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Financial Arrangements In Separation: Part 2

By: Abigail Taylor - Updated: 27 Jan 2016 | comments*Discuss
 
Maintenance Finance Agreement Divorce

Part two of our guide to financial arrangements in separation, covers spousal support and maintenance - what to do about shared property, possessions, bank accounts, debts etc. There are also sections covering wills and guardianship of your children, alternative dispute resolution and negotiation.

If you haven't already read part 1 it can be found here.

Spousal support / maintenance

Spousal maintenance consists of regular payments to help with the cost of everyday living expenses. This may be paid to your former partner if you have no children, or may be an additional sum on top of child maintenance. It may terminate on the death of the paying party, or the re-marriage of the receiving party.

The agreement may be for a set amount, or simply that one of you pays certain bills for the other. You can agree this amount in your separation agreement, which is always the cheaper and more flexible option.

Consider:

  • How much money does each party earn?
  • How much money do they need to live on?
  • What other money will you get from joint property / accounts / benefits?
  • What financial contribution did you each make to your marriage?
  • What non-financial contributions (such as staying at home with children) were made?

If you cannot agree, you may apply to the courts for a 'financial order'. However this can be a costly process and will usually require legal assistance from a solicitor. It is therefore advisable to try to agree arrangements between you.

You do not have to fund a celebrity lifestyle for your ex, but you can be expected to help them maintain the lifestyle you both shared. For example if you both rented a house during your marriage, you are not expected to help fund the purchase of a property for your ex partner, but will have to help them to afford their rent and security deposit.

Shared property

Your house is usually your most valuable property. If this was jointly owned, you need to decide how you are going to split its value (commonly referred to as equity).

The first stage is to decide whether one of you wants to keep the house and buy the other out, or whether you agree to sell the house and use the money from the sale to purchase or rent separate properties.

The second stage is to decide what share of the equity each party will take. Your starting point will be a 50/50 split, but there are several reasons why you may choose to vary this, for example:

  • One party contributed a larger amount to the initial deposit (such as their family money)
  • One party will need more money from the sale to buy or rent a larger property due to having your children living with them
  • One party will need more money from the sale to buy or rent a property as they have considerably less income than the other
  • You would rather allow your ex to have more money from the sale of your property than later share your private pension fund.

Possessions within the home

You may also want to make specific agreements about who will keep specific possessions within your home, or how the value of any items (particularly expensive items) is to be split. For example is one item a hereditary antique that belongs to one side of the family and so one particular party will want to keep? Is one item such as a boat used more by one party than the other? You are advised to avoid any "games" and simply be honest with each other about which items you want to keep so they can be factored into your arrangement and other items sold to release their monetary value.

You may also want to consider whether you can afford to keep property that costs money, such as a car. Even if you agree for one party to keep the car, that party will still have to pay for insurance and car tax. They may also have to pay monthly for the car if it was not bought outright. Can you afford to keep the car on this basis? If not, you may wish to sell the car and use some of any money from the sale to buy a cheaper car which is in a lower insurance band or uses less fuel.

What if you have rental property?

So what happens if your property includes a rental property bringing you a monthly or weekly income? In this case you have to consider whether either of you wish to keep this arrangement going. If so, then you will have to split the income and continue jointly owning the property, or one of you buys out the other. If you wish to sell the property, you can immediately split the value of the property but will lose out on further income generated by renters.

Joint accounts

When you split, you may have already stopped using joint accounts to pay bills etc. However you may not have considered any money remaining in the accounts. Again it is up to you how you split this money, and may depend on your agreements in relation to spousal/child maintenance and division of property.Even if the account is empty, you should both agree to shut down "sleeping" joint accounts as they will nearly always include an overdraft which could allow one party to run up debts in both your names.

Debt and loans

Any loans in joint names will leave you both liable to pay them. This means that even if one of you pays off half the loan, you will both still be liable for the other half. You therefore need to come to an agreement about any joint loans :

Pay off the loan: Agree how much each party must pay off and by when (you may want to agree that a defaulting party has to pay off any late payment charges their late/missed payment accrues).

Both take out an individual loan to pay off your half - but this could mean accruing even more debt and so is often not a practical solution.

Joint Debts

Joint debts can be more difficult to identify; just because a debt is only in one party's name does not necessarily mean that it is only their responsibility. In the case of any debts in single names that you consider joint liabilities, you will need to agree that this is the case with the other party. An example might be a loan taken out in one party's name but used to pay for a jointly used car. These debts will then also need to be considered with joint loans.

If you have several joint loans / debts, you may choose to pay them off by one party taking responsibility for one debt, and the other for another. This will allow you to swiftly take debts out of joint names even if you can't yet afford to pay them off, as most banks or loan companies will allow you to change a debt from joint into sole names as they still have someone liable and paying off the loan. You may however have difficulty with this if one party is unemployed or hasn't got enough security for the bank to satisfy themselves that you are able to pay off any debt.

Joint savings

Any joint savings in the form of money in a savings account should be split between you both and put in separate accounts. How you choose to split this money may again depend on your agreements in relation to maintenance payments and division of other assets.

Complications come where savings are in the form of investments, stocks and shares. You may again wish to transfer these into just one of your names (or some in one name and some in another) as part of your agreement. However remember that these will not usually pay out money immediately and so you may want to factor this into your division of assets so that you both have enough to pay for future accommodation rent / purchase of separate properties.

Many investments, stocks or shares can be sold to retrieve an immediately monetary value. The value of stocks and shares varies however and so you are not guaranteed to get back as much money as you paid for them. You may wish to keep these savings in joint names. However this can create problems with agreeing whether to sell them at a later date.

If your savings are in an ISA (Individual Savings Account), they will by definition be in one person's name. Any money in this account therefore legally belongs to the named owner. Like joint debts however, this may not reflect the reality of where the money came from and so you may wish to make an agreement in relation to the money in any ISAs. It is quite common for couples to save money by putting up to individual limits in ISAs for tax reasons, but the money in them came from joint current accounts and was contributed by you both. If no agreement is reached, the money will belong to the party named on the account and will only be accessible by them.

Company owners and directors

Where you both jointly own a business, you will have a further decision to make as to whether you are able to still work together. If not, you will either have to sell the business or one partner buys the other out. This can cause problems if you cannot afford to buy out one partner (who may not even work there but simply hold a significant amount of shares).

Often the best solution for both of you to get the maximum amount of benefit is for a staggered agreement to be put in place. This would mean that the business is able to keep running, but that an agreed percentage of shares / equity is bought off the absent partner annually.

Example: Tim and Sue jointly own a business 50/50. Tim wants to buy out Sue's shares when she leaves the company so that he can continue earning money in the business rather than sell it.
Tim can't yet afford to buy out Sue outright. They agree that in Year 1, Tim will buy 20% of Sue's shares, which Tim and the business can afford.
Tim will still make a profit, but it will be reduced by the payment to Sue.
In Year 2, Tim buys another 20% of Sue's shares, plus a small extra sum to compensate her for interest she would have made had the money been withdrawn a year earlier. If this continues, Tim will buy out Sue within 5 years.

This method is essentially a loan from the exiting party, but allows the business to keep running which may ultimately mean they end up with more money in maintenance as Tim otherwise won't be able to pay anything towards the children or Sue's maintenance.

Other benefits

In addition to savings, you may also have benefits such as a private pension. You may decide to factor this into your agreement by:
  1. Agreeing to pay a share of your pension payout each month to the other party
  2. Agreeing for the other party to take a slightly larger share of savings to give them extra money for after they retire

You may also have life insurance whose beneficiary is your ex partner. The obvious move following your separation is to change the beneficiary of this insurance to someone else, perhaps your siblings or other close family. You may however want to consider any life insurance set up so that your former partner can continue to afford to support your children as a single parent; if anything were to happen to you, they would still have to do this, so the purpose of the insurance still exists. You may therefore want to keep your policy without changes to the beneficiary to protect your children's future.

Wills

You may have already written your wills with your former partner as a beneficiary. You may want to change this part of your will so that you have a cleaner separation. However your ex partner may still be a trustee if you wish to give money to your children who would not be able to claim it until they are 18 years old.

You should discuss what will happen to your children should something happen to one of both of you. If one of you were to die, you may agree for the other parent to take full custody of your children. It is however increasingly common to include an agreement that in this event, you agree to allow your late partner's family contact with the children. In the event that something were to happen to both of you, you may wish to jointly nominate someone to care for your children. If you have already named someone jointly in your wills, you may be happy to keep this person. If you have not named someone, it is advisable to do so to prevent any arguments at a later stage of tensions between your families.

Alternative dispute resolution

There are alternatives to going to court to resolve any issues you may have in agreeing matters such as payments or contact with children. Below is a guide to some of these methods which both allow you more control of the process, and if they work can be far cheaper.

Negotiation

Suggesting resolutions and compromising to eventually reach a solution. This can be as simple as you writing letters to each other or meeting to discuss matters at a neutral location. You can get solicitors involved in this process or conduct it yourself.

Arbitration

Putting your side before a specially trained independent third party who will adjudicate and tell you what you each must do. This is much more like going to court, except that you and your solicitor argue your case in front of a trained arbitrator who is not a judge, out of court. This can still be costly due to still paying for a trained person to judge your case, and usually needing legal representation. However you have "rights of audience" during arbitration and so you can also speak to the "judge" to explain your case.

Mediation

An independent third party assists you in your negotiations. You will negotiate with each other and are responsible between the two of you for agreeing matters rather than having a decision imposed on you. However you will have an independent third party to help to come to an agreement by focusing you on the main issues and "policing" discussions to ensure you both have chance to speak.

There are other methods of alternative dispute resolution (ADR) that you could try, but these are the most common. Your local Citizens' Advice Bureau should be able to advise you further on these methods.ADR is often dismissed by parties without real attempts to make it work. It can however vastly reduce the costs involved in settling matters and can result in you both having an agreement tailored to your individual case and what you want. You will have to consider it when starting any court proceedings under the Civil Procedure Rules so you might as well really try to make it work and avoid additional expense and stress!

Need More Information?

There are more guides and templates in this section, read on to:

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Check out the Separated Dads Forum... It's a great resource where you can ask for advice on topics including Child Access, Maintenance, CAFCASS, Fathers Rights, Court, Behaviour or simply to have a chat with other dads.

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Share Your Story, Join the Discussion or Seek Advice..
[Add a Comment]
Ryw - Your Question:
After being split for 4 years and having access to my daughter 7 nights per 2weeks and paying in line with csa but not through csa directly my ex has become annoyed at paying childcare costs causing huge stress. She gets paid weekly a good amount of money considering I have my daughter a lot, my daughter has asked time after time to live with me and hates being at home for numerous reasons one being my ex partner, as I work early I drop my daughter 15 mins early which has incured a small fee daily which is understood to mount up. The main issue is now my ex is saying she's is completely cutting access to two nights a week for the only reason of getting more child maitainence from me and not for any other reason which is causing more stress to my 9 year old daughter and to everyone involved. After 4 years of 50/50 aces and weekly payments clothes paid for hobbies and holidays. Has she got the right to do this and what rights or avenues can I go down as it really isn't fair as a father to be dictated to when I can see my daughter purely for her financial reasons. Please help me regards

Our Response:
I am sorry to hear this. I can only suggest Mediation if you cannot agree between yourselves and you will have the option to bring up your gripes in the sessions. Please see link: Mediation - What is it and is it For Me? here . If you cannot agree through Mediation then your next recourse would be to take it to court.
SeparatedDads - 28-Jan-16 @ 12:04 PM
After being split for 4 years and having access to my daughter 7 nights per 2weeks and paying in line with csa but not through csa directly my ex has become annoyed at paying childcare costs causing huge stress . She gets paid weekly a good amount of money considering I have my daughter a lot, my daughter has asked time after time to live with me and hates being at home for numerous reasons one being my ex partner, as I work early I drop my daughter 15 mins early which has incured a small fee daily which is understood to mount up... The main issue is now my ex is saying she's is completely cutting access to two nights a week for the only reason of getting more child maitainence from me and not for any other reason which is causing more stress to my 9 year old daughter and to everyone involved.. After 4 years of 50/50 aces and weekly payments clothes paid for hobbies and holidays ... Has she got the right to do this and what rights or avenues can I go down as it really isn't fair as a father to be dictated to when I can see my daughter purely for her financial reasons . Please help me regards
Ryw - 27-Jan-16 @ 5:38 PM
GoodDad - Your Question:
Hi everyone, I was with my partner for almost 5 years and we now have 2 boys, 2 and a half and 10 months old. We have agreed to split up as things were unbearable at home, at the moment she has moved out with my boys and I am getting regular access, I asked her to stay in the house and I would go live with my mum for as long as it took her to find a new place with the boys but she declined and has since registered homeless and is staying with friends with the kids. The house that we bought was done so with a mortgage taken out in only my name, we both contributed to the deposit as well as got a loan from our families to make up the rest, we have since paid my family back so just hers to go now. She is possibly going to move back in until she is given a place by the council so I would move in with my mum for the time being. I am not sure what the legalities are in this situation, I obvlously wouldnt want to see my kids without a home and I am paying regular child maintenance while also paying for the house mortgage, bills etc.

Our Response:
I think you would need to be very careful here as once you leave the house you may relinquish all rights. For instance, should your ex move back in and no longer be registered homeless, then she may not be awarded a council house. Also, your ex could apply to the courts to remain in the house and because you have children between you and she can prove she has a financial interest in the house (i.e her deposit and loan), then in the best interest of your children, the courts may allow her to remain in the house until your children are no longer financially dependent. Therefore, I suggest you seek legal advice on the best way to approach this. See also CAB leaflet under Housing here. I hope this helps.
SeparatedDads - 6-Jan-16 @ 11:37 AM
Hi everyone,I was with my partner for almost 5 years and we now have 2 boys, 2 and a half and 10 months old.We have agreed to split up as things were unbearable at home, at the moment she has moved out with my boys and i am getting regular access, i asked her to stay in the house and i would go live with my mum for as long as it took her to find a new place with the boys but she declined and has since registered homeless and is staying with friends with the kids.The house that we bought was done so with a mortgage taken out in only my name, we both contributed to the deposit as well as got a loan from our families to make up the rest, we have since paid my family back so just hers to go now. She is possibly going to move back in until she is given a place by the council so i would move in with my mum for the time being.I am not sure what the legalities are in this situation, i obvlously wouldnt want to see my kids without a home and i am paying regular child maintenance while also paying for the house mortgage, bills etc..
GoodDad - 5-Jan-16 @ 6:54 PM
@liz - Sorry to hear this, it is always heartbreaking. I have directed you to one of your partner sites When Your Ex-Partner Denies You Access, link here which will take you through the step-by-step procedure. We also have another site which may help as a lot of fathers who are now representing themselves here. Our Separated Dads Facebook site also can offer a lot of helpful advice from dads in the same or similar situation. I hope this helps.
SeparatedDads - 2-Feb-15 @ 11:50 AM
My son is 22 and his ex is 20. They have a little boy who has just turned 1. Long story short, sicial services involved and mum has baby living with her. Dad did have 1 hour a week supervised visits with a relative but mum decided he was a risk, with no proof, and stopped visits. He hasnt seen his son in over 3 months. He wants to. Both mum and dad are on birth certificate. Whats best course of action for him
liz - 30-Jan-15 @ 6:06 PM
Hi I have a question. I'm currently divorced a year now from my wife of 9 years. I have a four year old daughter but my wife will not let me see her and it's been three years now. I also have to pay her £300 per month for this pleasure which really really gives me sleepless nights as I think it is so unfair. If I marry again, will my ex wife then get even more money if my future wife is employed? Thanks kind Regards H
H - 13-Jul-14 @ 8:52 PM
I have now become the resident parent and am looking after my 17 year old son.My son is still in full time education and is going on to university this year.When he goes to university does the non resident parent have to contribute toward his upkeep?and what age does this cease?Also who does the non resident pay,the child direct or to the resident parent?
DAD - 22-May-14 @ 1:43 PM
I would say I'm going through an amicable divorce with no third parties involved, so many of the major fears regarding access to my kids have been minimised. So much however boils down to what is right and fair for my ex and for the children and right and fair for me - so that we can all move on without feeling victimised. Having to leave the marital home and realising that your money might not stretch to a bedsit brings with it massive stress. So a web site like this is invaluable in helping to allay some of those fears that I would otherwise need to spend a lot of money on legal advice to get. Thank you and keep up the good work!
Friendly - 20-Nov-12 @ 9:50 AM
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