When couples with children break up, normally one of the big bones of contention is how much money should be paid by way of child maintenance by the parent who does not live with the children to the one who does. When the financial means of the couple are relatively modest, this is normally fairly straightforward as the limits of provision are clear. However, in 'high net worth' cases, it can be much more problematic.
In such cases, the issue of maintenance for children raises several questions, such as:
A recent case has shed some light on the approach that the courts may take in future cases of this type. It involved the break up of a wealthy unmarried couple with a three-year-old daughter. The father had net assets (including the flat they lived in) of over £4m and had an income of about £500,000 a year. The mother had approximately £200,000 in assets and also worked, earning £54,000 a year. She employed a nanny, at a cost of £2,000 per month, in order to do so.
The mother sought maintenance payments for their daughter of between £56,000 and £70,000 per annum, plus payment of various other expenses, including school fees of £10,000 a year. She also sought payment of the rent and service charges on their flat, which she still occupied. The father's offer was substantially less, although he did offer to pay up to £700,000 for a home for the child. He held that to pay such an amount as the mother was demanding would, in effect, allow his ex-partner to 'save for a rainy day' out of the maintenance payments. The courts will not allow child maintenance payments to provide 'slack' with which to fund a pension or savings.
The decision of the court was that the father should provide sufficient funds to purchase a house for £900,000, plus costs, and pay periodical payments of £60,000 a year for the maintenance of the child. The mother's earning capacity did not affect the amount of carer's allowance used in the calculation: she would have to pay the nanny in order to continue working and could use the balance however she wished. There was no 'slack' in this instance.
"The issue that often arises in these cases," says Jane Flemming, "is that when the child maintenance payments stop and any property settled on the child in trust until he or she reaches majority becomes theirs by right, or reverts back to the settlor, the ex-partner (usually the child's mother) can be left homeless and lacking funds. In this case the court accepted that one possible solution for the mother might be to fund a 'buy to let' property, using the rental income to fund the mortgage payments, so the mother would have a property of her own when the child reached the age of majority."
This article first appeared in Active Kids magazine; Issue 26; Spring 2006.
 |
 |
 |
 |
 |
 |
|
