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Faulty online divorce Form E

Form e financial disclosure

As we discovered just before Christmas, the online divorce Form E provided on the Court website was faulty.  It appears a section of the Form which summarises, amongst other things, the capital and income of divorcing couples, failed to carry forward the liabilities from an earlier section.  The result was that the net capital values produced in the summary section may have been falsely inflated by missing out any liabilities.

The person who claims to have noticed the error (a self-styled family expert)  used the publicity to criticise solicitors, barristers and judges for not having noticed it themselves.   This fed into the usual lawyer-bashing on public forums and comment pages.  Most family lawyers were taken aback by this particular slew of criticism because:

  • It is the Court service’s form, so nothing to do with lawyers;
  • 99% of family lawyers don’t use the court’s online Form E as we pay to have our own software;
  • Family lawyers pay no attention to the summary page of the Form E anyway as it is not helpfully laid out and does little to aid understanding;
  • The Form E financial information is quickly superceded by later rounds of  financial disclosure any way;
  • Family lawyers tend to reproduce the Form E information in separate Excel spread sheets (to model likely settlement options) so any error would be quickly spotted.

In short, although I have not been slow to have a pop at my fellow lawyers on the pages of this blog, I did think this particular story, as a vehicle to slag off family lawyers, was a bum rap.

The real story is that LiPs have been let down.   These people, the vast majority of this blog’s readership, cannot afford legal advice or struggle to maintain paid legal representation.  I’m guessing it would be LiPs in the main who would have been using the Court service online Form E.  I mean: it’s there to use, it’s free, and it’s on the official court website, so it must be safe to use, right?  Right?

The Minister responsible issued a statement to Parliament: “Update on investigation into faulty online form used in divorce proceedings”.  We now know the number of people likely to have been affected:

A total of 36,527 cases contain a version of Form E filed from these periods. HMCTS staff have now reviewed all these cases and found that 3,638 files – 10% – contained the faulty calculator version of Form E with an incorrect figure for net assets figure in the summary table.

1,403 of these cases are still live, allowing HMCTS to intervene immediately to clearly flag these cases to the courts in order to avoid the error affecting the final orders in these cases.

The remaining 2,235 files – 6.1% – were closed cases….I have instructed HMCTS to write to all parties in the 2,235 closed cases. The letter expresses our sincere regret for the error, sets out what happened and explains that, although Form E is just one part of the evidence used in their case, there remains a possibility that the error affected the final outcome.”

If you are one of the people with a closed case receiving a letter from the court service you will need to work out whether you may have been prejudiced by the software error.  Apparently, the letter sets out the options available for those parties who think they have been adversely affected, which includes seeking to set aside any final order made or varying such an order.  The letter also contains a link to a specific court form to be used by those who wish to set aside or vary their settlements.  If anyone has received such a letter or has the link I would be happy to post a copy (suitably anonymised) on this blog.

If there is anyone out there who thinks they are affected but has not yet contacted the court to register their concerns then please use the specially designated email address:  formE@hmcts.gsi.gov.uk.  Only 51 people have done so as at 21 January 2016.

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Why I created a child maintenance calculator

Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That’s how it goes
Everybody knows

Everybody Knows“, Leonard Cohen

About 10 months ago I became annoyed with the very basic child maintenance calculator provided by the Child Maintenance Agency (CMA) and decided I could copy it, refine it and then, greatly improve it.

Sure, the CMA’s calculator carries out the calculation but it lacks real thought, care and class. It introduced a new formula – that based on gross income – that was not as easy to understand as I first thought. In fact, in places, it was quite complicated.  It introduced nil, flat, reduced, basic and basic plus rates.  It no longer became the sort of calculation you could quickly scribble out on a piece of paper.

Sometimes, life is complicated but in my humble opinion, if a government decides to make something as important as child maintenance complicated it has an obligation to make its delivery to its citizens as understandable as possible. The CMA’s  online calculator is not good enough for such an important function. So, at first, I was just irritated at the lack of care in the delivery. I could not see how such a basic calculator could help parents to communicate about the appropriate level of child maintenance. The child maintenance result was not explained; it could not easily be emailed or otherwise electronically communicated to the other parent.   Because the calculator did not care to explain itself, its results could not easily be queried by the parents who needed to understand its workings in order to reach agreement.

So, I decided to take the child maintenance calculator and make it better. It proved to be very time-consuming. I wanted to give up quite a few times, frustrated at my inability to make the damn thing work and as the months passed I started to become less Mr Mardy Bum and more Mr Angry.  To be honest, if it wasn’t for getting the right hump I would not have finished this calculator.  But my beef was not with my stumbling efforts at coding but rather with the attitude demonstrated by various ministers responsible for key policies.

Why so angry?

So, why did feeling angry with the government’s treatment of families make me even attempt to build a child maintenance calculator?  Here’s why, quickly:

  • It was abundantly clear that the government would withdraw family legal aid anyway despite the warnings from most respectable quarters about the adverse impact on vulnerable families;
  • The government held up mediation as the panacea: withdrawing legal aid would matter not a jot we were told.  But in its wisdom, the government thought it unimportant to highlight the fact people could still get means-tested legal aid for mediation. I mean, really let them know: spend a small amount of the millions that would be saved publicising the availability of legal aid for mediation. The result was a policy car crash; mediation referrals fell off a cliff.  Litigants in person, unable to afford legal help have flocked to the courts – the very outcome the government was trying to avoid.
  • Even before family legal aid was knifed in the back in April of last year, high street solicitors’ firms were disappearing from the high street faster than my mum’s scones as soon as they came out of the oven. It suddenly became impossible for a very significant part of the public to get legal advice at at time when their families were in crisis.
  • The family courts are reeling from successive budget cuts. The public counter service intended to help the public used to open between the hours of 10.00 am to 4.00 pm.  Then it was reduced to the morning only.  Now, it doesn’t really exist at all.  You have to make an appointment if you want to see someone at the public counter. Think about that. You have to phone up the court (hoping the phone gets answered) and make an appointment. But if you want to make a court application you have to do so by post.  You can’t just drop it off at the court like you used to.   Such court applications by litigants in person are, understandably, often incorrectly drafted. They are then sent back by the court. In the days of access to a public counter you could at least go in with the papers and have the usually helpful staff at least iron out the worst mistakes and try to put people on the right track. To believe you could actually walk into a court to seek help. Literally, have access to justice.  The court service is no longer a service to all its citizens. It discriminates against those who are poor or of modest income who cannot afford legal advice.
  • Allied to the policy decision to deprive the poorest citizens of legal advice is a wholesale reform of the welfare state that has driven more children into officially defined poverty. A cabinet defined by high privilege knowingly consigns the poorest and youngest amongst us to the direst of life outcomes.  I find that unforgivable.

All in all, I just get the strongest impression that the government doesn’t give a toss.  It is an abdication of responsibility by the state to enact such policies and hope that the private sector will come up with the answers.  It may deliver some solutions but it will, inevitably, be driven by the bottom line: it will cherry pick those citizens it is interested in and filter out the rest.  The not for profit sector will soldier on but comes under an increasingly heavy burden.

For individuals to do nothing in the face of official indifference is as much an abdication of responsibility as that being demonstrated by the state. So, as a lawyer, like many others, who believes that access to justice is a fundamental principle that must be protected I have to do something rather than nothing.  Partly, that is why I started this blog, rather than going back to, say, the voluntary CAB roster of many years ago.  I realised that I could reach more people in one day using my blog than I could in a whole year of once a month voluntary sittings at CAB.

And this is why my small, further effort at doing ‘something’ rather than ‘nothing’ led me to create a proper child maintenance calculator to help parents towards that difficult conversation about money.  To allow parents to communicate more easily about the appropriate level of child maintenance in circumstances where they no longer have the assistance of lawyers, the courts or the state.

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Pensions and investments or how to turn Pensions into Porsches

Pensions into porsches Sam Jermy

GUEST POST FROM SAM JERMY

 

Turning Pensions into Porsches

I usually refrain from posting my reaction and opinion on a budget until at least a week has passed.  This provides some time to ponder and digest the detail; much of which only becomes clear post budget day.  In this blog post I will focus on the largely unexpected reforms being made to money purchase pension funds.

Over the week we have witnessed attention grabbing headlines such as describing the budget as the death knell for annuities. Lib Dem Steve Webb’s comments regarding his relaxed stance on people purchasing Lamborghinis with their pension funds has provided plenty of substance for debate. I now wait with nervous anticipation for marketing slogans such as “We Turn Pensions into Porsches”.

The proposed pension reform includes changes that were implemented from 27th March 2014.  These include a higher maximum income available from Capped Pension Drawdown, a lower Minimum Income Requirement for Flexible Drawdown and a higher lump sum figure available under Triviality Rules.  Ditching the technical terms, these changes basically mean.

People electing to drawdown their pension fund rather than buying an annuity will be able to take a higher annual income than that available previously.  For example, a 65 year old can draw a maximum of £8,850 p.a. from a fund of £100,000.  

People with secure pension income totalling at least £12,000 p.a. from sources such as the State Pension and a guaranteed annuity can now elect to have full flexibility on how much they draw from an invested pension fund.  

Pension benefits can be withdrawn from age 60 as a lump sum for funds totalling £30,000; individual pension pots can be withdrawn as a lump sum for pension pot values up to £10,000.

As is typically the case with pensions, the above rules are all subject to complex qualification rules, commencement dates and restrictions.  Professional advice should be sought before any action is taken.

The more dramatic changes to pensions will take place from April 2015.  From this point, people over 55 years of age will have full flexibility in how much they drawdown from their invested pension funds and will not be subject to the above limits and restrictions.  Note, the minimum pension age is proposed to increase to 57 in 2028.  Whilst in theory a full drawdown seems attractive, the tax implications of large one-off withdrawals may make it less so.  With only up to 25% of the withdrawal being free of tax, it is important to take into account marginal tax rates and any potential loss of personal allowances. 

This future flexibility for pensions and investments has led to a fierce debate as to whether people can be trusted not to blow their pension pots in one go.  The government’s stance is relaxed on this point as the introduction of the single-tier state pension is broadly at the level for means-tested benefits. Squandering a personal pension fund should not provide people with the means to claim additional state benefits. This does seem like an odd stance considering the government’s drive behind encouraging personal and workplace pension provision.

I do provide financial planning guidance to clients who have accumulated pension funds that are surplus to their lifetime income requirements.  They are a small minority however. The vast majority of my clients are greatly dependent upon their pension funds to support their basic spending needs and lifestyle aspirations.  Financial security during their retirement years is the key priority for most. For this reason, annuities should still have their place as they can offer guaranteed income levels for life.  That said, I would expect to see significant innovation in the annuity market and increased competition to win annuity business. All positive news for the consumer.

There has also been talk of a ‘Buy to Let’ bonanza fuelled by people fully withdrawing their pension funds and investing into property.  Again, what seems like a good idea in theory, in practice, may not be so.  The tax liability on pension withdrawals, property purchases (Stamp Duty Land Tax) and the tax on rental income may result in a less than attractive overall net rental yield.  The numbers need to be fully ‘crunched’ to determine the suitability and benefits of this option. 

Other considerations include the pros and cons of holding investments within ISAs vs. Pensions. Watch this space for the next blog on this specific subject and have a look at my previous post on Divorce Finance Toolkit on the subject of state pension changes.

The implemented pension changes and forthcoming reform gives people greater flexibility to make their own choices regarding when and how to draw their invested pensions. With so many variables at play such as tax, investment risk, inflation risk and liquidity; planning becomes essential. A qualified financial planner can provide guidance and assistance to help people make informed decisions and achieve financial security in retirement.

 
Sam Jermy works for Family Law Financial Planning Ltd which is an appointed representative of North Laine Financial Management Ltd which is authorised and regulated by the Financial Conduct Authority. North Laine Financial Management Ltd’s FCA Register number is 446522.  The views expressed in this guest post are Sam’s own. Please contact your own independent financial adviser or family lawyer if you believe the issues raised by Sam impact upon you. Alternatively, please post a comment or query below and Sam will do his best to respond.

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Inheritance Act Claims

 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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Divorce financial planning and interest only mortgages

Divorce financial planning and interest only mortgages

A bridge too far? Interest only mortgages

There is a worrying report from the Financial Conduct Authority (FCA) about interest only mortgages.  With an interest only mortgage you pay off the interest on the loan each month but nothing towards the capital you have borrowed at the end of the term.  If you do not have a savings plan to meet this capital payment at the end of the term, which could be at the point of retirement, you will be in trouble.  The report refers to some 2.6 million interest only mortgages coming to maturity between now and 2040.

The aspect of the report that struck me, is as follows:

More worryingly, it found some people were “underestimating the problem”: 37% of those quizzed reported a definite or possible shortfall between what they will have to pay the lender when their mortgage term ends, and what their savings, investments or other strategy will deliver. And borrowers who were able to give a figure believed their shortfall would be, on average, £22,000. But when financial modelling was carried out, the proportion who may not have enough money to pay off the loan jumped to 48%, and the average shortfall was “considerably higher”, at £71,850. That sum is approaching half the average £162,000 house price in England and Wales.

An article on the FCA’s report can be read in The Independent.

What now for interest only mortgages?

As a family lawyer specialising in financial settlement I want to know how my advice today will affect my clients in 10, 15 or 20 years’  time. I normally take a dim view of the opposing lawyer who suggests that my client should consider interest only mortgages when I know she will not be able to build up savings in the future on her present or predicted income.  As readers of my blog will know, I think that ‘reality-testing’ any proposals for settlement on divorce or separation is crucial.  One way to do this is to make sure that financial planning advice has been obtained.  The financial modelling referred to in the FCA report is precisely the advice I import for my clients so they know exactly where they will stand in the future if they accept a settlement proposal.

It does not mean that interest only mortgages would not be right in some situations, but I fail to see how a client can make an informed decision today if they are not being assisted to look at their financial health tomorrow.

If you do find yourself facing a shortfall then consider some of the options in this useful article in The Guardian.

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How does the budget 2013 impact on divorce and separation?

How does the budget 2013 impact on divorce and separation?

Another (austerity) budget

How does the budget 2013 impact on divorce and separation?

Chancellor George Osborne has doled out his latest spoonful of medicine for the UK economy.  My take, as usual, is from the family lawyer’s perspective, for those families dealing with separation or divorce.  How does the budget 2013 impact on divorce and separation?  Where the money has to stretch to two households?

The devil is always in the detail, especially with the Budget small-print, and the picture will not be entirely clear for another few weeks, but here is my initial reaction.

The Help to Buy Scheme.

In my post upon the 2012 Budget I referred to a home buying scheme called FirstBuy (George, did they not tell you about finger spaces between words at Eton?).  FirstBuy was aimed solely at first-time buyers.   The better news, I think, is that the new scheme is no longer restricted to first time buyers but will now be available for all buyers of newly built homes.  I hope that it may ease the pressure for those parents needing to fund a new property purchase after a divorce or separation, especially as a deposit as low as 5% could be obtained.  It appears that up to 20% of the purchase costs will be funded by a shared equity loan which will be interest-free for the first five years.

Personal allowance up to £10,000

On the face of it, it will make the pennies spread further in the family budget, especially for those working parents who struggle to afford child care.  And, it will kick in a year earlier than anticipated – in 2014.

Employers’ National Insurance

Indirectly of potential benefit: NI changes (with a predicted 450,000 firms no longer paying NI) may reduce the financial burden for smaller nurseries to take on more staff and provide more childcare.  Additionally, it seems that a new employment allowance will cut National Insurance bills for every firm by £2,000.

Public sector pay rise cap

The chancellor giveth and the chancellor taketh away, or at least, he lets inflation do his dirty work for him.  Following a public sector pay freeze, a 1% pay rise cap for the public sector – the nurses, council workers and teachers – will last for 3 years.  With inflation last year running at 2.7%, this is a year on year pay reduction for the public sector.

The kids are not alright

The Budget comes hard on the heels of benefit changes including Universal Credit which will replace at least 6 individual benefits or credits in the future and changes to housing benefit for those deemed to be under-occupying in the social housing sector.  The net effect of Mr Osborne’s budgets since the coalition came to power has been, and will be,  to reduce the income of families with children.  It seems to have become fashionable again to hate the poor and less well off,  and perfectly acceptable to mis-label them as scroungers, skivers and deadbeats.  At the end of the day, public policy and budget changes are hurting kids.   Those inconvenient people at the Institute for Fiscal Studies have summarised it nicely in the following table.  Is this really what you want, Mr Osborne?

How does the budget 2013 impact on divorce and separation?

THE KIDS ARE NOT ALRIGHT

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The man who sued his wife over the children who were not his

The law on Deceit put to an unusual use

I have had cases of divorce or cohabitee separation where fathers have sometimes cast doubt on the paternity of the children they have brought up in the relationship with the mother.  In most instances, the doubts expressed are quickly abandoned, since most stem from anger at receiving a letter from the CSA following a very short relationship indeed.  Not many fathers insist upon having their paternity genetically determined.   So I was surprised to see a sobering (and sad) article about a man who sued his ex-wife for letting him believe that the children from her affairs were actually his.

The ex-husband succeeded in winning damages of £25,000 for deceit.  He had maintained the children financially after the separation and divorce believing himself to be the biological father.  It appears from the article that the court awarded the damages at a level equivalent to the feeling of ‘bereavement’ the ex-husband would have experienced when finding out he was not the father.

There is insufficient detail in the article for me to comment further but it would appear that the ex-husband’s legal claim was under the  under the Tort of Deceit (a Tort is a civil ‘wrong’).  The article reminded me of my law student days and the leading authority on Deceit which was then Derry v Peek (1889).  Lord Herschell , in that case, said:

“First, in order to sustain an action in deceit, there must be proof of fraud and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (1) knowingly, (2) without belief in its truth, or (3) recklessly, careless whether it be true or false”.

I can only imagine the impact on this ex-husband and also his step-children upon discovering the truth.  How awful it will be if this revelation destroys the relationship he may still enjoy with the children who formerly looked upon him as their father.

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Credit history problems after divorce

Credit histories should attach to the person rather than the address

It is always unsettling, many years after a divorce has been finalised or your ex-partner has moved out, to receive letters in their name.  This is especially the case when the letters are from creditors or debt recovery agencies chasing outstanding payments.

My virtual postbag received the following from Elsa:

I’ve been divorced for 7 years, but recently have been receiving letters addressed to my ex husband from debt collectors. I have phoned them to tell them, and they have said they will not send any more letters. But what about the ones that they have sent? He hasn’t lived with me for 7 years but still seems to be using my address. Why are the credit companies not checking the validity of the documents they are given? Won’t this compromise my credit score? If there are debts lodged against my address?

OK.  The first thing to note is that so long as the debt is in Elsa’s ex-husband’s name, it remains his debt and his debt alone.  Provided the debts are not jointly owed by Elsa (what is termed joint and several liability – which means the creditor will chase whichever of the joint debtors is most likely to cough up) there should be no problem.

However, Elsa should check to see if any of the loans or credit agreements giving rise to the debts were taken out by her ex-husband after he moved out of the former marital home.  He should not have been claiming to still live at the property when taking on those liabilities.  I think Elsa would benefit from obtaining a credit report from one of the main providers such as Experien UK.  In my experience, lenders and commercial loan companies tend to be more sophisticated in their assessment of someone’s credit worthiness than used to be the case.  They do seem to focus more on the individual rather than the address.  But, Elsa may well find that her credit record is linked to her ex-husband’s especially if they did have joint loans in the past.  if she finds that this is having an adverse impact on her credit history she can submit a financial dissociation request so that her financial history is separated out from her ex-husband’s.

Strictly speaking, Elsa should not open the letters addressed to her ex-husband as they are not her property.  Better to mark them: “Gone away – return to sender”.  The letters should soon dry up.

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Family law and divorce without legal aid

divorce finance toolkit

The Court of the Kitchen Table

What happens when couples going through a divorce, having to sort out child support, the future of the matrimonial home, or even pension splitting upon divorce, have no access to a family lawyer?  I have talked before about what may happen when legal aid is withdrawn from family law.

My gut instinct tells me, and any other family lawyer you ask, that the withdrawal of legal aid will lead to more people trying to sort it out themselves – the DIY divorce route – or representing themselves in court (as litigants in person).  The court system is already  struggling with budget cuts and is ill-equipped to deal with an upsurge in self-reppers.

Gut instinct is fine but it’s always helpful to see some objective evidence and I therefore read, with keen interest, the results of a study sponsored by Simpson Millar Solicitors which can be found here.  The stand out headline is that 65% of women and 53% of men in Leeds and Manchester would try to get by on their own in a divorce situation.

I am very troubled by this stat.  God knows how two spouses, both unrepresented, can sort out complex issues around the kitchen table.  I can just imagine the conversations where words like ‘clean break’ will be bandied around without any understanding of the long-term consequences for both spouses and their children should they actually end up with a clean break.

The challenge for the legal profession is how to preserve access to justice and mitigate some of the worst effects of family breakdown: like the provision of expert legal advice. Some of us in the legal profession still give a damn about this even though it’s clear the Government doesn’t.  The majority of the retail operators about to move into the legal market (estimated value £25 billion) have not come from a background or training that still sees ‘the law’ and the profession of lawyer as offering society something more valuable than a ‘commodity’.  These retailers will cherry pick the best bits and won’t give a second thought for Kevin and Tracy sitting around the kitchen table in Manchester and Leeds.

 

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