When a couple separate they often ‘muddle through’ for a while with existing arrangements continuing largely unchanged. This is particularly so when the couple remain living at the same address.
After they have separated, they need to make realistic day to day financial arrangements as soon as possible. Ideally, the payer (we assume for the purpose of this note that this is the husband) should make a single payment at the start of the month and the wife should then assume responsibility for paying all the costs of her household, including the mortgage.
These arrangements may be temporary ones, in the sense that final arrangements are still under consideration, but they need to start to reflect what the future holds; this is that each party will be responsible for running the finances of their own household and all joint bank accounts will be closed.
Maintenance – for spouses
The first principle is that we all have a duty to maintain ourselves as far as we can. Courts accept that someone who is caring for young children or who has not worked for many years may have a very limited earning capacity, if any.
While both parties are still alive, a spouse or former spouse has a claim for maintenance (also called periodical payments) until the Court makes an order dismissing their claim or until they remarry. In every case the Court must consider whether it would be appropriate to dismiss their claim for maintenance and will do so when it is satisfied that the wife can adjust to the dismissal of her maintenance claim ‘without undue hardship’.
There is a broad range of possible outcomes: a fit young childless wife with her own career can usually expect no maintenance (or perhaps she will get maintenance for just a short period while she ‘finds her feet’) but a wife of twenty-five years with poor earning prospects may receive maintenance for life. If pensions are to be shared as part of an overall settlement then a maintenance claim will commonly be dismissed when her pension income is due to cut in.
If a husband does not make reasonable financial provision for his wife in the period immediately after separation, the wife can apply to the court for an immediate interim maintenance order (usually called maintenance pending suit). The Court arranges hearings of these applications without delay. The husband is liable to pay his wife’s legal costs if he has been unreasonable and the maintenance order in favour of the wife can include a provision for him to pay an ongoing contribution to her future legal costs. There is every incentive therefore for a husband to agree a reasonable short term financial arrangement to avoid his wife applying to the Court.
If a couple can agree their short term financial arrangements, there is an increased chance that they will later be able to go on and agree the long term settlement.
Where a final financial order is made (whether by consent or after a contested hearing) it should either include a maintenance order for the wife or should clearly dismiss her maintenance claim. Where all financial claims (for maintenance, capital, property and pension orders) are dismissed this is known as a ‘clean break’.
There are several types of maintenance order for spouses. In short the Court can make:
- an order for maintenance pending suit (interim maintenance);
- a term order - where maintenance is expressed to end on a fixed date or event in the future;
- a term order with a section 28 bar - where maintenance is expressed to end on a fixed date or event in the future but excluding the wife’s right to go back to Court and seek an extension of the length of the term;
- a joint lives order - where the husband is ordered to pay maintenance until one of them dies or until the wife remarries;
a nominal maintenance order - of, say £1 a year. These orders are usually made for a fixed term and end when the youngest child reaches a particular age. The value, of course, is not the £1 but the fact that an application can be made by the wife in the future to increase the amount of maintenance if her circumstances become much worse or if her husband’s become much better.
Where the Court has made a maintenance order:
- either the husband or the wife can apply to the Court at any time to vary it if there has been a significant change in their circumstances that justifies the amount being varied;
- the husband can apply to have the maintenance order dismissed if there has been a significant change in their circumstances that justifies this; for example, if the wife has increased her income or the husband feels she should have done so;
- the wife can apply to have her maintenance capitalised so that her husband pays her a lump sum in return for which her maintenance claim is dismissed.
You should take detailed advice about the appropriate level of maintenance. There is no ‘magic formula’. There is a range of reasonable answers in a particular case. It is often a matter of striking a fair balance between what the wife needs and what the husband can afford. The definition of 'needs' will be determined within the context of the standard of living during the marriage and the available resources. If there are children the level of a wife’s personal maintenance claim cannot be fairly assessed without first assessing the level of child maintenance.
It is usually essential to look at the budgets of each household. We hope you will find our Budget Planner useful.
As far as the income side of the budgets is concerned you should visit the HMRC website www.hmrc.gov.uk/taxcredits and check whether you (or your spouse) might qualify for Child Tax Credits or Working Tax Credits; if so, apply now.
Where a couple have not been not married, neither of them has a claim for maintenance in their own right against the other when the relationship breaks down, although they may have claims on behalf of any children. See Children – Financial Claims.
Maintenance - for children
Only rarely does the Court decide the level of maintenance for children. Usually the parents agree on the level of maintenance which is then paid on a voluntary basis. The level that is agreed will inevitably be influenced by what would happen if it was not agreed. In order to know how much maintenance you should be looking to agree you need to work out the level of child maintenance that might be assessed by the CMS (Child Maintenance Service which has replaced the CSA).
If maintenance cannot be agreed an application for child maintenance can be made to the CMS by either parent. You must first consult Child Maintenance Options at www.cmoptions.org.
The Child Maintenance Options site is very good; it explains how the level of child maintenance is calculated and includes a calculator tool. It is a complex subject because of the endless differences in people’s individual circumstances. If you struggle with it, we can work it out for you.
If parents can agree the level of child maintenance but wish to see it recorded as a child maintenance order, the Court can make a child maintenance order by consent. Usually this forms part of a consent financial order which also records all the other aspects of their financial settlement.
Where the Court has made a child maintenance order no application can be made to the CMS until a year after the making of the order.
The Court can make orders for the payment of school fees whether these are agreed or not. In some circumstances it may make a top-up maintenance order.
Generally speaking child maintenance orders should end when the child reaches 18 or completes their secondary education, whichever is later.