Tag Archives: Children’s Finance

Financial Arrangements for Children

Charles HaleCharles Hale QC explains why court is not always the most appropriate way to resolve financial arrangements for children.

Making arrangements for the financial wellbeing of children in England is either very simple or rather complex, depending on your financial resources and your relationship or former relationship with the other parent of your child. This short summary is intended to give a brief overview and explain why parents (and their children) may be better trying to keep matters out of court if possible.

Regardless of the former status of the parents’ relationship, the Child Maintenance Service (CMS) provides statutory guidelines for levels of child maintenance payable by parents whose children spend more time with their other parent. These guidelines apply to those who earn up to £3,000 per week (before tax), and the different levels take into account the number of children for which maintenance is to be paid, the number of nights they spend with the paying parent, and whether there are any other children in the paying parent’s household.

Although the child maintenance guidelines are set by law, it is not obligatory to make private arrangements according to them. Parents are able – and encouraged – to decide instead what is right for their family, which may be more or less than suggested, or perhaps in some cases take a form other than cash, such as the purchase of items for the child, school fees or other one off payments. However, the guidelines show the level of payments the Child Maintenance Service will impose if one parent invites it to become involved because it is not possible to reach agreement.

Parents who have been married to each other are fortunate to be able to have any agreement that they come to about child maintenance put into a consent order as part of their divorce settlement. If there are issues regarding provision for school and university fees, trips abroad, or any other matter that requires specific expenditure on or for the children, these can all be dealt with at the same time together with all the other arrangements that the adults need to make between themselves. Consent orders can be arrived at through negotiation between solicitors or by using the collaborative process or mediation. They can also, as an alternative to court, be arbitrated (a binding, non-court and private determination of the issue).

If the parents did not marry, and the child has financial needs above the standard maintenance covered by the CMS formula, the legal framework is quite different. The technical term is “Schedule 1”, which refers to the part of the Children Act 1989 that applies in these circumstances. The parent with whom the child spends more time is entitled to claim financial support on the child’s behalf from the other parent if that other parent is of sufficient means to take him (or her) outside the standard CMS framework (an annual before tax figure of £156,000) or, if there are other resources that make it appropriate for him to provide for any other needs. The parent looking after the child day-to-day is not entitled to ‘maintenance’ for herself/himself, and any support generally ends (and property is returned) when the child becomes adult at 18 or sometimes 21.

Children’s finance is all about the child needs, and what the parents can afford. These matters can either be assumed and imposed by the CMS, ordered by the court, or discussed and decided upon by the child’s parents with their child’s best interests at heart. The collaborative process and mediation give each parent the opportunity really to focus on the sort of life they want their child or children to have, and to discuss their expectations of each other – both financial and as parents. These processes, guided and facilitated by professionals, can ease and encourage the ongoing conversations that are necessary when bringing up a child together. Unfortunately, this is less likely when the court is involved and communications are adversarial rather than collaborative.

Sometimes, the financial arrangements where parents were never married can be complex, and my advice is often sought where trusts are set up to hold properties for the future, and to make family arrangements clear for the future.

No two family set ups are the same and I see more and more same-sex families who have financial issues concerning children on separation.

Part of my work, and a part that I very much enjoy, is when I am asked into the collaborative or mediation process to assist parents and other lawyers in understanding the approach that a court might adopt to the financial arrangements for their children. I feel privileged to be involved in these constructive conversations that put children at the centre, and have admiration for the parents who choose to take this approach in circumstances that are almost invariably painful and stressful. I have no doubt when I come away from these meetings that the children involved will have benefited from their parents working together and seeking lasting solutions. The benefits of making decisions away from court when working out children’s financial arrangements – or indeed any arrangements on separation or divorce, particularly where children are involved – may not be instant, but I do believe they pay significant dividends in the longer term.

I often say to my clients that if I can achieve a solution that both sides are content with rather than happy I will have done my job. For the children though, happiness will be possible when their parents can agree.