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What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

What steps can we take to reach a fair agreement?

The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

What is a Consent Order and why do we need one?

A Consent Order is a legally binding document that finalises a divorcing couple's agreement on property, pensions and other assets.


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Spousal Mainteance

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16 Apr 12 #324182 by pgh
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Thats good know I will genuinely have just enough to live on. I understand that if I do overtime that even that would be included in any God frobid CSA involvemnet? It''s as somuc2know says you are penalised for trying to make up ground after divorce...

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16 Apr 12 #324188 by somuch2know2
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CSA includes my discretionary bonus in mine. I was awarded it 2009 after the banks fell to their knees and annual bonuses were ceased. It can be pulled at any time and is NOT part of my salary- but they grab it. That alone sees my STBX get 1700.

Sometimes I wish I would just be made redundant- I would have nothing, but then there would be nothing to take and she would HAVE to take some financial responsibility instead of trying to screw me for every last pound.

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16 Apr 12 #324196 by dukey
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Your both quite new to this and have similar concerns, if i were a betting man i`d say you both have looked at the subject and think there don`t seem to be any definite answers, in an ideal world there would be a mathematical model all could use like we have with CM, but no its just not possible because of the number of variables.

And now for the big slap in the face, even if you do your research even if you pay a barrister for advice, it all boils down to the opinion of a single judge, if three judges heard the same case there is a strong chance they would end with a similar judgment but maybe take different roads to get there, you have to look at the issue in the round and not the singular, it tends to fall into three camps.

Respective income

Liquid assets

Pensions

Spousal maintenance is one part of the jigsaw.

If SM is an issue then be aware of the type of potential order.

Term order, this has a fixed end usually when children reach a certain age or leave full time education.

Joint lives, no fixed end and can be payed until the ex marry`s or you pop your clogs.

Global order, more commonly known as segal or conell orders, these combine CM and SM, they can be term or joint lives.

Anyone bored yet?.

If not check out statute bars, knows as s28(1) bars, if you are maybe going to have a term order you need to make sure once the order ends the ex cannot apply to extend, thus the need for the bar.

As with all family law learn what you can, a barrister wrote a most excellent article on SM which ill try and find, print it off and read it a few times, don`t try and take it all in at once though or blood will flow from your ears.

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16 Apr 12 #324200 by somuch2know2
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Brilliant advice... and very informative.
I have done more homework on divorce than all my school courses combined and they all basically add up to "you are a man, you are going to get screwed"

All I can do is prove her income capability
mortgage capability, housing needs, and then prove all mine and hope that a judge feels that my 15hr days should not be rewarded with a bigger SM payment to her

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16 Apr 12 #324212 by dukey
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Its a common misconception - all men get screwed, its also rubbish.

SM is not and never has been gender specific nor will it ever be.

Its facts and circumstances that matter not what bits you have.

Its true SM is mostly paid by men, why?, usually because the wife has children to look after and a much lower income.

We all know the story boy and girl meet fall in love and get married, girl falls pregnant and dad works on often doing quite well, roll the years by say ten or fifteen and mam may have a few sproglets and dad has a career.

Then it goes wrong, why is irrelevant, they argue over who keeps what and who pays what, the judge is left with the decision to make, the judge will consider all the factors in s25 (1) of MCA, that`s the stuff you should focus on.

For most of us its a case of reasonable needs, so your ex may come up with a huge list of "needs" what you have to do is go through the list and make it "reasonable".

There are a couple of wise wiki members both of who have personal experience of SM, Fiona (who payed her husband) and little mr Mike who payed his wife for 28 years until she sadly passed away last year, both are well worth talking too.

Oh and on the myth that its men that get screwed there is a lady on wiki right now who has offered her husband £3500 per month for 12 years, he says he needs £5000 for life, he refuses to work never has and the court have indicated that his staus quo need not change.......................who`s getting screwed there then?.

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16 Apr 12 #324213 by dukey
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Here we are, this was written by a family law barrister who helped wiki for along while.

SM

What is it?

The legal term for spousal maintenance is “periodical payments”, which are governed by section 21(1) of the Matrimonial Causes Act, and to which the considerations of section 25 apply. Simply put they are payments made periodically (usually monthly) by one party to the marriage to maintain the other party. You can find the Act here:
www.uk-legislation.hmso.gov.uk/RevisedStatutes/Acts/uk pga/1973/cukpga_19730018_en_1

On an application for spousal maintenance, the court has 8 options:

1. To grant the application by way of an order for £X per month without limit. This is colloquially referred to as a “joint lives order” as unless it is discharged by further order or the remarriage of the receiving party, it lasts until the death of one of the parties;
2. To make a nominal order of say £1 per year, to keep the door open for an application at a later date should the applicant’s circumstances change;
3. To make a “term order”, that is to make an order for £X per month for a specified amount of time or until a specified event, such as the receivers’ cohabitation with a person of the opposite sex. However, without the bar mentioned below the receiver can apply for an extension to the term providing the term has not yet ended;
4. To make a term order with a bar to applying for an extension;
5. To make an order adjourning the application, which means the applicant can restore it at any stage;
6. To make a deferred order to come into effect on a specified date, which is usually the payer’s retirement - colloquially this is known as an “earmarking” order, and is technically one of the pension orders;
7. To make an order dismissing not only the claim, but the right to make the claim again;
8. To make no order – this then leaves matters open for argument that as the claim has not been dismissed, it has been adjourned, and as arguments are expensive, this is an order that ought to be avoided.

Who can apply?

The person with the lower income of the two parties to the marriage. Even today this is usually the wife, but there is nothing stopping a lower earning husband from applying. The key factor is that there is a disparity in incomes. Unlike the other financial orders a spouse who has remarried cannot apply, even if the remarriage took place after the application was made.

How do you apply?

Using a Form A. It is rare to apply for periodical payments in isolation; usually the application forms part of the global application for Ancillary Relief. There is the option to apply during the course of the proceedings for maintenance pending suit, which is the subject of a further article.

What is it for?

Put simply, it is to maintain the lower earning party. Since the case of McFarlane (www.familylawweek.co.uk/site.aspx?i=ed2060) the courts are now entitled to factor in a compensatory element to periodical payments, for example where wife gave up a career to raise children. So while the general rule was that the receiver had to prove need and the payer had to demonstrate an ability to pay; the onus is no longer on the “need” of the receiving party especially in higher income families.

How does the court decide whether to make an order?

Given that the court has to consider making a Clean Break in all possible cases, the first consideration is whether to make an order at all. Should the court decide it is fair in all the circumstances of a case to make an order, the next consideration is how much the order shall be for. Once that is determined, the court then decides the duration of the order.

Should there be an order at all?

If there is a reasonably large disparity in incomes (and bearing in mind “income” is income from all sources, including (but not limited to) child maintenance; tax credits; state benefits; income from employment and self employment; private income) then the answer is usually yes, an order for periodical payments should be made, providing the paying party can demonstrate a need, and demonstrate the paying party has the means to pay. “Need” is something that varies in case to case however, and is largely determined by the lifestyle enjoyed by the parties’ pre-separation. The court has to look at all the section 25 criteria, and most important here, especially when considering the length of the order, is firstly the length of the marriage and secondly the earning capacity or potential earning capacity that the receiver has.

A further relevant factor is cohabitation, on both sides of the coin. If the payer is now cohabiting with a non-earner this does not negate the duty to pay (and the court has to give first consideration to the “first” family), however, the court cannot simply ignore his or her obligations to the second family and how this reduces the available income to pay. The flip side is if the receiver is cohabiting. While the courts repetitively point out that cohabitation falls far short of marriage, the court also recognises the “social revolution” towards cohabitation over marriage. While the earnings of any cohabitee are not directly taken into consideration, the fact that those earnings lead to a contribution to the household is valid, and therefore reduces the need of the receiver. It is the rare case now that a cohabiting applicant will receive anything much if at all.

How much?

Hmmm well ask a lawyer and you will receive the answer along the lines of “the court has a broad discretion” for which read “haven’t a clue”. Not helpful, I appreciate. The old school approach was “one third; two thirds”, but that has long gone. The proper starting point is to consider all the section 25 criteria and draw a balance. That also is not really a helpful answer if you are representing yourself. The truth of this matter is that lawyers and judges develop an intuition as to what is fair in all the circumstances of the case. It is unfortunate that there is not a formulaic approach, but this is something the courts have avoided.

To be able to attempt to calculate how much, the first port of call is to calculate the “need” of the receiver. The basic calculation is his/her outgoings minus any income he or she receives. If there is a gap there is a need, and that forms the ­­base­­line figure. Then one looks to the resources of the payer, and if there is an ability to pay that ­­base­­line figure. If so, it is awarded. However, that is not the end of the calculation. One then looks at the lifestyle the parties enjoyed during the marriage. If the payer can afford to pay more so that the receiver can continue to enjoy a similar level of lifestyle, then that will be so. The payer will not, in most cases, be ordered to meet payments that push him below subsistence level. However, if since separation the payer has been reckless in the responsibilities assumed, the court will overlook the level of need required to pay those liabilities and prioritise the needs of the receiver.

Once there is a figure the court will look the effects the proposed order will have on the respective incomes and consider if it is fair in all the circumstances. It would be the rare order that amounted to more than 50% of the payer’s net income when spousal maintenance was added to child maintenance. The court also has to look at the orders for capital division and weigh the maintenance order in light of those orders. Particularly relevant is a pension sharing order. If there is such an order, and the effect is to achieve parity of income in retirement, the order should end on the pension order taking effect, and there should be a bar to extending the term put in place.

Finally, there are special considerations for servicemen, and the amount of maintenance the spouse of armed service personnel is limited.

When representing yourself on an application it is helpful to the court if a “net effect schedule” is prepared. This is a document that shows the global income of both parties if X order is made. So for instance, say it would seem the figure of maintenance is between £500 and £1000. Do a schedule showing the global net incomes of both for £500, £600, £700, £800, £900 and £1000. The court then has a ready reckoner to refer to and can see almost at a glance what is the fairest order to make in the circumstances.

How long for?

Section 25A(2) of the Matrimonial Causes Act 1973 requires the court to consider limiting the period of the order to that which enables the receiving party to adjust to being financially independent. This is particularly relevant in short marriages, and marriages of a longer duration but where the receiver has an earning capacity of his or her own. The phrase often used is a “feet finding” period – i.e. a period of time which enables the receiver to find their own feet.

The order can last for life, particularly after a long marriage during which the receiver has not worked. With joint lives orders it is common for an order to be made that the payer takes out a life insurance policy so that the receiver is not left without the income stream on the death of the payer. If no such order is made, or if a policy is not taken out, the receiver has a claim on the estate of the payer under the Inheritance (Provision for Family and Dependents) Act 1975.

If a pension sharing order has been made, the spousal maintenance order should end on the pension sharing order coming into effect, otherwise there is double counting.

Capitalisation

Should there be the liquid assets available the payer can opt to capitalise maintenance to achieve a Clean Break. This is by no means a cheap option, and is one the court can reject, particularly if there are young children, as the court may consider it wiser to keep the door to upward variation open should anything happen to the parent with care. As an example of the costs of capitalisation, lets take the example of a 40 year old wife who has a need of £15,000 per annum. Capitalised for her lifetime, the payer would have to find £306,000 to buy out that claim, according to the tables used by the court for the purposes of calculating capitalisation.

Are there any tax implications?

Very simply, no. The receiver does not pay tax on spousal maintenance received. Until 2000, tax relief was available to the payer, however, this has now been abolished.

Variation

Either party to an order for spousal maintenance may apply to the court to have that order varied or discharged. On such an application the court may vary the payment upwards or downwards; discharge the order or capitalise it by way of lump sum order, pension sharing order or property adjustment order. It should be noted that a pension sharing order is only available if the original divorce petition is dated after 1.12.00.

When considering variation the court again refers back to the section 25 checklist, however, what is of most importance in these applications are any changes to the circumstances of the parties. However, it is not as simple to say the payer no longer works; the order was calculated on his income of £75,000 per year therefore the order should be discharged. If the payer has deliberately given up work, and proposes say to live off capital until retirement, the order will not necessarily be discharged (indeed that that scenario it is unlikely to be discharged). Similarly so, it is not as simple as to say that the receiver is now earning therefore there should be a reduction. The court is entitled to consider that it was envisaged that the receiver would eventually receive an income and therefore the order should remain. Should either party consider an application for variation, the party considering applying should weigh up all the factors of the case before filing the application, especially as it is more usual for the unsuccessful party to pay costs in a variation application than it is on a full application for ancillary relief. The application is made by way of Form A.

Spousal maintenance and benefits

Spousal maintenance does not affect working tax credit. It does however affect income support, housing benefit and council tax benefit, so one has to consider the wider implications of maintenance on the whole income of the receiver.

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16 Apr 12 #324216 by WhiteRose
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Dukey - you''re a STAR - this is fantastic!!
:)

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