Sorting out the Money: What is Maintenance and when is it paid?
In this series of blogs we’re looking in detail at how to work out money following a separation. We’ve looked at how it works and property and mortgages already. In this blog we will be looking at maintenance and explaining the differences and when this is paid.
There are two types of maintenance: Child maintenance and Spousal Maintenance. Child Maintenance is essentially maintenance paid to the parent the children are living with to help with the costs of housing, feeding, clothing and keeping warm that child or children. This maintenance is assessed on the basis of a formula and is calculated as a percentage of the parent’s (who the children don’t live with) income. This percentage is then reduced where the children spend a certain number of nights (averagely) with that parent because they will also have to provide housing, heat and food for the children.
This can lead to certain issues because where care is shared, parents may feel like the children live with both of them and there is not one parent who the children live with, and one parent the children see, or spend time with. This is purely a mechanism for determining what is a fair amount of child maintenance and the way the legalities of this are worked doesn’t need to affect how you, and crucially your children, view the arrangements that you have made.
The second problem that can crop up is where one parent seeks to reduce the other parent’s time with the children in order to ensure they get more child maintenance. In family mediation we encourage parents to decide on the arrangements that will work best for their children and then work out money based on those arrangements. This ensures you have arrangements that work best for your children rather than for your wallet. This doesn’t mean you won’t be able to both make ends meet (in fact we would suggest that if you have created a financial resolution where one of you can’t make ends meet then that’s not a resolution) it just means that you have worked out what is truly best for your children as a starting point and they will greatly benefit from that.
If you need more information about working out child maintenance then the best way to do this is to use the online calculator. Child Maintenance is dealt with by the Child Maintenance Service (formerly the Child Support Agency) where you can’t reach an agreement between yourselves. If you are able to agree a figure and pay this between yourselves then there is no need to use the service and pay the relevant fee (which is waived in certain circumstances).
Spousal maintenance is maintenance that is paid to a spouse following a divorce or separation. There is no formula for calculating this as it is a much more arbitrary exercise in ensuring that both parties are able to make ends meet. It can also be an exercise in ensuring that you are both able to access a similar lifestyle and especially so where there has been a long marriage.
Working out what spousal maintenance (if any) should be paid involves understanding what options you will each choose with regard to your housing. You then need to look at the costs of living in those properties and what your outgoings will be. This can be a difficult exercise in forecasting a budget for a property you don’t yet live in but again professionals like mediators can help you with this. Once you have a budget worked out you then need to look at how this stacks up against any income that you receive (from work, child maintenance, benefits or other sources). If you have a shortfall and the other person has a surplus then it may be appropriate that spousal maintenance is paid to level up that imbalance.
If you both have a shortfall then it may mean the option you’re exploring is financially unworkable. Or it may mean that you need to look at whether you can reduce your outgoings or increase your income (or both). If spousal maintenance is going to be paid then you need to be clear about how long this will be paid for and whether it will be reduced down at any point. Either party can ask to review spousal maintenance if there is a change in their financial circumstances but it can be helpful to plan for future events. For example, if a parent plans to increase their working hours as the children start primary or secondary school then you can build in a reduction, or tapering off, of spousal maintenance to coincide with that. Or it may be that spousal maintenance is paid until the other person can draw their pension. It will always depend on the circumstances of the two people involved.
How long spousal maintenance is paid can be a controversial topic. Going back say 10 or 15 years more couples agreed spousal maintenance being paid for life but there are moves against this now because of the fact that it represents an ongoing financial commitment to a spouse for the rest of at least one of their lives. It will always depend on each party’s circumstances but planning to become financially independent of each other as soon as possible is now an important part of looking at financial issues. This may mean one party has more capital so that they are not dependent on the other, or a supported return to work may be built in. It will depend on a variety of different factors.
You can also build in circumstances where spousal maintenance will stop being paid for example the other person re-marrying or the children leaving home.
We will be talking more about this and other financial issues in our series of downloadable webinars which will be coming in the spring. To stay up to date with when they’re likely to be launched join our free mailing list. We also have a separate mailing list for professionals working with separating couples. This will include sharing the webinars so you can share them with any of your clients who may benefit. It also includes details of our forthcoming training workshops and networking events.
You can watch the Facebook Live talking about this blog by clicking on the video below.