The Financial Consequences of Marriage Breakdown: A Practitioner's View (Hawksmere Special Briefing)

A

H A W K S M E R E

S P E C I A L

B R I E F I N G

The financial consequences of marriage breakdown – a practitioners view By Maggie Rae

P U B L I S H E D

B Y

T H O R O G O O D

LT D

IFC

A

H A W K S M E R E

S P E C I A L

B R I E F I N G

The financial consequences of marriage breakdown – a practitioners view By Maggie Rae

P U B L I S H E D

B Y

T H O R O G O O D

LT D T H E P U B L I S H I N G BUSINESS OF THE HAWKSMERE GROUP

Published by Thorogood Limited Other Hawksmere Reports and Special Briefings published by Thorogood:

12-18 Grosvenor Gardens London SW1W 0DH. Thorogood Limited is part of the

Influencing the European Union

Hawksmere Group of Companies.

Peter Wilding

© Maggie Rae 1998 Making Sense of the Social Chapter

All rights reserved. No part of this publication may

Alan Wild

be reproduced, stored in a retrieval system or Dynamic Budgetary Control David Allen

transmitted in any form or by any means, electronic, photocopying, recording or otherwise, without the prior permission of the publisher.

Evaluating and Monitoring Strategies

This Briefing is sold subject to the condition that it

David Allen

shall not, by way of trade or otherwise, be lent,

Managing the In-house Legal Function Barry O’Meara

The Internet as a Business Tool

re-sold, hired out or otherwise circulated without the publisher’s prior consent in any form of binding or cover other than in which it is published and without a similar condition including this condition being imposed upon the subsequent purchaser.

Brian Salter and Naomi Langford-Wood

No responsibility for loss occasioned to any person acting or refraining from action as a result of any

Employment Law Aspects of Mergers and Acquisitions

material in this publication can be accepted by the author or publisher.

Michael Ryley

Achieving Business Excellence, Quality and Performance Improvement

A CIP catalogue record for this Briefing is available from the British Library. ISBN 1 85418 042 8

Colin Chapman

Printed in Great Britain by Printflow Limited.

The author Maggie Rae is a solicitor and partner at Mishcon de Reya. She specialises in family law. She has written extensively on all aspects of family law, including Women and the Law and Children and the Law, both published by Longmans. She has co-written Pensions and Family Breakdown (Butterworths) with Robin Ellison and is completing a book on Assets and Matrimonial Finance (Class Publishing). She also lectures on family law. She is a member of the Lord Chancellor’s Advisory Committee on Ancillary Relief, the President’s International Family Law Committee and the International Academy of Matrimonial Lawyers.

Contents 1

Introduction

1

Overview......................................................................................................................2 The consequences of marriage breakdown ................................................................2 Dispute resolution techniques.....................................................................................3

2

The reordering of assets

4

Why should it become necessary to reorder assets on divorce?.................................5 The Court's powers .....................................................................................................8 The principles on which the Court decides................................................................8 The ‘clean break’ ..........................................................................................................9 Asset adjustment – the principles..............................................................................10 Other factors ..............................................................................................................11

3

The process

18

General (non pilot scheme courts)............................................................................19 The pilot scheme .......................................................................................................19 Disclosure ..................................................................................................................20

4

Resolving issues

21

Asking the Court to decide........................................................................................22 Mediation ...................................................................................................................22 Negotiation.................................................................................................................23 Legal costs..................................................................................................................23 Outcomes...................................................................................................................24 Variations....................................................................................................................24 Child support .............................................................................................................24

5

Other matters

26

Tax..............................................................................................................................27 Inheritance.................................................................................................................27 Cohabitees .................................................................................................................28

Appendix 1

29

Section 25 Matrimonial Causes Act 1973...................................................................30

Appendix 2

37

List of Courts operating the pilot scheme .................................................................38

Appendix 3

39

Useful addresses.........................................................................................................40

Appendix 4

43

Civil legal aid eligibility rates 1997/1998...................................................................44

Introduction Overview The consequences of marriage breakdown Dispute resolution techniques

1

chapter 1

CHAPTER 1: INTRODUCTION

Introduction Overview The United Kingdom has a high rate of marriage breakdown compared with the rest of Europe. In 1991 three people in every thousand divorced compared to an EC average of 1.6. Denmark was next after the UK with a figure of 2.6. In recent years the level of marriage breakdown has remained fairly constant at about one in three marriages. This means that there are approximately 170,000 divorces each year in the United Kingdom. Of equal importance in recent years has been the growth in the numbers of couples who cohabit without marrying.Today that growth is reflected in the fact that more than one in three children are born to couples who are not married.This is more than four times the proportion in 1971.These unions take a variety of forms. Some are long standing and the relationship between the couple is most closely akin to that of married couples. In others the relationship is short even transitory. Couples who are not married to each other cannot use most of the legal procedures discussed in this Briefing (see Chapter 5). Not every couple whose marriage breaks down obtains a divorce. Some choose to separate. They can do so either through the legal mechanism of Judicial Separation or by making arrangements through the procedures available in the Magistrates Courts or through informal arrangements.These are all discussed later on in this Briefing.

The consequences of marriage breakdown Two very important consequences flow from a couple’s separation.The first concerns their children. Separation involves making arrangements for on-going contact for both parents with the children of their union. These are now governed by the provisions contained in the Children Act 1989 which places great emphasis on agreement and cooperation between separating spouses.The Court will only become involved in these arrangements if there is a need to do so. The other major consequence of separation concerns finance.Arrangements will have to be made for the ongoing maintenance of the family now housed in two separate units. Maintenance for the children is an obligation on both parents. This is now frequently achieved through the intervention of the Child Support Agency although the Court can also become involved.The family’s assets will usually need to be examined and may need to be adjusted either by agreement or by the Court.

2

CHAPTER 1: INTRODUCTION

Dispute resolution techniques Final arrangements usually take time to organise and interim provisions have to be made for the period immediately after separation. If agreement cannot be reached the Court can make orders providing for maintenance for children and spouses. In all of this lawyers are likely to become involved. Most arrangements are, in the end, agreed. However, this is often not before a great deal of work has had to be done by the individuals concerned and their legal advisors. Disputes between separating couples are common.The atmosphere between people who separate is rarely good and emotion gets in the way of agreement. In recent years there has been a tendency to move towards resolving disputes by agreement. Lawyers frequently negotiate these agreements on behalf of their clients.Additionally, the last decade has seen a great growth in the availability of mediation as a means of resolving disputes around children and increasingly, finance.This process is likely to grow when the Family Law Act 1996 comes into force, probably in the year 2000. These processes are discussed in detail below. Separation also has consequences for the taxation arrangements between spouses, the inheritance provisions and the availability or otherwise of State benefits and State pensions. All in all, it is a complex business which is, of necessity, conducted at a time when people feel a great sense of loss and disappointment. Most marriages do not end happily or consensually.

3

The reordering of assets Why should it become necessary to reorder assets on divorce? The Court's powers The principles of which the Court decides The ‘clean break’ Asset adjustment – the principles Other factors

2

chapter 2

CHAPTER 2: THE REORDERING OF ASSETS

The reordering of assets Why should it become necessary to reorder assets on divorce? The position of married couples is rarely equal. A couple with equal earning power and equal assets is unusual. In most marriages there is a disparity between the earning capacity of one spouse and the other. This is often due to the position in which spouses find themselves at the time they marry. It is also frequently the result of family decisions that have been made by the couple. Of these the commonest is the decision by the couple that one of them, usually the wife, should give up work or only work part time whilst the children are young. For example in 1996 37% of mothers of children aged between 0 and 15 in the UK worked part time and a further 35% were economically inactive. In those years the wife’s position in the job market may become seriously weakened. Her husband is likely to progress his career. He is also more likely now, than hitherto, to accumulate a pension whilst the wife cannot. A not untypical scenario may involve a couple aged in their forties, a husband with a successful career and good prospects. He will have acquired a pension.The house is jointly owned with a mortgage.A schedule of the couple’s assets would look like this:

Example 1

•

John and Sue

John is aged 44, Sue 42.They have three children aged 14, 11 and eight. Sue does not work. John earns £45,000 per year and has an occupational pension whose fund value is £60,000. They own a house worth £100,000 with a mortgage of £60,000. John has savings of £10,000. Sue has savings of £3,000.They have credit card debts of £4,000.

5

CHAPTER 2: THE REORDERING OF ASSETS

John’s financial position Share of home (£100,000 – £60,000 ÷ 2)

£20,000.00

Savings

£10,000.00

Car [Pension

£6,000.00 [£60,000.00] £96,000.00

Less half share of debts

£2,000.00 £94,000.00

Sue’s financial position Share of home (£100,000 – £60,000 ÷ 2) Savings

£20,000.00 £3,000.00 £23,000.00

Less half share of debts

£2,000.00 £21,000.00

In this example John’s pension has been treated as an asset like other assets. This is not strictly correct however, since it is a contingent asset and cannot be realised unless and until John retires. Leaving the pension out of the calculations till shows a disparity between the couple with John having assets of £32,000 and Sue of £21,000. This disparity is greater when John’s salary and pension are taken into account. Sue will typically have been at home with the children since the birth of the eldest and her earning capacity will be restricted by the need to care for the children and her (likely) absence of skills or experience. An alternative scenario, again not untypical, involves an older couple in their fifties. The children are grown up. The wife has not worked until very recently and now works part time.The husband has continued to work throughout the marriage.Again (and this is more common than not) the house is in joint names with a very small mortgage remaining.The husband is a member of an occupational pension scheme. The wife has no pension. A statement of their assets might look like this:

6

CHAPTER 2: THE REORDERING OF ASSETS

Example 2 • Pam and Bill Bill is 55, Pam 56. They have two grown up children. Bill works as an executive in a company. He earns £85,000 per annum. He has share options currently valued at £15,000 gross, CGT may be payable on exercise. He is a member of a final salary pension scheme and has accumulated 30/60 entitlement. Pam works part time in a large store. She earns £8,000 per annum and has no pension. They own a house worth £120,000 with a mortgage of £15,000.They have no debts. Each has inherited some money from their parents, although much of this has been spent putting the children through college and university.

Bill’s financial position Share of home (£120,000 – £15,000 ÷ 2) Car

£52,500.00 £7,000.00

Savings

£20,000.00

Share Options (gross figure)

£15,000.00 £94,500.00

Pam’s financial position Share of home (£120,000 – £15,000 ÷ 2) Car Savings

£52,000.00 £2,500.00 £15,000.00 £69,500.00

The differences between this couple’s realisable assets may not be that great. But they are compounded by the couple’s very different earning capacity and above all the pension position of each of them. Bill’s pension, which was not put into the asset statement in this example is a significant, if contingent asset. He is likely to accumulate 40/60 of salary entitlement by retirement age.This will give him an index-linked pension of two-thirds his final salary. He will be able to commute part of

7

CHAPTER 2: THE REORDERING OF ASSETS

that to a tax free lump sum on retirement. His scheme is likely to provide a survivor’s pension of up to two-thirds of his.This will be lost to Pam on divorce.The fund value of such a pension now will be about £440,000. In both these cases the disparity of assets and earning power is such that if equity is to be achieved, some reordering of the family’s assets will need to take place.

The Court’s powers To this end the Court is given wide powers to adjust the property rights of the parties as between each other. It can, for instance, order that the home be transferred from the names of both spouses into the name of one spouse. It can make orders for the payment of sums of money and payments for maintenance. It can now (in cases where the Petition was issued on or after 1 July 1996) make an order requiring all or part of one spouse’s pension to be paid to the other.This is dealt with in detail below. The Court can also make an order providing that one spouse pay maintenance to the other either for a fixed period of time or indefinitely. Normally child support will be the subject of an assessment by the Child Support Agency but can be made the subject of a Court order. In summary, therefore, the Court can: • Make orders adjusting the property rights of the parties. • Order one spouse to pay maintenance to the other. • Order one spouse to pay a lump sum of money to the other. • Make orders for the provision of child support. • Order that one spouse’s pension scheme make payments from his pension to the other spouse.

The principles on which the Court decides Although most disputes between separating couples are resolved by agreement, it is important to remember the principles on which the Court acts since these inevitably have a significant influence on the way in which disputes are negotiated. Some countries have, what is known, as community of property regimes. These vary but their principal feature is that property acquired during the marriage (usually other than by inheritance) will be divided equally between the spouses.

8

CHAPTER 2: THE REORDERING OF ASSETS

For example, in Germany on divorce each party is under a duty to account for the increase in his or her property from the date of the marriage until divorce.The amount of gain made by each will usually then be shared equally between them. England and Wales operate a different discretionary system, sometimes referred to as equitable distribution. The system requires the Court to have regard to a wide range of circumstances. It lays down no fixed or rigid principles but does require that the interests of the children be considered first. These principles are contained in s.25 of the MCA 1973 which is reproduced, in full, in appendix 1 at the end of this Briefing. In summary, the issues which the Court must consider are: • All the circumstances of the case with first consideration being given to the welfare of any child of the family under the age of 18. • The income, earning capacity and other financial resources of the parties, including pension entitlement. • The parties’ financial needs, obligations and responsibilities. • The standard of living enjoyed by the parties before the marriage broke down. • The age of each party to the marriage and the length of the marriage. • Any physical or mental disability suffered by the parties. • Contributions made or likely to be made by the parties to the welfare of the family including care and looking after the home. • The conduct of the parties if it is such that in the Court’s opinion it would be unfair to disregard it. • The value of any benefit which would be lost to one party as the result of dissolution or annulment.

The ‘clean break’ In addition, the Court now has a positive duty in every case to decide whether or not to make orders terminating the financial relationship between the parties as soon after the divorce as the Court thinks just and reasonable. This provision was introduced by an amendment passed in 1984 and provides an incentive to the Court to consider whether or not to make an order terminating the financial relationship between the parties commonly referred to as a clean break order.

9

CHAPTER 2: THE REORDERING OF ASSETS

Most spouses want a clean break from their partners. However, it is often impossible to achieve this on the assets available. For example: Example 3 • Pam and Bill Pam and Bill (see example 2) can rehouse themselves in separate homes using the equity available in the matrimonial home and most of their savings. Pam will need maintenance of about £10,000 per annum to live at a reasonable standard. It is possible to capitalise that sum using standard actuarial tables (called Duxbury tables). On the following assumptions: • Pam has a life expectancy of 29 years • The sum produced will give an income yield of 4.25% and capital growth of 3% • Inflation is at 3% • Current (1997/98) income tax rates. • Pam will draw on both capital and income using up the capital by the end of her life. The capitalised figure is about £127,000.This, however, takes no account of the reduction in both Pam and Bill’s incomes after retirement. What the example does demonstrate, however, is that Bill is not in a position to achieve a clean break.There simply isn’t enough money. Where sufficient assets are available it is possible to effect a clean break. If a wife is considered to be entitled to maintenance for the rest of her life it is possible to capitalise her maintenance requirements and if there is sufficient free capital available to pay these by way of a lump sum.

Asset adjustment – the principles The requirements of the legislation do not entitle spouses to an automatic share of each other’s assets.This was made very clear in the case of H v H [1993] 2 FLR 335. In this case the husband and wife, who were both in their early forties, were married in 1978. The marriage was dissolved in 1990. There were three children aged ten, eight and seven. The husband was a doctor from an affluent family from whom he derived considerable financial

10

CHAPTER 2: THE REORDERING OF ASSETS

benefits.The wife had qualified as a teacher and nurse but when she married had no capital or prospects. She later acquired capital from her husband’s family. At the time of the divorce the jointly owned assets were £158,000 (the matrimonial home and a small building society account). In addition the husband’s assets were worth £242,000 and the wife’s £162,000. The wife asked for an adjustment of the capital position between the spouses. This was rejected by the judge who said that ‘… the discretionary powers of the Court to adjust capital shares between the spouses should not be exercised unless there is a manifest need for intervention upon the application of the section 25 criteria.’ (at page 348).

Other factors Although it is impossible to give hard and fast guidelines which will fit each case, some general principles are apparent.What follows is not an exhaustive nor rigid list, for each case must be decided on its own facts but may provide some useful pointers and cover some of the situations most commonly experienced in practice.

The importance of children Children have to be the first consideration (see section 25(1) appendix 1).This, however, does not entitle them to a share in their parents’ capital. Separating spouses often think that it would be a good idea to give say half the ownership of a home to the children to be held on trust for them.This is not a solution that appeals to the courts and creates in any event enormous difficulties in management.

Example 4 • Mr and Mrs B For example, Mr and Mrs B separate amid circumstances of great acrimony. There is considerable equity in the matrimonial home which is jointly owned. Mr B believes that it would be fair for Mrs B to retain her share in the house which is needed for the maintenance for the children in any event and for his share of the house to be given to his children. The Court is most unlikely to do this and has said that it must only be in exceptional circumstances. In the case of A v A for example, [1994] 1 FLR 657, it was stated that property adjustment orders should not ordinarily be made to provide benefits for a child after he or she had attained independence.

11

CHAPTER 2: THE REORDERING OF ASSETS

The importance of a home The English Court will place great importance on the need of both parties to have a home. This applies particularly where the home is to provide a home for the children. It also, however, applies to other cases too. For example, a parent who sees his children for staying contact will have his housing needs recognised and it has been held that a husband’s need for housing will not be met by his living with his parents (see Wills v Wills (1984) 5 FLR 672).

The clean break It is unlikely that a Court will order that a wife’s rights to maintenance should cease where there are young children involved for whom she cares.A clean break will only be possible therefore if there is sufficient capital to meet the claim and (see below).

A wife’s entitlement This has been the subject of much debate.There is no absolute rule here. But the following factors are influential:

The length of marriage In 1995 22% of divorces occurred in marriages of less than five years’ duration, 46% in marriages of between five and 15 years’ duration and 32% in marriages of over 15 years’ duration. There is no general principle that a spouse (usually the wife) is entitled to maintenance for life. Short marriages have tended to attract small rehabilitive awards (especially where there are children). Such awards may for example provide that maintenance should be paid for a fixed period of time to enable a wife to retrain and gain employment. Longer marriages especially where the wife has not worked or only worked part time are likely to result in an on-going maintenance obligation.

The existence of children The need to care for children is recognised and so maintenance is likely to be paid to a spouse to enable her to care for the children. Once they are grown up however it may well be appropriate for a wife to work and maintenance may be expressed to be payable for a

12

CHAPTER 2: THE REORDERING OF ASSETS

term of years to cease at the end of that time or be reviewed then with the aim of terminating on-going maintenance.

The wife’s own resources A wife with significant resources of her own will usually have those taken into account when looking at her need for maintenance.

The wife’s age and health A wife who is nearing retirement will have at best, a very limited period during which she can earn her own living. These factors often work in combination, providing an overall picture. For example: Example 5 • John and Sue (see example 1) Sue was a teacher before she married John and may be expected to go back to work at least part time in about three years. She may need to retrain, if her qualifications are out of date. If she is in poor health, however, her earning capacity may be nil or very low. She will require financial support from her husband at least for some years until she can earn enough to support herself. Example 6 • Pam and Bill (see example 2) Pam already works part time so those earnings will be taken into account in any event. Her age and lack of qualifications may not enable her to increase the amount she earns.The income she receives from any investments and her state pension in due course will also be taken into account. In most families assets are small. In a small number of families however assets are large.What is the Court’s view? This has been considered at length in recent cases. In the case of F v F [1995] 2FLR 45 the husband was worth £175 million.The wife was held to have an entitlement of £9 million or 5.3% of the net assets. In the case of Dart v Dart [1996] 2 FLR 286 the husband was worth about £400 million.The wife put her claim on the basis that she should have a greater part than that which the husband thought right. In that case the Court said the award should be based on her reasonable needs and awarded her £10 million, or 2.5% of the husband’s assets.

13

CHAPTER 2: THE REORDERING OF ASSETS

Contributions In the preceding paragraph the Court’s approach to ‘big money’ cases was considered. In general the courts will look at the wife’s reasonable needs and where possible use Duxbury calculations to award the appropriate lump sum. However, where a wife has made significant (not necessarily financial) contributions to the family’s wealth, this will be reflected in the award. For example Mr and Mrs Gojkovic built up a hotel business together, both working very hard. On divorce Mrs Gojkovic was awarded a sum which reflected her contributions and enabled her to start her own hotel business. She was awarded a total of £1.3 million leaving Mr Gojkovic with £2.7 million. Mrs Gojkovic obtained 32.4% of the couple’s net assets. A Duxbury calculation based on Mrs Gojkovic’s age and needs would have produced a figure of just over £500,000 ([1990] 2 All ER 84). In the case of S v S (1980) (The Times 10 May 1980) the Court awarded the wife £375,000 from assets worth £2 million. The wife’s needs would have been met by an award of £200,000 but the sum was increased to reflect her contributions to the husband’s farming business in the early years of the marriage. Most recently in the case of Conran v Conran [1997] 2 FLR the Court held the wife’s contributions to have been outstanding. They included her contribution to the welfare of the family, her help in the success of his business, the contacts she made for her husband, her ideas and entertaining business contacts. Her needs for maintenance and housing would have been met by an award of £8,400,000. Mrs Conran was awarded £10,500,000, the additional £2,100,0000 reflecting the contributions which she had made. The Court said that the wife had not played an equal role in the generation of the husband’s wealth and did not consider a fractional approach consistent with the operation of the discretionary powers invested in it.There was therefore no precise method used to quantify the level of Mrs Conran’s contributions in this case.

Conduct The behaviour of the parties to the marriage is rarely taken into account in determining financial arrangements. In reality it has to be very serious.Adultery and even violence will not per se affect an award.The case of Kyte v Kyte [1987] 3 WLR 1114 shows the serious nature of what is required. The wife helped the husband with a suicide attempt knowing she would benefit from his will and whilst having an affair with someone else.The Court reduced the lump sum she received from £14,000 to £5,000 to reflect her conduct.

14

CHAPTER 2: THE REORDERING OF ASSETS

In general, conduct is more likely to be considered where: • It has led to a spouse’s earning capacity being reduced. For example, in Jones v Jones ([1976] Fam 8) the husband attacked the wife severing the tendons of her right hand. This prevented her from working. The husband’s share in the matrimonial home was transferred to the wife to reflect this. • A spouse has behaved in an inappropriate way, although this must be exceptional. For example, where a wife refused to move into the home and stayed with her mother it was held that her conduct should be taken into account (West v West) ([1978] Fam 1). • A spouse has been financially improvident e.g. has wasted assets or stopped working with out reason. In Moorish v Moorish ([1984] 14 Fam. Law 26) a husband who was an alcoholic and whose drinking had led to the matrimonial home being repossessed was held not to be entitled to benefit from capital accumulated by the wife since the separation. • A spouse has not disclosed assets or has tried to mislead the Court. For example, where a wife had been deceitful and unco-operative in disclosing her assets the Court reduced her award to reflect this (see B v B [1988] 2 FLR 490). An alternative approach is to penalise such behaviour by ordering the spouse concerned to pay the other’s legal costs.

Remarriage or cohabitation One spouse’s obligation to maintain the other ceases if the dependant spouse remarries and does not revive even if that subsequent marriage fails.This does not mean that the spouse is not entitled to a share in the assets built up during the marriage, especially to a share in the home. If she has made a contribution, as discussed above, this will be reflected in the award. Cohabitation does not automatically disentitle a spouse to maintenance but may result in that or a downward variation in the level paid. If the ‘paying spouse’ remarries or cohabits this may reduce his liability to maintain his first wife and family.The income of the second wife or cohabitee may also be taken into account.

Pensions The disparity of pension provision in any married couples was demonstrated in examples 1 and 2 above and has become increasingly recognised in recent years as something which

15

CHAPTER 2: THE REORDERING OF ASSETS

must be dealt with on divorce. It is, however, a complex problem and for many years the Courts, although recognising that pensions should be considered a matrimonial asset, were in most cases unable to make orders directly affecting spouses’ interest in their pension scheme.Additionally, there is no general principle enabling the adjustment of pension asset in a standard way. Each case will depend on its own circumstances as with the other factors outlined above. In general, however, the Court will be less concerned with pension provision where a couple is young than when they are nearing retirement age. If however, the couple are in their fifties (see example 2 above) and the wife has no pension and no opportunity of acquiring one in her own right, the Court is likely to be concerned and in some cases can hold up the grant of a decree of divorce until matters have been resolved satisfactorily. A particular difficulty is that whereas most occupational pension schemes and some personal pensions provide for survivor's (i.e. widow's or widower's) pensions, these are almost invariably lost on divorce. In example 2 therefore if Pam and Bill get divorced she will lose the survivor’s pension payable from Bill’s pension scheme in the event of him predeceasing her. A number of different solutions exist enabling loss of pension rights to be made up or provision to be made so that a former spouse can have security in old age. The main solutions at present are: • Pension benefits can be earmarked. This solution was introduced in relation to divorce judicial separation or nullity proceedings commenced after 1 July 1996 to enable the Court to order that pension benefits paid to one spouse can as to all or part be made payable to the former spouse directly by the pension scheme. The Court can also order that a former spouse receives some or all of a pension scheme member’s death in service benefit.The Court can order a pension scheme member to commute his pension benefits on retirement to a lump sum up to the maximum allowed by the pension scheme and to pay some or all of that to his former spouse. • Monetary compensation.This is often called off-setting and involves compensating for or making provision for pension needs by adjustment of other assets. It is attractive where there are sufficient assets to enable this to be done. However, in many families that is simply not possible. Nor is it easy to assess the appropriate sums required. For example, simply taking the value of the pension and dividing it in whatever way seems appropriate as a basis for calculating compensation is not generally regarded as adequate.A spouse who is receiving a lump sum in this way before retirement will receive it wholly tax free whereas the pension when it

16

CHAPTER 2: THE REORDERING OF ASSETS

comes into payment will be subject to income tax.These and other factors mean that in negotiations the sums involved will be the subject of argument and there are no general principles. • Pension splitting or sharing. The government has announced that it proposes to introduce a form of pension splitting or sharing on divorce from April 2000. It will probably only apply to petitions issued after that date. In some cases however, it is possible to either agree or ask the Court to order the existing pension provision be re-written. Such cases are not common and are not applicable to every type of pension arrangement.The opportunity to do this first came to light in the case of Brooks v Brooks ([1995] 3 ALL ER 257).The case was not a definitive statement of what was possible and did not state with clarity the extent to which it could be applied to other situations. It does seem, however, from anecdotal evidence that many couples are able to agree a division of a pension with the pension scheme enabling a solution of this kind to be arrived at.

17

The process General (non pilot scheme courts) The pilot scheme Disclosure

3

chapter 3

CHAPTER 3: THE PROCESS

The process Although most couples resolve their difficulties without the need for Court adjudication, some do not and the Court will be asked to decide. At the time of writing there are two distinct procedures available for adjudicating financial disputes.The first was laid down by the Matrimonial Causes Rules 1973 and has been in operation since then. In summary, it provides that where one or both of the parties have applied to the Court for a financial order, the following procedure should apply.

General (non pilot scheme courts) The person making the application must file an affidavit of means and the person responding to the application must do the same. An affidavit is a document which the person making it swears on oath to be true.The form of the affidavit is not prescribed but the rules say that it must contain full details of each party's income and resources. Following the sequential exchange of affidavits, both sides will normally file a questionnaire and serve it on the other party asking for further details of the information contained (or not) in the affidavit. Some courts have a system for dealing with the process and will give directions as to when such questionnaires may be filed and when they must be answered. The Court has a discretion to allow or disallow questions in questionnaires.

The pilot scheme There is another system currently being piloted at selected courts in England and Wales (a full list of these courts is set out in appendix 2). In this scheme (‘the pilot scheme’) the affidavit of means has been replaced by a form (Form E).This document prescribes in detail what must be disclosed and like an affidavit it has to be a sworn document. In pilot scheme courts, the Court has a much more directive role and when the application is issued the Court will set a date for what is called the first appointment. Five weeks before the first appointment each side must have exchanged Forms E sworn by the other and had an opportunity to formulate a questionnaire together with a concise statement of the apparent issues between the parties. At the first appointment the Court can decide how much of the questionnaire should be answered.

19

CHAPTER 3: THE PROCESS

Disclosure Whatever scheme is used, there is one very important point to bear in mind. The first is that full disclosure of assets is a mandatory requirement.That means that neither party should conceal assets or indeed any relevant aspect of their financial circumstances from the Court or their spouse. The consequences of non disclosure or concealment may be serious. Subsequently the Court can reopen and reverse any order made if one of the parties has concealed material aspects of their financial position. For example, in the case of Livesey v Jenkins. ([1985] AC 424) the Court set aside an order reached by agreement because the wife failed to disclose she was engaged to be married. In T v T ([1996] 2 FLR 640) the Court again set aside a consent order because the husband had failed to disclose that active negotiations were in progress to acquire his shares in a private company. Earlier in the proceedings he had disclosed that there was no free market in the shares.This was true at the time but had changed during the course of the case. This case illustrates the importance of notifying changes in the position of the parties during the course of legal proceedings or negotiations. Many people feel tempted to conceal assets, often very small, because they feel that if they admit to everything the Court will take them away.As the case of H v H (above) shows, the Court is not interested in automatic redistribution of assets. It is concerned with effecting justice according to the facts of each case and the principles set out above.

20

Resolving issues Asking the Court to decide Mediation Negotiation Legal costs Outcomes Variations Child support

4

chapter 4

CHAPTER 4: RESOLVING ISSUES

Resolving issues Asking the Court to decide If the case is being dealt with in a pilot scheme Court, the Court will endeavour to promote resolution through agreement at an early stage.At the first appointment it may well adjourn the case to a financial dispute resolution hearing (FDR).This hearing, which is privileged i.e. nothing that is said at the hearing can be used later in Court, is an attempt to promote a settlement. It will be heard by a Judge who will have no further dealings with the case. If settlement is not forthcoming then the likelihood is that the case will be adjourned to be tried before a different Judge. If the case is not being heard in a pilot scheme Court, the parties will have to have the case listed for hearing. The procedure in pilot scheme and non pilot scheme courts for trying cases is the same. Most cases will be tried by a District Judge. Complex cases may be tried by a High Court Judge. Both parties will normally give evidence and witnesses maybe called on behalf of either of them to deal with issues in dispute such as for example, lifestyles, valuations of properties and businesses.

Mediation Mediation for financial disputes is in its infancy in Britain. However, more and more mediators are being trained to deal with these kind of issues. Normally if mediation is being used to determine financial issues, at least one of the mediators will be a solicitor. Mediation is usually conducted by one or two mediators. Further details of mediation services can be obtained from the Solicitors Family Law Association, the Family Mediators Association and National Family Mediation (their addresses can be found in appendix 3). Mediation may take a number of sessions and involves helping the parties to come to a resolution of the issues between them. Mediators say that on average it takes about four to six sessions to reach a resolution. Those going to mediation can withdraw at any time. Mediation is privileged and so none of the information disclosed at the mediation sessions, except that relating to the parties’ assets and financial positions, can be used in any subsequent Court proceedings. Mediation also proceeds on the basis that all assets are disclosed.

22

CHAPTER 4: RESOLVING ISSUES

Negotiation Most cases are settled by solicitors and/or the parties’ to the marriage negotiating an agreement which can then be incorporated into a deed of separation or Court order. It is unwise in most cases to attempt to reach a final agreement without full disclosure first and professional advice from a solicitor. Negotiations usually take one or two forms: • Both solicitors meet and try to reach an agreement which they will recommend to their clients. • Solicitors and clients all meet and try to reach agreement.

Legal costs Legal costs can be considerable in family disputes. People often use their lawyers as a kind of support system which greatly adds to the costs. This kind of support may be more appropriately provided through counselling or family therapy services. A list of such services and how to contact them is provided at appendix 3. Legal Aid is available for disputes concerning matrimonial breakdown. However, there are two important qualifications to this.The first is that the capital and income limits for legal aid are very limited and many people are not eligible.The eligibility tables for 1997 /1998 are set out at appendix 4.They are changed each year. Solicitors should advise whether or not legal aid is available in any particular case. Solicitors are not obliged to take on legally aided work but should nonetheless advise as to eligibility. If legal aid is not available solicitors should give a clear account of how they charge for the work they do and what they expect clients to provide by way of payment. Solicitors are normally unwilling to give an estimate of the overall costs of a case because the exact amount of work needed will not be known at the outset but it is a good idea to ask for bills to be submitted on a regular basis. The question of costs and their overall impact on the family’s finances should be borne in mind in every case. It is not uncommon for the costs’ level in divorce cases to wipe out most of the family’s assets.This makes it all the more important to reach an agreed settlement at an early stage before costs have risen to too great a level.

23

CHAPTER 4: RESOLVING ISSUES

Outcomes Normally agreement will be incorporated into a Court order.This can only be done however if there are matrimonial proceedings underway so it is usually necessary to apply for a Decree of Divorce, Judicial Separation or Nullity in order to obtain a Court order. A Court order can be made when the couple have reached agreement or as a result of adjudication by the Court. Those who do not want to start proceedings or who do not require a Court order can have agreements made into a Separation Deed. In order for this to be binding it is usually wise for both spouses to seek legal advice. It is also very important that both should have made full and accurate financial disclosure, and that neither has been pressurised into entering into the deed. In these circumstances the agreement can be set aside.

Variations Many agreements are expressed as being clean break orders and thus not susceptible to subsequent variations by the Court. However, the Court can set final orders aside if, for example, one or other spouse has not made full and frank disclosure of all the material circumstances. Orders for the payment of ongoing maintenance can also be varied.

Child support In 1993 the government introduced a system for calculation of child support based on an algebraic formula as administered by the Child Support Agency.The agency is a sub-division of the Department of Social Security.The system has caused considerable disquiet and led to a public outcry which was partially resolved by reforms introduced in 1995 and 1996. These went some way to meeting criticisms that the formula was unfair on the paying parent and that its rigidity of operation led to manifestly absurd and unfair results. It is once more being reviewed by the Government and further changes are likely. The child support system is technical and governed by much regulation. It can only be administered through the agency who can also enforce arrears of payment. Many couples choose to make their own arrangements for the calculation and administration of child maintenance and have these incorporated into Court orders on divorce and separation, thereby avoiding having to deal with the CSA. However, if the

24

CHAPTER 4: RESOLVING ISSUES

person looking after the children is on income support, family credit, disability working allowance, or income based job seeker's allowance then she will normally be required to make an application to the agency for it to calculate the level of child support and ensure that it is paid. Even if the agency has calculated child support high earners may be the subject of ‘top up’ orders for child support which can be made by the Court. The agency’s ambit does not in any event extend to payments for stepchildren, school fees, special payments for disabled children or families where a child or either of its parents live abroad. Orders for child support in these circumstances must be made by the Court.

25

Other matters Tax Inheritance Cohabitees

5

chapter 5

C H A P T E R 5 : O T H E R M AT T E R S

Other matters Tax Many of the exemptions applied to married couples are lost on divorce.These include the tax exemptions on gifts between spouses, and inheritance tax exemptions.These may mean that in some cases particularly where couples are older and neither wishes to remarry, that it is better for both of them if they remain married even though they are separated.This is something which needs consideration in every case. When the Court makes orders on divorce for property adjustment or the payment of lump sums these orders take effect free of tax. However, if assets such as shares have to be sold to pay the sums ordered tax, for example CGT, may be payable on the sale of these. Likewise, when the Court orders maintenance to be paid by one spouse to the other such payments are now free of tax in the recipient’s hands.This means that the spouse receiving the payment will not have to pay tax on the money paid but the payer will make the payment out of income which has already been taxed.The payer will receive tax relief on maintenance payment to a maximum of £1,830 (for the tax year 1997 to 1998) which is given at 15%. It is given only in relation to payments made to a separated or former wife who has not remarried. No relief is available for payments made direct to children nor to a mother for the benefit of children who are not children of the marriage.

Inheritance Generally, English law places no restrictions on a person’s freedom to bequeath their property as they wish. However, a restriction on that was introduced by the Inheritance (Provision for Family and Dependents) Act 1975 which enables certain categories of people to apply to the Court asking for financial provision to be made from the estate of someone who died after 1 April 1976. The spouse or former spouse of the deceased or a child of the family are two of the categories of people to whom this law applies. In addition, anyone who was being partly or wholly maintained by the deceased person before his or her death may apply, as can anyone living in the same household of the deceased for the two years preceding death. Spouses and former spouses are able to obtain relief from the Court (assuming there are assets to satisfy the claim) if the Will or Intestacy fail to make such financial provisions as

27

C H A P T E R 5 : O T H E R M AT T E R S

the Court considers reasonable in all the circumstances for the spouse to receive.There are no hard and fast rules to decide that level and as with other aspects of matrimonial provision each case will be decided on its own fact.Where a clean break order was made on divorce a provision is normally included preventing either spouse making a claim under this legislation.

Cohabitees Cohabitees are not subject to the same principles of property adjustment and financial provision as those applicable to married couples, regardless of how long a couple have lived together. In particular there is no obligation on one cohabitee to maintain the other. This does not apply to children where both parents are considered liable to maintain the child regardless of whether they are married or not. The principal financial orders that can be made in relation to cohabiting couples are: • For child support. This can either be through the Child Support Agency or in particular cases by the Court. • Settlements for children. These can sometimes (although rarely) be made by the Court. It is highly unusual however to settle property on children (see the case of A v A cited above on page 12). Normally if the Court needs to make a settlement for a child to ensure that the child is housed, it is likely to order (resources permitting) that the parent of the child settles property on the child to enable the child and the other parent to have a home whilst the child is under 18.Thereafter, the settled property will revert to the other parent. • Today under provisions introduced by the Family Law Act 1996 the Court can in certain circumstances order the transfer of tenancies from one cohabitee to another. • Where cohabitees are dependent on each other or have lived together for a period of more than two years at the time of the deceased’s death a claim can be made under the Inheritance Act (see above).

28

Section 25 Matrimonial Causes Act 1973

1

appendix

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

Section 25 Matrimonial Causes Act 1973 25

Matters to which Court is to have regard in deciding how to exercise its powers under ss. 23, 24 and 24A. 1 It shall be the duty of the Court in deciding whether to exercise its powers under section 23, 24 or 24A above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of 18. 2 As regards the exercise of the powers of the Court under section 23 (1) (a), (b) or (c), 24 or 24A above in relation to a party to the marriage, the Court shall in particular have regard to the following matters: a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the Court be reasonable to expect a party to the marriage to take steps to acquire b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future c) the standard of living enjoyed by the family before the breakdown of the marriage d) the age of each party to the marriage and the duration of the marriage e) any physical or mental disability of either of the parties to the marriage f)

the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family

g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the Court be inequitable to disregard it h) in the case of proceedings for divorce or nullity of marriage, the value to each of the parties to the marriage of any benefit which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.

30

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

3 As regards the exercise of the powers of the Court under section 23 (1) (d), (e) or (f), (2) or (4), 24 or 24A above in relation to a child of the family, the Court shall in particular have regard to the following matters: a) the financial needs of the child b) the income, earning capacity (if any), property and other financial resources of the child c) any physical or mental disability of the child d) the manner in which he was being and in which the parties to the marriage expected him to be educated or trained e) the considerations mentioned in relation to the parties to the marriage in paragraphs (a), (b) (c) and (e) of subsection (2) above. 4 As regards the exercise of the powers of the Court under section 23 (1) (d), (e) or (f), (2) or (4), 24 or 24A above against a party to a marriage in favour of a child of the family who is not the child of that party, the Court shall also have regard: a) to whether that party assumed any responsibility for the child’s maintenance, and, if so, to the extent to which, and the basis upon which, that party assumed such responsibility and to the length of time for which that party discharged such responsibility b) to whether in assuming and discharging such responsibility that party did so knowing that the child was not his or her own c) to the liability of any other person to maintain the child. 25A Exercise of Court’s powers in favour of party to marriage on decree of divorce or nullity of marriage. 1 Where on or after the grant of a decree of divorce or nullity of marriage the Court decides to exercise its powers under section 23 (1) (a), (b) or (c), 24 or 24A above in favour of a party to the marriage, it shall be the duty of the Court to consider whether it would be appropriate so to exercise those powers that the financial obligations of each party towards the other will be terminated as soon after the grant of the decree as the Court considers just and reasonable. 2 Where the Court decides in such a case to make a periodical payments or secured periodical payments order in favour of a party to the marriage, the Court shall in particular consider whether it would be appropriate to require those payments

31

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

to be made or secured on for such term as would in the opinion of the Court be sufficient to enable the party in whose favour the order is made to adjust without undue hardship to the termination of his or her financial dependence on the other party. 3 Where on or after the grant of a decree of divorce or nullity of marriage an application is made by a party to the Marriage for a periodical payments or secured periodical payments order in his or her favour, then, if the Court considers that no continuing obligation should be imposed on either party to make or secure periodical payments in favour of the other, the Court may dismiss the application with a direction that the applicant shall not be entitled to make any further application in relation to that marriage for an order under section 23 (1) (a) or (b) above. 25B Pensions 1 The matters to which the Court is to have regard under section 25 (2) above include: a) in the case of paragraph (a), any benefits under a pension scheme which a party to the marriage has or is likely to have, and b) in the case of paragraph (h) any benefits under a pension scheme which, by reason of the dissolution or annulment of the marriage, a party to the marriage will lose the chance of acquiring, and, accordingly, in relation to benefits under a pension scheme, section 25 2 (a) above shall have effect as if ‘in the foreseeable future’ were omitted. 2 In any proceedings for a financial provision order under section 23 above in a case where a party to the marriage has, or is likely to have, any benefit under a pension scheme, the Court shall, in addition to considering any other matter which it is required to consider apart from this subsection, consider: a) whether, having regard to any matter to which it is required to have regard in the proceedings by virtue of subsection (1) above, such an order (whether deferred or not) should be made, and b) where the Court determines to make such an order, how the terms of the order should be affected, having regard to any such matter. 3 The following provisions apply where, having regard to any benefits under a pension scheme, the Court determines to make an order under section 23 above.

32

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

4 To the extent to which the order is made having regard to any benefits under a pension scheme, the order may require the trustees of managers of the pension scheme in question, if at any time any payment in respect of any benefits under the scheme becomes due to the party with pension rights, to make a payment for the benefit of the other party. 5 The amount of any payment which, by virtue of subsection (4) above, the trustees or managers are required to make under the order at any time shall not exceed the amount of the payment which is due at that time to the party with pension rights. 6 Any such payment by the trustees or managers: a) shall discharge so much of the trustees’ or managers’ liability to the party with pension rights as corresponds to the amount of the payment, and b) shall be treated for all purposes as a payment made by the party with pension rights in or towards the discharge of his liability under the order. 7 Where the party with pension rights may require any benefits which he has or is likely to have under the scheme to be commuted, the order may require him to commute the whole or part of those benefits: and this section applies to the payment of any amount commuted in pursuance of the order as it applies to other payments in respect of benefits under the scheme. 25C Pensions: lump sums. 1 The power of the Court under section 23 above to order a party to a marriage to pay a lump sum to the other party includes, where the benefits which the party with pension rights has or is likely to have under a pension scheme include any lump sum payable in respect of his death, power to make any of the following provision by the order. 2 The Court may: a) if the trustees of managers of the pension scheme in question have power to determine the person to whom the sum, or any part of it, is to be paid, require them to pay the whole or part of that sum, when it becomes due, to the other party. b) if the party with pension rights has power to nominate the person to whom the sum, or any part of it, is to be paid, require the party with pension rights to nominate the other party in respect of the whole or part of that sum.

33

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

c) in any other case, require the trustees or managers of the pension scheme in question to pay the whole or part of that sum, when it becomes due, for the benefit of the other party instead of to the person to whom, apart from the order, it would be paid. 3 Any payment by the trustees or managers under an order made under section 23 above by virtue of this section shall discharge so much of the trustees’ or managers’ liability in respect of the party with pension rights as corresponds to the amount of the payment. 25D Pensions: supplementary. 1 Where: a) an order made under section 23 above by virtue of section 25B or 25C above imposes any requirement on the trustees or managers of a pension scheme (‘the first scheme’) and the party with pension rights acquires transfer credits under another pension scheme (‘the new scheme’) which are derived (directly or indirectly) from a transfer from the first scheme of all his accrued rights under that scheme (including transfer credits allowed by that scheme), and b) the trustees or managers of the new scheme have been given notice in accordance with regulations, the order shall have effect as if it has been made instead in respect of the trustees or managers of the new scheme; and in this subsection ‘transfer credits’ has the same meaning as in the Pension Schemes Act 1993. 2 Regulations may: a) in relation to any provision of sections 25B or 25C above which authorises the Court making an order under section 23 above to require the trustees or managers of a pension scheme to make a payment for the benefit of the other party, make provision as to the person to whom, and the terms on which, the payment is to be made b) require notices to be given in respect of changes of circumstances relevant to such orders which include provision made by virtue of sections 25B and 25C above c) make provision for the trustees or managers of any pension scheme to provide, for the purposes of orders under section 23 above, information as to the value of any benefits under the scheme

34

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

d) make provision for the recovery of the administrative expenses of: i)

complying with such orders, so far as they include provision made by virtue of sections 25B and 25C above, and

ii) providing such information, from the party with pension rights or the other party. e) make provision for the value of any benefits under a pension scheme to be calculated and verified, for the purposes of orders under section 23 above, in a prescribed manner, and regulations made by virtue of paragraph (e) above may provide for that value to be calculated and verified in accordance with guidance which is prepared and from time to time revised by a prescribed person and approved by the Secretary of State. 3 In this section and sections 25B and 25C above: a) references to a pension scheme include: i)

a retirement annuity contract, or

ii) an annuity, or insurance policy, purchased or transferred for the purpose of giving effect to rights under a pension scheme, b) in relation to such a contact or annuity, references to the trustees or managers shall be read as references to the provider of the annuity, c) in relation to such a policy, references to the trustees or managers shall be read as references to the insurer, and in section 25B (1) and (2) above, references to benefits under a pension scheme include any benefits by way of pension, whether under a pension scheme or not. 4 In this section and sections 25B and 25C above: ‘the party with pension rights’ means the party to the marriage who has or is likely to have benefits under a pension scheme and ‘the other party’ means the other party to the marriage, ‘pension scheme’ means an occupational pension scheme or a personal pension scheme (applying the definitions in section 1 of the Pension Schemes Act 1993, but as if the reference to employed earners in the definition of ‘personal pension scheme’ were to any earners), ‘prescribed’ means prescribed by regulations, and

35

A P P E N D I X 1 : S E C T I O N 2 5 M AT R I M O N I A L C A U S E S A C T 1 9 7 3

‘regulations’ means regulations made by the Lord Chancellor’’ and the power to make regulations under this section shall be exercisable by statutory instrument, which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

36

List of Courts operating the pilot scheme

2

appendix 2

A P P E N D I X 2 : L I S T O F C O U R T S O P E R AT I N G T H E P I L O T S C H E M E

List of Courts operating the pilot scheme Principal Registry of the Family Division The High Court Barnsley County Court Bath County Court Blackwood County Court Bolton County Court Boston County Court Bow County Court Bristol County Court Bury County Court Crewe County Court Guildford County Court Harrogate County Court Hertford County Court Kingston County Court Maidstone County Court Northampton County Court Salford County Court Southampton County Court Southport County Court Stafford County Court Staines County Court Stoke-on-Trent County Court Taunton County Court Teesside County Court Trowbridge County Court Tunbridge Wells County Court Willesden County Court Wrexham County Court

38

Useful addresses

3

appendix 3

APPENDIX 3: USEFUL ADDRESSES

Useful addresses The following organisations can provide advice or assistance – explanatory details are provided where appropriate: Association for Shared Parenting PO Box 2000, Dudley West Midlands DY1 1YZ 01384 455665

Child Poverty Action Group 1-5 Bath Street London EC1V 9PY 0171 253 3406

A charity with a number of regional branches which helps estranged parents and other relatives of children experiencing difficulties after divorce or separation.

Produces detailed handbooks on various topics including non-means tested benefits and child support.

Benefits Agency (DSS) Free enquiry line: 0800 666 555 Child Abduction Unit Official Solicitor’s Department 81 Chancery Lane London WC2A 1DD 0171 911 7047 Childline Free helpline: 0800 1111 Child Benefit Centre PO Box 1 Newcastle-upon-Tyne 0191 417 9999 Information on child and single parent benefit.

Child Support Agency PO Box 55 Pedmore House Brierley Hill DY5 1YL Enquiry line: 0345 133133 Employers’ line: 0345 134134 Literature line: 0345 830830 Divorce Mediation and Counselling Service 35 Ebury Street London SW1W 0LU 0171 730 2422 Divorce Registry Somerset House Strand London WC2R 1LP 0171 936 6000

40

APPENDIX 3: USEFUL ADDRESSES

Families Need Fathers Administration Centre London EC2A 3AR 0171 613 5060 Postal address: 0171 613 5060 Information: 0181 886 0970 A support organisation for parents no longer living with their children to help them keep in contact after the breakdown of a relationship. Family Mediation Service 43 New Cavendish Street London W1M 7RG 0171 935 1651 Information on counselling and mediation services. Family Welfare Association 501-505 Kingsland Road London E8 4AU 0171 254 6251

Jewish Marriage Council 23 Ravenshurst Avenue London NW4 4E0 0181 203 6311 National crisis helpline: 0345 58199 (open 12pm-1am) Manchester: 0161 740 5764 Law Society (England & Wales) 113 Chancery Lane London WC2A 1PL 0171 242 1222 The Law Society is the professional body for solicitors. It publishes the Directory of Solicitors and Barristers, which gives details of all solicitors and the Solicitors’ Regional Directories which provide information on local solicitors and their areas of expertise. Both publications should be available at local reference libraries.

A social work organisation which helps families facing emotional, financial or housing problems.

HM Land Registry 32 Lincoln’s Inn Fields London WC2A 3PH 0171 917 8888

General Computer Index Romney House, 99 Amyand Park Road Twickenham, Middlesex TW1 3HN 0181 891 4651 0181 891 4108 (fax)

Legal Aid Board 85 Grays Inn Road London WC1X 8AA 0171 813 1000

Can obtain certified copies of birth, marriage and death certificates.

Marriage Care Clitheroe House, 1 Blythe Mews Blythe Road, London W14 0NW 0171 371 1341 Formerly known as the Catholic Marriage Advisory Council, the organisation has about 80 branches nationwide.

41

APPENDIX 3: USEFUL ADDRESSES

National Council for the Divorced and Separated PO Box 519 Leicester LE2 37E National helpline: 0116 270 0595 The organisation has over 100 branches throughout the UK where divorced and separated people can meet to share experiences and problems. National Council for One Parent Families 255 Kentish Town Road London NW5 2LX 0171 267 1361 Produces a range of publications, many free to lone parents, on benefits, housing etc. National Family Mediation 9 Tavistock Place London WC1H 9SN 0171 383 5993 National Stepfamily Association Chapel House Hatton Place London EC1N 8RU 0171 209 2460 0171 209 2461 (fax) 0171 209 2464 (counselling service) National helpline: 0171 209 2462 Provides advice and information for stepfamilies.The helpline provides the telephone number of the Association’s telephone counselling service.

Probate Personal Application Department Principal Registry of the Family Division 2nd Floor Somerset House Strand London WC2R 1LP 0171 936 6983 Relate Herbert Gray College Little Church Street Rugby Warwicks CV21 3AP 01788 573241 Formerly known as the Marriage Guidance Council, Relate offers its services to both married and unmarried couples. Reunite National Council for Abducted Children PO Box 4 London WC1X 3DY 0171 404 8357 0171 242 1512 (fax) An organisation providing advice, support and information to parents and families whose children have been abducted or who fear abduction. Solicitors Family Law Association PO Box 302, Orpington Kent BR6 8QZ 01689 850227 An organisation whose members are specialist family lawyers.They can provide details of members in any particular area.

42

Civil legal aid eligibility rates 1997/1998

4

appendix 4

A P P E N D I X 4 : C I V I L L E G A L A I D E L I G I B I L I T Y R AT E S 1 9 9 7 / 1 9 9 8

Civil legal aid eligibility rates 1997/1998 Legal aid eligibility from 7 April 1997 New legal aid eligibility limits have been set by the Lord Chancellor’s Department, and become effective as of 7 April 1997

Green form – legal advice and assistance Income limit: £77 per week Weekly dependants’ allowances:

Partner – £28

Dependants:

up to 11 – £16.90* 11-16 – £24.75** 16-18 – £29.60*** 18 and over – £38.90****

Note *

If applying for legal aid before 1 September 1997, use the higher allowance for 11-16 year olds only if the child became 11 before 7 April 1997. If applying on or after 1 September, use the higher allowance only if the child became 11 before 1 September. Otherwise, use the lower allowance for 'up to 11’.

**

Use the higher allowance for 16 - 18 year olds only if the child became 16 before 7 April 1997. If applying on or after 1 September 1997, use the higher allowance only if the child became 16 before 1 September. Otherwise, use the lower allowance for 1116 year olds.

***

The higher allowance only applies where the dependant became 18 before 7 April 1997. Otherwise, use the allowance for 16 - 18 year olds.

**** At the time of printing, further regulation changes are anticipated to clarify the rules for allowances for dependants who are over 18.

44

A P P E N D I X 4 : C I V I L L E G A L A I D E L I G I B I L I T Y R AT E S 1 9 9 7 / 1 9 9 8

Capital limits No dependants – £1000 One dependant – £1335 Two dependants – £1535 plus £100 for each additional dependant.

Contribution system None. Ineligible if weekly disposable income exceeds £77

State benefits Automatically qualify on income if in receipt of income support, income-based jobseeker’s allowance, family credit or disability working allowance, but may still be out of scope on capital.

ABWOR Income limit: £166 per week Weekly dependants’ allowances: as for green form – see above.

Capital limits No dependants – £3000 One dependant – £3335 Two dependants – £3535 plus £100 for each additional dependant.

Contribution system Free if weekly disposable income up to £69. If between £69 and £166, weekly contribution of one-third excess income over £69.

45

A P P E N D I X 4 : C I V I L L E G A L A I D E L I G I B I L I T Y R AT E S 1 9 9 7 / 1 9 9 8

State benefits Automatically qualify on income if in receipt of income support, income-based jobseeker’s allowance, family credit or disability working allowance, family credit or disability working allowance.Automatically qualify on capital if in receipt of income support or income-based jobseeker’s allowance.

Civil legal aid Income limit:

Lower limit – £2563 per year Upper limit – £7595 per year (£8370 for personal injury)

Yearly dependants’ allowances:

Partner – £1460

Dependants:

up – 11 – £881 11 - 16 – £1291 16 - 18 – £1543 18 and over – £2028 and see Note above.

Capital disregards for pensioners Annual disposable income (excluding net income derived from capital) up to £370 £371 - £670 £671 - £970 £971 - £1270 £1271 - £1570 £1571 - £1870 £1871 - £2563

46

A P P E N D I X 4 : C I V I L L E G A L A I D E L I G I B I L I T Y R AT E S 1 9 9 7 / 1 9 9 8

Amount of capital disregarded

£35,000 £30,000 £25,000 £20,000 £15,000 £10,000 £5,000

Contribution system Contribution from capital of excess over £3000. Ongoing monthly contribution from income of 1/36th of excess over £2563 for the life of the legal aid certificate.

State benefits Automatically qualify for civil legal aid free of contribution if in receipt of income support or income-based jobseeker’s allowance.

Criminal legal aid Free legal aid income limit: £49 Free legal aid capital limit: £3000 No upper income or capital limit.Weekly dependants’ allowances as for green form.

Contribution system Contributions from capital in excess of £3,000.Weekly contribution from income of £1 for every £3 or part of £3 by which weekly disposable income exceeds £49. Except that no contribution is payable if the disposable income is less than £50 per week.

47

A P P E N D I X 4 : C I V I L L E G A L A I D E L I G I B I L I T Y R AT E S 1 9 9 7 / 1 9 9 8

State benefits Automatically eligible free of contribution if in receipt of income support, income-based jobseeker’s allowance, family credit or disability working allowance.

48