Avoiding spousal maintenance

[Schleich]

Hello,

I'm going through a separation at the moment, and we are trying to construct the financial settlement between us to be as fair and tax efficient as possible.

I am a relatively low earner, and would be entitled to a significant amount of universal credit - I have no savings or any other assets (nor does STBXDH) other than the family home.

I understand that child maintenance does not affect universal credit, but spousal maintenance does. Is there anything to stop us agreeing an artificially high child maintenance monthly payment instead of separate child maintenance and spousal maintenance payments, to avoid losing out on universal credit?

Also, STBXDH has suggested setting up a joint bank account (which only he will pay into as the high earner), which we are both able to use to pay for all costs relating to the children. Would this impact on universal credit? Does anyone see any issues with this?

Thanks!

[MH1111]

Surely you should just accept child maintenance and get a job if you want more money?
Courts like people to be financially independent these days, you may get a higher %of the assets in lieu

[Schleich]

@MH1111

Yes, I will be working full time as well (I already work part time). But I'm not a very high earner, so still entitled to universal credit.

We don't have many assets, and my husband is a high earner, so a clean break is unlikely.

[Sidge]

Spousal maintenance is rarely awarded I believe.

Just accept a reasonable figure of child maintenance. And I’d avoid a joint account as it will mean an awful lot of explaining to UC et al.

The courts still like to see clean break divorce I believe. This can incorporate property, pensions and maintenance but disallows future claims on income, pensions and properties.

[Shmithecat2]

Tax efficient? That's a stretch.

[MushyPeasAreTheDevilsFood]

Hoe do you have no savings or assets if your fh is a high earner? Could have have accounts you dont know about?

[Schleich]

@MushyPeasAreTheDevilsFood

We've no savings or assets because we've spent all our money on holidays, private school fees and a failed business venture!

[Schleich]

@Sidge

The intention is to avoid getting the court to decide anything, and to agree an arrangement privately. I believe this is possible?

We will still be getting independent legal advice, but we are confident that we can come to a fair arrangement without having a fight. We had a low conflict marriage, and I'm hoping we can have a low-conflict divorce too.

[Schleich]

@Sidge

The intention is to avoid getting the court to decide anything, and to agree an arrangement privately. I believe this is possible?

We will still be getting independent legal advice, but we are confident that we can come to a fair arrangement without having a fight. We had a low conflict marriage, and I'm hoping we can have a low-conflict divorce too.

[Muppetry76]

Spousal maintenance is incredibly rare. Seriously. Unless you've both taken legal advice that states otherwise I'd suggest don't even go there.

If you have few assets (don't forget to include pensions, these are often grossly underestimated unless you get a proper valuation) and there is no equity then a clean break is likely, with you accepting child maintenance as his contribution towards the kids.

I would not recommend maintaining any financial ties to your ex - explaining this to UC will be tricky. Also you would be liable if the account was overdrawn, and either of you can spend the money on whatever you want. If one of you racks up any debt at all this could affect the others' credit rating if you still have this financial link.

What has your solicitor suggested OP? Have you checked the benefits calculator? What does the CMS figure work out at?

[Muppetry76]

You certainly can come to an amicable financial settlement but it ultimately will be rubber-stamped in court, and if it seems in any way unfair to either of you then it will not be approved.

[SexTrainGlue]

You can construct the agreement yourselves, but it has to be endorsed by the courts or it will not be binding. Your solicitors would be pretty incompetent if the allowed you to have a non binding arrangement.

If he does not already know, he will shortly find out that spousal maintenance is rarely awarded, though you may get a transitional arrangement for a couple of years to allow time for you to retrain if necessary and job hunt.

He can apply for child maintenance to be adjusted in future, so you could be putting yourself in a vulnerable position.

I wouldn't keep a joint bank account.

If he wants to pay for agreed child related items in addition to regular maintenance, then it might be worth considering him having a credit card with you as second card holder

[Schleich]

@Muppetry76

We have quite a lot of pensions, and I think I will be getting the lion's share of those (70%), but probably only half the equity in the house, since there is only enough equity to cover two deposits for a house each - if I got 70% of the equity then STBXDH wouldn't be able to buy (we have no savings).

It is likely that we will have a 50:50 split on the kids, or close to that, which would dramatically reduce my CMS entitlement. The calculator works out to around £800 monthly, but STBXDH has agreed in principle to pay £1000 to me as child maintenance, plus fund a joint account for us both to use to £500 monthly, and also to pay private school fees if he can earn enough to keep the kids in private school.

The point of the joint account was mostly convenience, but also to ringfence some costs away from me to help me with mortgage affordability - since my lower salary will make it harder for me to get a big enough mortgage, and most lenders seem to ignore maintenance payments unless ordered by the court (we'd rather avoid for cost reasons) or paid via CMS (which incurs 25% fees). I do take your points on the joint account though - I'll think about that and get advice.

[MadameButterface]

spousal maintenance is rarely awarded in the UK, so no need to crunch the figures there to commit benefit fraud. i imagine lots of single parents who struggle along needing every penny of UC to keep the wolf from the door will be reading this thread about you with your privately educated kids doing this face

[okiedokieme]

I get spousal maintenance, it didn't go through the court but I don't claim
Uc. I think they do ask how much child maintenance you get these days

[Sidge]

@Schleich you can agree everything privately and be as low conflict as you like, but ultimately the judge will review the financial agreement before granting the divorce and if it’s in any way unbalanced, unfair or unreasonable they won’t grant your divorce.

You will probably be encouraged to attend mediation and will need to evidence all finances including pensions. There is total transparency (or should be) and UC applications are pretty intrusive - you also have to lay your finances open for assessment.

[Muppetry76]

OP when you agree finances (even without a judge ordering who gets what), it needs to be finalised through court for legality. It can be a simple paper exercise as long as it is fair to both parties, and you must both complete satisfactory financial disclosure forms including CETV for pensions.

The split of equity must be fair to you both: if your salary is much lower, your mortgage affordability will be lower, and I think you should aim for a larger share of the equity. His higher income allows him to save more in the meantime and borrow more (assuming you are going for similar size/value properties). Remember pensions are not 'cash' - there could be more benefit to you in the short term to claim more equity to enable you to purchase a property.

50:50 would usually result in a zero child maintenance liability, he is being very generous to offer you the sums he is, but he could apply to CMS at any time after financial resolution and if zero rate is awarded leave you spectacularly high and dry.

Please reconsider the joint account for the reasons I outlined in my PP.

Add into the mix future new partners, new financial obligations, new children, and it all gets very messy indeed.

Please take specialist independent legal advice.

[AllsortsofAwkward]

If its 50.50 why would he pay maintenance it sounds like you need to bite the bullet and support yourself. Its rare spousel maintenance as they encourage a clean break and independence.

[Schleich]

@Muppetry76

Thanks. That’s really helpful.

Do you know if it’s possible to make the maintenance more secure so he can’t change his mind?

On the house equity, I think there is only around £80k in the house, and we have no savings at all (in fact around £15k of debt), and by the time we pay solicitors fees relating to the separation, and in relation to the sale of the house, I suspect there will only be around £70k left. Where we live we are unlikely to get much change out of £300k for a large enough house each (we have 4 kids), and assuming a 10% deposit is required that doesn’t give much scope to fight for more than a bit over 50% on the house. We have £200k of pensions, and the initial agreement is that I get £140k of those. Do you think I should be asking for more than this, or to try for more of the house and insist he rents until he can save up for a deposit (which would be never if he pays me as much as he’s promised me, and with rental prices for family homes being as high as they are!)?

I’ve only had a 30 minute consult with a solicitor so far.

[Sidge]

In my (non legal) opinion surely you’d be better off having the house rather than the pensions. You’d have to wait until retirement for those! If you’ve got 4 kids you need money or housing now, not an income stream in your late 60s...

[MooseBeTimeForSummer]

Tread carefully. Once a court order for child maintenance has been in place for 12 months, either party can give notice and ask the CSA (or whatever it’s called now) to deal with it. If you’ve had a clean break financial order you won’t be able to go back and ask for spousal maintenance

[Schleich]

@Sidge

That would be ideal, but my ex needs a house for the same reasons!

[Sidge]

@Schleich I see that but as Muppetry76 has said as the lower earner you need protection. If he is a very high earner he’s in a much stronger position than you.

You definitely need good legal advice, and don’t let your desire for low conflict mean you get shafted.

[Muppetry76]

Try the wikivorce website/forum for really useful advice, was my go-to during my divorce. Lots of actual legal folk on there.

[HeartGirls]

Just remember child maintenance stops when they are out of education where as spousal maintenance can continue until you remarry or indefinitely

[Fennelandlovage]

Do not give up the pensions. Life is long.