Sort out your rights: divorce does not have to mean a life of penury

Sue viccars divorced Tim Hall in 2000, but they still live near each other in Devon and their two boys have always split their time equally between the two households. While divorce can be difficult, maintenance does not have to become an issue if you're fortunate enough to be able to go your separate ways amicably and share childcare arrangements.

"The separation agreement said financial arrangements and access were to be agreed by us," Ms Viccars says. "Tim never paid maintenance because we were both working and split the childcare 50/50. In practice, I pay for almost everything for the boys because I earn more, but I'm not about to start keeping tabs on who buys what for them."

But many family break-ups are less conciliatory, and in an environment where family resources are already under strain as one household splits into two, the cost of bringing up the children can spark further wrangles.

Philippa Pearson, a lawyer with the Family Law Consortium, says the court has the power to make maintenance orders only by consent, if the divorcing couple can agree on maintenance to be paid by the absent parent (usually the father). If the settlement is contested, the case is given to the Child Support Agency (CSA).

"But the CSA has such a bad reputation most couples prefer to try to agree between themselves," Ms Pearson adds. The settlement process has been made much easier since the law governing maintenance payments through the CSA was changed in March.

The CSA formula for payments has been greatly simplified: the basis is that the absent parent will pay 15 per cent of net income (less tax, national insurance and pension contributions) for one child, 20 per cent for two and 25 per cent for three. Other factors, such as children by a subsequent partner, are taken into account.

Ms Pearson says: "The basic numerical formula is simple enough for lawyers to use as a guideline when advising clients what to expect in the courts."

The law has also changed to make it easier for divorced parents to have their maintenance payments reassessed further down the line. "Court order by consent is no longer sacrosanct," Ms Pearson says. "Before March, any application to vary payments had to be made via the court, but now, after the first year, either parent can apply to the CSA for a reassessment."

Court orders can be made for other financial considerations relating to the children. If the net income of the absent parent exceeds the cap for CSA assessment (at present £104,000), the resident parent can apply to the court for a "top-up order" to boost the family income. Occasionally, the court may make a "lump-sum order", designed to fund an expense such as the cost of having the home adapted for a handicapped child.

But what if the absent parent will not pay? The CSA has various painful instruments, including deducting the money directly from his or her pay packet. But it is not always that simple. The former husband of Rose Hamilton (not her real name) lost his job in 2002, but got a big redundancy payoff. "He used it to clear his personal debts, which meant I lost £12,000 of maintenance last year," she says. "The court was powerless, and it admitted as much."

It is basically a matter of haggling over the pot of money available. Sometimes the court will issue a school-fees order instructing the absent parent to contribute to educational costs for as long as necessary, but it all depends on the family's circumstances. The less money there is, the less realistic such an expense becomes. There is no automatic guarantee that the children's education will be able to continue privately if the parents go their separate ways. At the IFA Byrne Williams, Roger Prest says: "One particularly unpalatable fact of divorce is that it is considerably more expensive for two parties to live separately than together, and school fees is one area where savings can be made easily."

And where one parent - usually the father - is making significant maintenance payments to support his former family, he should protect their lifestyle in the event of his death. "Solicitors often overlook this issue," says Liz Lyke, at the IFA Options for Women, in Witney, Oxfordshire. "But it's essential that the absent parent takes out sufficient life insurance, pays the premiums and writes the policy under trust, so that it goes to his children on his death and is kept separate from the rest of his estate. The trouble is that often the husband will fob off his former wife by saying he already has lots of life cover, but the policies won't be specifically earmarked for his family."

Ms Lyke says that divorced mothers tend to be short of cash and not necessarily in a position to pay extra insurance premiums, but Mr Prest takes a more pragmatic view.

"The resident parent should take out maintenance protection in the form of life insurance 'on the life of another', to protect the family financially against the event of the other parent dying," he says. He emphasises that the paying parent is not obliged to make that provision, though he does need to be consulted by his ex-spouse because he personally has to answer the medical questions in the insurance application.

Danny Smith of the IFA Towry Law recommends that not only life cover but critical illness and income protection should ideally be sorted out as part of the divorce settlement. "They are often not included, yet people are four times more likely to be unable to work again because of a serious condition than they are to die," he says. "Critical illness protection is more important than life insurance. The trouble is that all this protection is expensive."

Finally, when new marriages and new families or stepfamilies enter the equation after a divorce, there is a risk children from the old relationship will suffer. To ensure a fair say in the estate, each party should make a new will after the divorce.

EASING THE STRAIN ON THE CHILDREN

* Try to focus on the kids' wellbeing, rather than the other emotions and issues between the two of you, when you are discussing financial and practical arrangements for them.

* Recognise that some financial compromises and sacrifices are likely. Continuing private schooling may mean a smaller house, for instance.

* Work out the real costs involved in caring for the children (do not forget items such as phone and heating bills, school travel costs and out-of-school activities) and identify savings areas. A negotiated settlement may be more likely than the CSA formula to reflect the two parties' positions accurately.

* One parent should consider life insurance to cover maintenance payments from the absent parent, written in trust to ensure benefits are earmarked for the children on his or her death.

* Make sure your wills are up to date and state clearly who should receive what.

CONTACTS

* Child Support Agency www.csa.gov.uk 08457 133133

* Family Law Consortium: www.tflc.co.uk

020 7420 5000

* Towry Law: www.towrylaw.com 01344 828000

* Options for Women: www.rachelleweb.com/ options 01993 773889