Posted April 16th, 2013
In divorce, there are few issues that stir up as much controversy as child maintenance.
Most non-resident parents (NRP) pay maintenance on a sliding scale depending on how many children they have with the resident parent. A child is classed as either:
- Under 16
- Under 20 and in full-time education (but not higher than A-level or equivalent)
The parent who doesn’t have day-to-day care of the child pays child maintenance to the parent or guardian who does.
If you are on benefits as the NRP you will pay maintenance at the ‘flat-rate’. This is £5 no matter how many children you have whether you have 1 child or 5. This also applies if the NRP has a weekly income of less than £100.
If the NRP has a weekly income of more than £100 but less than £200, they pay the flat rate plus a percentage of their net weekly income. This is termed ‘reduced rate’.
‘Basic rate’ applies to NRPs who have a net income of more than £200 or more per week. The percentage depends on:
- The number of children needing child maintenance
- The number of other children the NRP or their partner get Child Benefit for
If the NRP pays child maintenance at basic rate then currently that is 15% for the first child. On a net income of £200 per week, that would be £30. For each further child an extra 5% is added. For 3 children a NRP with a net income of £200 pw that would amount to the first child at 15% and child 2 and 3 at a further 5% each. This would mean 25% of the NRPs net income would be paid in child maintenance. This would amount to £50 pw.
The child support agency (CSA) isn’t perfect by any means. On the whole though, the amount payable seems fair. Regardless of the circumstances, your flesh and blood shouldn’t be penalised for any mishaps leading to separation.
There are perhaps situations arise where one may make a fairly strong argument against paying (or at least a reduction in pay). Consider the following:
A father that is very close to and hands on with his children is forced out of the marital home due to infidelity by his wife. The father pays child maintenance but is also having to find a place to live, furnish it etc. and make sure his new abode is suitable for his children to stay with him in. He doesn’t earn a great deal but he still pays maintenance. Marry that with the fact that his ex-wife works and has a new partner living in his children’s home that also brings in a salary. Our illustrative father may feel a bit aggrieved as he struggles to maintain his own home for his and his children’s sake – a home in which there is only his salary yet his ex-partners household income (including her new partner) easily dwarfs his.
However, strong an argument that maybe it’s easily quashed with the simple question of “but whose children are they?” Not only that, but regardless of who and who isn’t to blame, it’s not unlikely that his ex is paying astronomical child care fees so that she can work. Is the situation ideal? Probably not but it is fair that the NRP still pays his share.
Sledgehammer pieces of legislation that rarely accounts for merit are bound to marginalise a significant amount of hard working people. I feel that the current rates of maintenance are fair. So why is the government reducing the amounts?
Well the change is due in part to reflect the fact that a growing number of NRPs are setting up homestead with new families. That’s my take on it anyway; whether they are starting a new family, or moving in with somebody else the change is to reflect the fact that they may have a duty of care to ‘relevant other children’. Seems fair, yet things can get tangled up in even fairly common situations.
Observe!
Our illustrative dad is paying around £350 per month for his two young children. They have moved to a new area with mum. If our illustrative dad – let’s call him Pete – were to live with ‘other relevant children’ then his maintenance to his own children will reduce. Fair? Well, no. Even though he may be living with new children that no doubt he has grown very fond of, they are not his kids. The idea suggests that the reduction is due to the support he has to offer the ‘other relevant children’.
Let’s come at this from another angle. Let’s say Pete’s ex-wife – we’ll call her Louise – has finally settled on one new partner. This new partner – we’ll call him Brian – has his own children under 16, but has moved in with Pete’s ex-wife and children. Brian’s maintenance to his own children will reduce as he offers support to ‘other relevant children’ he is now living with – namely, Pete’s children. But what of Pete’s maintenance? Remember that Pete obviously is obliged and indeed wants to support his children; but on his own is building a new home and life for himself and the sake of his children. Not only that, but Brian has a reduction in his NRP maintenance in order to reflect the fact that he is living with a new family……….sounds like Pete is being treated a bit unfairly. Or more to the point, Brian should be supporting his kids and his kids alone despite who he lives with. Now obviously, should Brian and Louise have children of their own then the picture is slightly different.
You could say “well as long as the children involved aren’t losing out then what does it matter?” True; Pete’s kids are actually better off, but what about Brian’s poor kids? Assuming that Brian’s ex isn’t cohabiting then it’s his children that miss out.
This all really only applies though if you have to go down the dreaded CSA route. My advice; get it sorted through mediation. Just because the law says this is what you could do, it doesn’t mean you have to. I have no doubt believing that neither Pete nor Brian would dream of skimping on paying for their own kids. However, given the current changes in legislation I’ve no doubt that many will
Tags: Divorce, IFA | Posted in Divorce |
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Posted March 14th, 2013
Cuts to the legal aid budget that come in next month are going to leave many vulnerable families deprived of vital services that only professionals can supply.
I can’t really understand where the government is coming from on this one. Often when cuts are imposed there will be some alternative offered. Yet in this instance the legislation comes in and will leave many people in difficult situations with nowhere to turn; and let’s not forget that there will obviously be a lot of children caught in the midst of all this. So much for the welfare of the child is paramount.
One reputable firm of solicitors – Stephensons, the largest family law team in the North West – are making provisions to help those that are in a vulnerable position. The help on offer to those families whether they may be divorcing, parents in adoption cases or parents trying to resolve contact disputes will include a fixed fee service and a flexible ‘pay as you go’ service. Both services will ensure that, at the very least those facing having to pay for their legal repressentation will know where they stand from a cost perspective.
I also offer a free 30 minute consultation and have a lot of experience in helping people work through their finances on divorce whether that is helping you get a fair settlement or implementing a pension sharing order. If you feel that you may be affected by the changes in legal aid then why not get in touch for a free 30 minute, no obligation consultation.
Tags: Advice, Divorce, Financial Settlement, pension share, Pension Sharing, Pension Sharing Orders, Pensions & divorce, Resolution Accredited Independent Financial Adviser | Posted in Divorce, Financial Advice, Pension Sharing, Pension Sharing Order, Pensions & divorce, Resolution Accredited IFAs |
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Posted March 13th, 2013
Technically speaking the cash equivalent transfer value (CETV) represents the expected cost of providing the member’s benefits within the scheme.
In divorce settlements, thought needs to be given as to whether the CETV is the most appropriate method of valuing the overall pension benefits. Consideration needs to be given as to whether the CETV accurately reflects the benefits on offer and if certain benefits are not counted within the CETV, what should be done about it.
In the case of money purchase benefits, this is generally straightforward – it is the accumulated contributions made by and on behalf of the member together with investment returns. (There can be exceptions).
But with defined benefits (like final salary), the CETV is a value determined on actuarial principles, which requires assumptions to be made about the future course of events affecting the scheme and the member’s benefits.
So when negotiating settlements it should be noted that it is not that the CETV has been inaccurately valued but that it may not be the most suitable valuation to use for divorce purposes.
Look at the definition again and note that it states “the expected cost of providing the member’s benefits” The CETV may therefore be valuing the member’s benefits but not the spouse’s. (Spouse’s pensions can often be very valuable). Trustees will also provide a CETV based on the normal retirement date of the scheme, even where it is likely that the member will retire early.
Of course, agreeing on a higher valuation does not mean that there are extra funds available as the CETV is the only value the scheme will place on the pension. However, when completing a pension sharing order it is possible to take a higher pension share (based on the higher valuation agreed) to compensate.
So what does this all cost and surely every actuary/pension expert would take all this in to account? Firstly, for no more than a few hundred pounds a second opinion valuation can be obtained. Secondly, unfortunately not and many reports I see only work of CETVs thus potentially undervaluing the pension assets at the most crucial stage!
My approach is to work hand in hand with an actuary to ensure that you get the best result. It should be noted that on several occasions we have managed to increase the valuation considerably (doubled it one case) resulting in a significant pension sharing increase for our client.
So before proceeding any further why not allow me to review the pension CETVs (for free) and see if we can improve the settlement today.
Tags: Cash Equivalent Transfer Value, CETV, CETVs, Divorce, Final Salary, Money Purchase, Pension Sharing | Posted in Pension Sharing |
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Posted March 6th, 2013
Wife divorces husband over map-reading argument
You have to feel a certain amount of sympathy here for Mark Powell. None of us know what goes on behind closed doors and even the most seemingly rock-solid couple might fight like cat and dog away from prying eyes; however, divorcing over a map reading argument? How broad is the term “for better or worse” exactly?
The reason I feel some sympathy for Mr Powell is that he obviously did not want to divorce and insult was added to injury by way of a refusal to appeal. Factor in the fact that had he won the right to appeal then what? Stay married to someone who feels that an argument over map-reading is tantamount to battery or adultery? Move on Mark – plenty of loyal fish in the sea.
The couples I find that make it aren’t the ones that don’t fight but the ones that accept that they will. Some couples fight more than others and I know I could make a nun swear without too much effort. Yet couples that embark on matrimony under the illusion that nothing will ever breach their starry eyed vows are headed for therapy or the divorce courts. In fact, I’d go so far to say that when you marry someone, if you can accept that they are far from perfect just the same as you, and that you may disagree about certain things, then you may find that you probably don’t fight all that often any way.
The idea that you can divorce over something as petty as a row about reading a map leaves me a tad incredulous. That’s the equivalent of jumping ship just because they didn’t have your favourite brand of mustard. If someone can divorce on such frivolous, childish grounds then surely this person should not have been allowed to marry anyone in the first place; but then there’s nothing that can realistically be done about that I suppose. It’s up to people to be a little more honest with themselves about what they want out of life.
Interesting to note that Mr Howells ex-wife wasn’t at court for the hearing. Perhaps she got lost on the way.
Image Credit: Flickr.com/valleygirl_tka
Whitewell Financial Planning Ltd is not responsible for the content of external websites.
Tags: Divorce, Pensions & divorce, Pensions and Divorce | Posted in Divorce |
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Posted March 4th, 2013
Not a good idea. Of course it may seem unfair to have to declare assets that were acquired before you got married; or assets that were solely paid for by you during the marriage, but the fact is if you aren’t up front about your finances during divorce then you are risking a spell in prison.
According to a survey by Co-operative Legal Services, 25% of those who go through divorce will hide aspects of their finances from their soon to be ex-partner. And here’s the really surprising thing about this survey – the survey was conducted online and involved around 800 divorcees and it found that women are more likely to conceal money and possessions during a divorce.
From a little research on the good ol’ worldly wide web, it looks like most divorces are initiated by women. Stats abound from anything between 55% and 91%. So what are we to glean from this? It does make for depressing reading. You could take the view that women view marriage purely as a move to make financial gain. Whereas I’ve no doubt that it’s true for some, it surely can’t be true for anything more than a minority. That would be highly cynical.
I think it points more to the fact that many people marry the wrong person and do it too quickly; and as it is often the mother whom the children will live with, you may imagine that she may feel justified in hiding financial assets from an estranged spouse. After all, she’s only doing it for the kids. Morally justifiable it may be, but it is illegal and you are putting yourself in contempt of court if you do this. The whole point of settlements is to make sure that both sides have the chance to put their lives back on track. The best way to ensure that there is a fair outcome is to be completely open and honest. If you’re made an offer you aren’t happy with then you don’t have to accept it. On the other hand if you’re made an offer that you don’t know if you should accept or you want help with negotiating then get in touch.
I am a Resolution Accredited IFA and as such I am in a position to help you get a fair settlement without risking prison!
Tags: Advice, Divorce, Financial Settlement, IFA, Resolution, Resolution Accredited, Resolution Accredited Independent Financial Adviser | Posted in Divorce, Financial Advice, Financial Planning, Pension Sharing Order, Pensions & divorce, Resolution Accreditation, Resolution Accredited IFAs |
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Posted March 1st, 2013
You can’t get divorced unless you get married. Aside from stating the obvious, I’m underlining the point that these days marriage seems little more than a precursor to divorce. It was only within the last week that I heard an acquaintance remark about how much more fun his divorce is compared to his marriage.
Granted, there is maybe a little relief when it all becomes absolute, but this rising trend that divorce is the main course after the entre of marriage is eroding at society. That sounds sweeping, but marriage just doesn’t seem to mean what it used to.
For better or worse is a redundant term as couples seem to run to divorce solicitors at the merest hint that they have actually married another human being just as flawed as they are. For better or slightly worse than better may be more apt.
When nothing but divorce will do though and there is no salvaging the wreckage of supposed wedded harmony, the last thing you need on top of the stress are spiralling costs and poor quality representation:
BBC News – Rising costs add to divorce woe, says Legal Ombudsman
Marriage should be more – much more than an exercise in saving for divorce. Divorce costs are starting to rival what you’ll spend on a wedding day; and it looks like there are some unscrupulous solicitors looking to capitalise on clients engaged in an acrimonious divorce. That’s abuse, whichever way you cut it up. That is praying on the vulnerable and taking advantage of their state of mind.
A common and highly justifiable complaint by clients and consumers in the financial services industry is that charges are not transparent and clear. The Retail Distribution Review was set up to combat that issue (although it’s clear that there are many providers and platforms that are quite happy to work around that and leave clients still scratching their head when it comes to exactly what they are paying!) and I would say it’s time that something similar was brought in to weed out the more unscrupulous solicitors that just want your money.
If you’re not happy with your legal representation and feel they are not acting in your best interests, then please get in touch by phone on 01204 663904 or by email – phil@white-well.co.uk. I can recommend excellent law firms that will act with your best interests at heart.
Image Credit: Flickr.com/stan
Whitewell Financial Planning Ltd is not responsible for the content of external websites
Tags: Advice, Divorce, Pension Sharing, pension sharing order, Resolution Accredited Independent Financial Adviser, Settlement | Posted in Divorce, Financial Advice, Pension Credit, Pension Sharing, Pension Sharing Order |
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Posted November 27th, 2012
We all know, or know of people that have managed to get married abroad. It probably doesn’t work out much more expensive than a lavish ceremony on these shores. Wouldn’t it be curious to find an agency set up to help you get divorced abroad?
“They got divorced? When did that happen?”
“Yeah they’ve been divorced a couple of months now, they got divorced in the Seychelles!”
“Pffft…..it’s alright for some, me and the ex had to make to do with a divorce in Wolverhampton!”
In reality though, the only money held abroad in divorces tends to be offshore bank accounts that Mr. Taxman doesn’t know anything about……….yet!
That is, until a disgruntled soon to be ex-partner tells him about it, and handsomely rewarded they will be for it as well. Of course, marriage, or the dissolution thereof, doesn’t have any relevancy when it is an ex business partner blowing the whistle. However, according to HMRC, there are significant number of tip offs are coming from ex partners.
As the waters separating the terms “evasion” and “avoidance” get ever muddier (avoision if you will) it’s a made up word intended to nod at the notion that evasion and avoidance are becoming entwined but I’ll change it to aversion if you think it would make more sense, let’s not debate here on the rights, wrongs or other loopholes surrounding the whole Tax debate currently.
Fact is, it’s more incumbent on you to be up front. Hiding money from the tax man is one thing – and it can land you in prison. Hiding money that is due to a disgruntled ex is positively like dicing with death!
Be up front, and then you might avoid finding yourself being upfront in front of a Judge.
image credit: flickr.com/banjo_d
Tags: avoidance, Cash Equivalent Transfer Value, Divorce, evasion, HMRC, judge, money, offshore, Pension, Pensions and Divorce, Tax | Posted in Divorce, Financial Advice, Financial Planning, Pension Attachment, Pension Credit, Pension Offsetting, Pension Sharing, Pension Sharing Order, Pensions & divorce, Resolution Accredited IFAs |
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Posted November 20th, 2012
…..and that figure is unnervingly low. There are nearly twice as many women over 50 without a pension when compared with men over 50.
It seems clear then, that many women are not even asking the question upon agreeing a divorce settlement. It is more important now than ever before that the question of sufficiency in retirement is tabled during in settlement talks. It is just as relevant as child care and the split of matrimonial assets.
It’s pretty straight forward. If you have sacrificed a career to raise children, or even settled in a job just to help make ends meet within the marriage, there is a fair question of income equalisation after retirement that needs to be asked and answered.
I am an IFA with expertise in the field of Pensions on Divorce. If you are going through a divorce and need advice, or if the issue has never been raised for you and you feel that this is something that you would like to talk about then please get in touch:
01204 663904
Image credit: flickr.com/tax credits
Tags: Advice, Cash Equivalent Transfer Value, Divorce, external transfer, Financial Advice, Financial Planning, Financial Settlement, Pension, Pension Credit, Pension Scheme, Pension Sharing, pension sharing order, Pension Sharing Orders, Pensions & divorce, Pensions and Divorce, Personal Pension, Resolution Accredited Independent Financial Adviser, Settlement | Posted in Divorce, Pension Credit, Pension Sharing Order, Pensions & divorce |
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