Category Archives: Finances

Mediate not Litigate

And that is the rallying cry of Mr Justice Holman in the case of Ekaterina and Richard Fields http://www.theguardian.com/uk-news/2015/may/13/judge-divorce-couple-ekaterina-richard-fields-settlement

The couple have been married about 10 years, have two children, and at the start of the case, the Judge has urged them to try and resolve their financial issues without the intervention of the court.  He explained that court hearings can be “awful” and described them as being like a boxing match.  The couple’s fees are expected to be in excess of £1 million by the end of the trial, and the Judge asked them to consider what else they could have spent the money on.

As a mediator and a solicitor, I am aware that some cases are suitable for mediation, and others are not.  For most however, it’s a question of timing.  At the start of the separation, feelings are very raw, with clients ranging from angry to distraught.  This is usually when clients are told about the benefits of mediation.  This is usually when most people are not ready to try and work with their ex – there is likely to have been a massive breach of trust, and by embarking on the mediation process, clients have to trust their ex to make the process work.

By the time the court system kicks in, many clients are weary of the process, are fed up of paying legal fees, when they don’t feel like they have got very far, and are more likely to be receptive of mediation and the benefits – it’s quicker and cheaper, and far less stressful, and clients can dictate the pace (provided they agree).

What is the answer?  Our system is built on the basis of litigation.  There have been various suggestions over the years, as to how to improve our divorce system – by introducing no fault divorces, and by having a “cooling off” period.  The difficulty is that our system is a one size fits all and as a practitioner of over 20 years, no two divorces are the same.

Mediation needs to be promoted, not as an alternative to litigation, but the main option.  It is only when mediation is at the forefront that people will be more accepting of the system.

Some clients think that having a judge make a decision is somehow easier than making a difficult decision for themselves.  It is only when they have been in litigation for a few months do they realise that that isn’t the case at all.

Protecting your children financially

Homes_and_coins

A question that I get asked frequently as a family solicitor is “How can I protect my children’s interests in my finances now that I have moved in with a new partner?”.  There can often be a real struggle for a parent in protecting their children, but wanting to live with a new partner.

The answer is communicate, communicate and communicate.  And, do it before the new partner moves in.  This is because the best way of protecting property is by entering into an agreement with the new partner that effectively, certain assets with be ring-fenced, or dealt with in a certain way.  If you can show that this was the intention at the time cohabitation began, then a partner’s potential claim further down the line is very much diluted.

Under Trusts of Law and Appointment of Trustees Act 1196 (we call it TOLATA) for short, the first thing that a court has to establish is what was intended between a couple, at the time a property was purchased, or a significant triggering event – such as one of them moving into the other’s home.  They then have to establish whether or not the partner has contributed for money or “money’s worth”.  So, if you can satisfy a court that the intention was that the new partner was to get nothing, their claim would have to fail.

Sadly most couples do not have discussions about what they would intend to happen if they split up later down the line.  In addition, a word of caution – if you marry new partner, the divorce rules governing finance and property are a whole different ball game, and you would be wise to enter into a pre-nuptial agreement – plenty of time before the marriage, and where both of you have had the opportunity of getting legal advice, and finding out what financial position you are both in.  Whilst pre-nuptial agreements are not yet officially enforceable, the Law Commission has recommended that certain pre-nups, which satisfy certain conditions, should be legally enforceable.  In addition, after the case of Radmacher, the courts are looking at them a lot more favourably.  However, again, the longer the marriage, the less likely it is that a court is going to be bound by a pre-nuptial agreement – particularly if there have been children.

If you are worried, please see a solicitor.  Most solicitors now offer fixed fees to prepare documentation of this nature, and most offer an inital free consultation.

Child Maintenance Service – Son of CSA?

Happy group of kids

So, is it going to be third time lucky?  The Government are once again setting about reforming the rules to child maintenance.  This time, they have decided that as it is better for parents separating to try and agree, they have decided to introduce a rule that says that if they don’t agree, they will have to pay!  Whereas the CSA hasn’t previously charged either parent for their service – save when a father had denied paternity, and the CSA have paid for DNA tests which have proved that he is the father, then they do ask for that money back – they are charging now!  It is £20 to register a claim for Child Maintenance with them, and then the paying parent will pay an extra 20% on top of their child maintenance, and the receiving parent will pay 4% to receive it.

There is a formula, as previously.  Whereas the CSA looked at people’s net wage, the Child Maintenance Service looks at gross income.  For one child, the broad formula is that they would be expected to pay 12% of their gross income, for two children 16% and for three or more children 19%.  Money may be knocked off if the paying parent has other children in their household, and there is a formula for where the children stay with the paying parent for 1 night or more each week.

So, the CSA was universally hated.  Hated by the people who received money, because they found it cumbersome, beaurocratic and slow.  Hated by the people who had to pay, because they found it beaurocractic, unyielding and inefficient.   Will the Child Maintenance Service be more popular, or will it simply be seen as the son of CSA?

For most parents, they want to ensure that the children are provided for.  The CSA regulations meant that people in receipt of certain benefits HAD to approach the CSA.  This often caused huge problems within families.  Hopefully CMS will help.  People are encouraged to be less adversarial, and agree things between themselves.  On the www.gov.uk website, there is a helpful calculator, which helps calculate what the maintenance liaibility should be.  Couples are being encouraged to go to mediation rather than through the courts, and this is an area that has been covered with mediators up and down the country.

However, there are those parents who will do anything in their power not to pay child maintenance.  It seems very unfair that for the parent with care of the children in those circumstances will be financially penalised at having to use the government agency, because they are unable to get anywhere with a difficult ex partner.  As an old cynic, it does smack of the Government trying to make a bit of money in difficult times.