spousal periodical payments

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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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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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UK Budget 2012: impact on divorce and family law

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

Contains more than the Chancellor’s sarnies

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

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

That’s it folks.  For now.

 

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Arrears of maintenance following divorce

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

Many a mickle makes a muckle

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

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

This week’s postbag:

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

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

The solution

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

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

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

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

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

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Child support and maintenance after divorce

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

Who knows what the future holds?

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

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

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

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

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

Your options

Carry on as you are. 

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

Apply back to court yourself

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

Or, just pay the new amount

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

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

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