Divorce and Children - the Financial Side

 

When separating parents’ first consideration is normally the children. They want to try and ensure that the children suffer as little distress as possible. It is therefore perhaps not surprising that under the Matrimonial Causes Act 1973 when deciding what financial orders to make the court has “to have regard to all circumstances of the case, the first consideration being given to the welfare, while a minor, of any child of the family who has not attained the age of 18”. So what does this mean in practice.

People often assume that it means that the parent whom the child(ren) spend most of their time will be able to remain in the matrimonial home. This is not necessarily the case and it is worth pointing out that children are often far more adaptable to changes than adults. What is important to parents in a new house may be less important depending on the age of the children. By way of example teenagers are often not concerned about having a small garden and may well choose to have for example a room that is in converted loft space if it gives them greater freedom. If there is sufficient capital to enable one person to stay in the matrimonial home then a court will normally make an order enabling him or her to do so but only if such order will not prejudice the other party for example by preventing them from rehousing due to for example remaining liable under a mortgage.

If there is insufficient capital to enable both parties to purchase properties then the court may order a transfer to the parent with care of the children particularly if it will be cheaper for them to remain in the matrimonial home and pay a mortgage than to rent somewhere else. Sometimes this is done on the basis of an outright transfer and whether this is possible would depend on what other assets are available including pensions. If the court feels that the effect of an outright transfer would be unfair in terms of the overall division of the assets between the parties (i.e. the person in the matrimonial home would end up with too much capital) it is possible for the other spouse to retain an interest in the property by having what is called a charge back. Their interest is effectively like a mortgage on the property but the court would normally direct that they cannot redeem this interest until the other person cohabits or remarries or the children attain a specific age (e.g. 18) or finish education. It is also not unusual to provide that even if the other person marries or cohabits the spouse will not get their charge back if the court feels it would be inappropriate. In practice this might be the case if the new cohabitee is not in a position to buy the other spouse out or to remortgage to enable this to be done.

The issue of children is also relevant to income and under Section 25 (3) (d) the manner in which the child was being and in which the parties to the marriage expected him to be educated or trained. People often assume that if a child is at private school this will continue but again this is only the case if there is sufficient income. It is always hard to make the income that has previously supported one household stretch to support two. Sometimes the situation is assisted by the availability of Working Tax and Child Tax Credits but if not the judge may well make the tough decision that the children who had previously been educated privately should move schools to assist the finances.

English law has been referred to as the divorce capital of the world so far as wives are concerned and the reason for this is that under English law the person who has made the greater contribution to the children (which specifically is more likely to be the woman but in practice the same does apply if it is the man) is entitled to claim maintenance from the other party if their contributions towards child care have impacted on their own earning capacity or enabled the other person to pursue a much higher earning capacity. It is not unusual if a court decides that spousal maintenance is appropriate for these orders to last for life which people often find surprising. In practice however the reality is that maintenance always stops on remarriage and often reduces to a nominal amount (5p a year) in the event of cohabitation so statistically it is unusual for maintenance to actually be paid for life.

Spousal maintenance is paid in addition to child maintenance which is currently dealt with by the Child Support Agency unless the husband and wife agree that it should be dealt with in a court order. The Child Support Agency calculates maintenance by way of a fixed formula which takes into account the number of nights the children spend with the other parent and further details can be found on their website.