Dealing with maintenance

Dealing with maintenance

Contents

In 1993, the Child Support Agency was established to deal with all maintenance claims for children. There are exceptions when the Agency will not become involved. It is generally recognised that an absent parent will only be able to afford the assessment of maintenance for the child and not be able to pay additional maintenance for their spouse.

In case where the spouses are very wealthy, the court will attempt to ensure that the family assets are fairly divided. There will be sufficient income to ensure that each spouse has at least a reasonable standard of living.

With moderate-income families, the aim of the court is to ensure that each spouse is housed and able to maintain themselves. It is a recognised fact that neither will probably be able to enjoy the same standard of living as they both enjoyed together before the separation.

With low-income families, it is certain that one or both will be reliant on benefits. There is an advantage in the parent with the care of children being on income support because they will be entitled to passported benefits. Passported benefits include free school meals, free prescriptions, housing benefit and, in England & Wales, council tax benefit.

The Child Support Agency

Most applications for child maintenance are now made to the Child Support Agency. There are precise formulas to assess the level of maintenance payable.

The formulas produce predictable and consistent results and leave very little discretion in calculating children's maintenance. There is no opportunity for any argument over the weight given to different factors and interests. The Agency operates under the authority of the Secretary of State for Social Security.

The Agency has taken over the role of the court in assessing the maintenance payable by absent parents. The Agency is responsible for making maintenance assessments, carrying out reviews every two years and where necessary collecting and enforcing maintenance.

The Agency will also provide information and advice. It was introduced in order to reduce the huge sums of income support paid to parents looking after children and separated from the natural father or mother of their child. If the parent claims certain welfare benefits, they must allow the Secretary of State to pursue the absent parent for maintenance. The welfare benefits included are income support and Job Seeker's Allowance, but not Working Families' Tax Credit.

The Agency is maintained by Child Support Officers. They carry out the function on behalf of the Secretary of State. The parent looking after children and separated from the natural father must complete a maintenance application form and provide information to assist officers to recover maintenance from the absent parent.

The most controversial and important information that the Child Support Agency requires is the naming of the absent parent. Unless a parent looking after children and separated from the natural father of their child can show a legitimate reason for not co-operating, they will be penalised by a reduction of their benefit for three years. During that period, their benefit will be reduced by up to 40% of the adult personal allowance. If they co-operate, it will be put back.

Many parents may not wish to look to the absent parent to maintain a child with whom the absent parent has no relationship. Indeed, the absent parent may not even be aware that they are the father of a child.

If there is a risk of the parent looking after children and separated from the natural father of their child suffering harm or undue distress as a result, it will be legitimate to refuse to co-operate. Thus, if the parent is genuinely and reasonably afraid that co-operation might provoke a violent response from the absent parent, this would constitute good cause and the benefit would not be reduced. There is no requirement to substantiate the belief with hard evidence although a Child Support Officer would require to interview her about the concern.

If the officer is satisfied, the requirement to co-operate can be removed and the parent may continue to receive her full benefit.

The Agency will assess maintenance liability for any child under 16 or an unmarried person under 19 receiving full-time education and who has one or two absent parents. An absent parent is one who is not living in the same household as the child. The term parent takes its usual meaning of being a person who is in law the mother or father of the child, therefore the natural parents or adoptive parents of the child are included. It does not extend to a step-parent. This includes unmarried as well as married parents and it is immaterial whether the absent parent knows the child is his.

In the case of disputes over parentage, the Child Support Officer may not make a maintenance assessment until the court has determined parentage. The person with care is the person with whom the child lives and who usually provides the child's day-to-day care. The person with care will generally apply for the maintenance assessment. However, the absent parent may choose to apply for an assessment against themselves.

Court involvement in maintenance for children

The Child Support Agency may only make an assessment if the child, the person with care, and the absent parent are all habitually resident in the UK.

However, there are some very specific situations where the court may make orders relating to child maintenance. They include:

  • Maintenance for stepchildren who are children of the family
  • Natural children who over 18 years in education or training

If the absent parent or person with care is not habitually resident in the UK, the court will decide the level of maintenance and the agency will not become involved.

The court will decide if any capital is to be paid to a child or for the child's benefit.

The court may decide to revoke existing maintenance orders.

Where the court assesses maintenance, it will have the widest discretion to determine the amount of maintenance payable for a child. Income Support Child Rates or by the National Foster Care Association Allowances for Fostered Children can provide a guide for the court. In addition, the courts can compare what a parent would be ordered to pay for a child if it were an application through the Agency.

The court may make maintenance orders for children in the following circumstances:

  • Supplementary maintenance in addition to that assessed by the Agency
  • Where a child is in education and provision is required to meet some or all of the expenses connected with it
  • Supplement the maintenance assessment to meet disability expenses if a child has a disability

It is still open to parents who are not claiming welfare benefits to arrange maintenance for children without going to the Agency. They can do this by using separation agreements or consent orders. For those who do not wish to obtain a court order and who have agreed their own arrangements, a separation/matrimonial agreement is most appropriate.

A separation/matrimonial agreement is not a court order, but is enforceable in the same way as any other binding contract. However, such agreements do not prevent the court or the Agency becoming involved.

Maintenance for spouses

The level of maintenance that one spouse will pay to the other spouse will depend on a number of variables. The most significant variable is the existence of any dependent children. If there are children, this will have a significant impact on each spouse's needs and resources. In many instances there will be insufficient resources remaining for any maintenance to be paid to a spouse after paying maintenance for children.

In high-income families, the courts will be less concerned about meeting the spouse's basic needs and more concerned in ensuring a fair division of the family's wealth. In doing so, the court will consider the standard of living enjoyed before the breakdown of the marriage.

Where significant capital is available, it may not be appropriate for maintenance to be paid. A clean break will be favoured.

However, in some wealthy families there may be insufficient liquid capital, so that a clean break may not appropriate. Assets may be tied up in land or in a business. It could be counter-productive to sell the assets, as their loss could have a disproportionately adverse affect on income. In these cases, it would be more sensible for the assets to be retained and a maintenance order made instead. There is no general formula for calculating how much maintenance should be paid above the basic living expenses.

The arguments will tend to be about the weight that is to be placed on any positive or negative contribution towards the family's prosperity.

In middle-income families, the traditional approach taken by the court was to give sufficient maintenance to bring each spouse's income up to one third of the joint net income. This formula has been used to assist the courts to arrive at a starting point. It is only a rough guide and the Court of Appeal has frequently warned against using it too rigidly. Recently, the Court of Appeal has suggested that where there are children, a useful rule of thumb would be to divide the gross income of the spouses equally between them.

This starting points may continue to be used particularly if no maintenance is payable under a child support assessment. However, in cases where maintenance assessment has been made by the Child Support Agency, the court is more likely to calculate whether the absent parent can afford to make any additional periodical payment to the parent who has the care of the children using a net effect approach.

The net effect approach is that the court, before deciding on a figure for maintenance, should consider the impact of the proposed maintenance on both spouses. It is important to consider whether the paying spouse can afford to make the proposed payment and that the spouse receiving maintenance can live off their total income. It is therefore important to compare the size of the respective households and the extent of their liabilities.

These liabilities will include:

  • Income tax
  • National insurance
  • Pensions
  • Rent
  • Mortgage payments
  • Council tax (England and Wales only)
  • Proposed child maintenance

The resulting balance for each spouse should be compared. With their money, each spouse must be able to feed and clothe themselves together with any dependants that they may have. If this shows that either spouse's standard of living will fall disproportionately in comparison with the other the proposed figure for maintenance must be readjusted and the calculation repeated.

In the case of low-income families, a one third approach will rarely be appropriate. If one spouse has low earnings and the other none, the spouse earning an income could not afford to lose one third of their income and the receiving spouse could not survive on it.

In these cases, an alternative means of calculating maintenance is used. If there are clearly insufficient resources for both parties to be independent of welfare benefits, the court will take a pragmatic approach. The calculation of maintenance in such cases will often be a relatively straightforward process. It will involve identifying how much the earning spouse needs to live on and how much they can spare. The court will never order a spouse to pay a sum that would place them below a notional subsistence level.

This means the earning spouse would be allowed to keep sufficient money to pay their housing costs as well as the sum that they would be entitled to if they were to claim income support or Job Seeker's Allowance.

Careful calculation must be made in the case of low-income families to ensure that the receiving spouse is not worse off with maintenance than without it.

It will often be appropriate to accept a reduced sum of maintenance to ensure that the receiving spouse is still eligible for income support and enabling him or her to continue to qualify for passported benefits. These include:

  • Rights to free prescriptions
  • School meals for their children
  • The right to claim full housing benefit
  • Full council tax benefit (England & Wales only)

Maintenance pending suit

If a spouse is in urgent need of money and the other spouse is in a position to make a payment, the court may make an order that regular weekly or monthly payments are made. This type of order is known as maintenance pending suit.

The order may continue until the court makes a final order dealing with all the financial issues. The application can be made at any time after the petition has been lodged with the court.

Applications for maintenance pending suit are relatively rare. The welfare benefit system is intended as a safety net to provide an income for anyone facing destitution. However, the welfare benefits system will only provide money to maintain an existence. If a spouse reliant on welfare benefits wishes to have an income above the basic minimum, they must make an application for maintenance pending suit.

Periodical payments

The court may order that one spouse pays the other spouse a weekly or monthly amount on an on-going basis. This is known as a periodical payments order. The order will be made at the final hearing dealing with all of the financial issues. The order cannot be made before the decree nisi or decree of judicial separation is pronounced.

Periodical payments orders may be for the benefit of the other spouse or a child of the family. A natural parent will have a duty to maintain their child if that child does not live with them. The level of money required to maintain the child will be fixed either by agreement or by an assessment carried out by the Child Support Agency.

If the parent with whom the child is living is in receipt of benefits, the Benefits Agency will automatically apply to the Child Support Agency for an assessment of the money to be paid by the absent parent for the maintenance of their child. The moneys due will be collected by the Child Support Agency and used to offset the benefits paid. If the money collected from the absent parent is greater than the benefits paid to the parent with whom the child is living, the balance is paid to the parent.

It is possible for the court to order the absent parent to pay periodical payments for a child greater than that assessed by the Child Support Agency. This is rare and would only apply where the absent parent has considerable wealth and income.

The periodical payments for children will usually continue until the child reaches the age of 17 years or ceases full time education. Should the child continue full time education beyond 17 years, it is possible for the order to be extended until full time education is complete.

The court can order an absent parent to make periodical payments for children of the family that are not their natural children. However, the prime duty to maintain a child rests with their natural parent. Nevertheless, circumstances may dictate that the natural parent may not have resources to make any payment for the maintenance of their child. If that situation should arise, the court will look to the absent spouse who has treated the child as a child of their family.

If the court has made a periodical payments order for the benefit of the other spouse and they remarry, the periodical payments order will end. However, any order for the children will continue. If the other spouse cohabits, the periodical payments will continue unless the court orders otherwise. The court will tend not to order that periodical payments come to an end if the other spouse cohabits. However, the court may order that they be reduced since the financial need is reduced. The reason for this is that there is no duty upon two people cohabiting to maintain one another.

Finally, all periodical payments end upon the death of either spouse.

Secured periodical payments

If the court makes a periodical payments order and there is concern that the spouse having to make the payments will not make payments, a secured periodical payments order could be made. A secured periodical payments order is identical to a periodical payments order except that it is attached to some assets of the spouse having to make payment.

It is attached by a charge, which is similar to a mortgage. If the spouse having to make payment defaults on payments due under the periodical payments order, the court can order that the assets be sold or any income that they generates be paid direct.

A secured periodical payments order does not end on death of the spouse having to make payment. Payments will continue to be made from either the sale of the assets or any income that it may generate. However, it will end on the death of the spouse receiving the money.