorce financial settlement including child support if your ex is not willing to negotiate? The Maintenance Orders (Reciprocal Enforcement) Act 1972 may help.

This is the subject of a recent enquiry from Sarah (not her real name)

I am divorcing my husband who lives in USA – the divorce case is in UK. I first contacted my solicitor last year in may and this has been taking a year now just to get divorce – i am not asking anything financially from my husband even knowing how much i am entitled to, however i want him to start paying child support which is 15% from his income as i have been advised from my solicitor. i tried to negotiate but my soon to be ex husband is not paying. how long will it take if i issue proceedings? thank you!

To be honest, I don’t know how long it would take if Sarah issued proceedings.  It depends upon the type of proceedings, the foreign jurisdiction she is dealing with and the speed of her lawyers,  but I suspect it will not be quick for reasons I will explain shortly.  International claims for financial relief are a notoriously difficult area to navigate even for highly experienced family lawyers.

Back to basics…

It sounds as if Sarah has done the right thing first which is to try and negotiate the level of child support.  Unfortunately, her spouse is not playing ball.  There are few things more unattractive than a man who won’t take financial responsibility for his child or children.  So what can Sarah do?

In the English jurisdiction, for the great majority of cases in the family courts involving child support, the court only has power to give an order if the spouses are in agreement.  In the absence of agreement, the CSA has the power to carry out a determination of the absent parent’s net income and demand payment on the basis of a formula.  In Sarah’s case, since her solicitor advises she should seek 15%, I deduce that Sarah has one child with her husband. (The CSA will seek 15% of net income for one child, 20% for two and 25% for three or more children). In general terms, the CSA only has jurisdiction for parents who live in England and Wales.

But the CSA can still retain jurisdiction for the absent parent if:

  • the absent parent is in the armed services; or
  • working for the UK government; or
  • employed by a UK registered company

I’m presuming that none of these categories apply in Sarah’s case.  So if Sarah can’t negotiate with her husband and the CSA don’t have jurisdiction, then she will just have to issue in the English court to get child support, right?  Not necessarily.

 Transmission of a claim?

If Sarah issues financial proceedings in the English courts – and it would normally be in her local Magistrates’ Court (also called a Family Proceedings Court) and obtains an award of maintenance (for child support) against her husband then she will need advice upon how to enforce it in the USA.  But Sarah should consider, if she has not already, the ability to transmit her claim for maintenance rather a final order for maintenance to the USA and to ask the court there to initiate the claim for child support against her husband.  To my knowledge, the American states give the choice of transmission of the claim or the enforcement of an English order.  It may be more advantageous to Sarah to transmit the claim to the American jurisdiction rather than have her English lawyers pursue it here and then seek to enforce in the States.

Sarah should test the water by googling family law attorneys in the state where her husband resides and then sending an email to several of them asking them to weigh up for her the benefits of transmitting her claim for child maintenance or enforcing a final order for that maintenance from the English Court.  This feedback will assist her English lawyers to decide the best course of action for Sarah.

Enforcement of final order

Whether Sarah is advised to transmit her claim for child maintenance or whether she obtains a final order first in England and then seeks to enforce in the USA, she will have to follow pretty much the same procedure.  Her solicitors will need to contact the REMO (Reciprocal Enforcement of Maintenance Orders) unit at the Office of the Official Solicitor and Public Trustee.  REMO is a central authority for international maintenance claims in England & Wales.  The good news about this approach is that most of the enforcement is undertaken by way of liaison between governmental departments (in the English and foreign jurisdictions) so it will often be free.

Since Sarah is looking to get financial support from a husband in the US, I’m sure her solicitors will have regard to the Reciprocal Enforcement of Maintenance Orders (United States of America) Order 2007 which allows for a UK order for maintenance to be enforced provided the payer is resident or has assets there.  Equally, if Sarah and her advisers conclude that the transmission of her maintenance claim to the US is the better option then they will consider The Recovery of Maintenance (United States of America) Order 2007.

Finally…

Sarah states that she is not asking for anything financially from her husband (apart from child maintenance).  I’m not sure why not, if she really needs it and if her husband can pay.  The Maintenance Orders (Reciprocal Enforcement) Act 1972 deals with spousal maintenance as well as child maintenance.  I’m just saying…

 

 

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