child support - are rpi and bonuses included?

Hi there

Just wanted a bit of advice for a friend who's trying to resolve financial issues with her stb ex. They are not wanting to go to court (obviously who does!) and are a bit stuck on including (1) annual rpi increases and (2) does his annual bonus get included in child support equation and how this is to be done.

My advice was that rpi is pretty standard in a financial agreement and it should definately be included. Her ex is adamant that he will not included and it is not standard? Any advice?

As to the bonus, we've had a search and it seems that yes bonuses are included and counted as income but how do you include that and make a fair child support monthly amount if the bonus is paid annually? I do not know figures but she did say it was variable and was sometimes quite large..

Lastly anyone know what the situation is if part of the income is in shares??? How does that enter the equation.

Thanking you in advance.

Hi persephone1,

RPI linking of Spousal Maintenance is usual. It is not usual in child support.

The bonus is included in working out the amount and I have heard of the previous year's bonus being used to calculate payment through the CSA for the next year. In other words the % of the annual bonus for the year 2000 would be added to the amount of payments for the year 2001.

Regarding shares - if they provide a dividend then that could get treated as a bonus but that's up to the parties to agree. The capital value of the shares, realised or not, should have no influence on child support payments.

Good luck!

As a matter of interest why 'persephone'? All manner of things happened to her.

YA

Lol, joined yonks ago and only chose Persephone because I had tried numerous others and had just watched a programme about her! Just think it's a great name (apart from being the Queen of the Underworld married to Hades!!).

I am surprised that you say RPI is only linked to spousal maintenance.. I got divorced a number of years so my family law is pretty hazy but my court order consisted of both spousal and child support and it was ordered that both be increased each year by RPI?

As far as index linking is concerned, yes,, as YA rightly says, it is not unusual for SM to be index linked.
In relation to child support, the amount is calculated by reference to a proportion of the payer's income, so if the payer prospers then the child support increases ; but if, on the other hand, the payer is suffering a three year wage freeze, the child support is frozen with it.
But if the child support is payable under a Court order I suppose index linking must be an option.
In the present economic climate where wage freezes or even reductions are depressingly common, it can be very hard on the payer to have to increase child support by RPI if his wages are static. On the other hand, there can be advantages for the payer as well ; this may seem slightly paradoxical, who would welcome an increase in the maintenance ?
The problem is that if this is not done there is a danger that the payments will be reduced in real terms over time, which may lead to an application for an upward variation, and the cost and complexity of variation applications is such that it could be the lesser of two evils to pay the increase but avoiding the problems associated with variations. At least, that was the view I used to take when I had to pay SM.
By the way, I think it is now high time that indexation increases should be linked to the CPI as this is the index the Government uses to calculate benefits and cost of living increases. But I don't suppose judges will take any notice.
As to shares - well, YA is not quite right but I admit the point is very technical and esoteric. In certain circumstances shares can be taken into account. The authority for this is the Child Support Variation Regulations 2000, regs 18-20. The way it works, in summary, is that if the payer has assets exceeding £65K ( excluding some assets like his home or business ) then the payer will be credited with a notional income of 8% from the assets which is, of course, wholly unrealistic. The idea seems to be to force the payer to draw down on capital until it is reduced below 65K.
Sorrrrrrrreeeee, YA, I always enjoy reading your posts and I learn from them too !!! This one is more than a wee bit technical. I keep learning things on wiki too !!!!

Mike

Hi Persephone,

Yes, married to Hades but only after he abducted her!

Anyway and back to the future - you say the child support you received was in a court order. The courts can link payments to RPI, the CSA does not.

I am pleased to be corrected by Mike! I ­base­d my answer on my own situation where the CSA told me that shares were not included in working out the CSA payment. I see that I made the error of extrapolating my individual circumstances to be the rule for everyone (the arrogance of it!).

A notional income of 8% return on capital? Oooh, I'm going to have dreams about that!

All the very best to both of you (separately or together, I'm broad minded)!

YA

Thanks for your replies.

So if I summarise from your advice.

RPI is only linked to the spousal maintenance (which they have agreed an amount on)

RPI not linked (usually) to Child Support but for 2 children that should be 20% of net income.

Bonuses - if annual, then after said bonus is received 20% of that could be added to normal child support (from normal monthly income) for the following year, and recalculated again the following year?

Shares... still hazy about this!! Don't really understand but will forward your response to my friend (sorry!)

I know in my own case shares were involved but they were a one off payment vested over 3 years so were counted as capital, rather than income as in my friends case.


Just one other question regarding child support and education... What is the norm regarding child support if children go on to University....

My friends stb ex is wanting the cut off to be at 18 or after secondary education/college and is refusing to discuss/agree continuing the child support if the children go to University.

My friend is obviously concerned about this... any advice?

Hi Persephone!

RPI linked to Spousal Maintenance - Yes.

20% of previous year's annual bonus added to payments for the current year. I have heard of this being spread out over 12 equal monthly payments but don't know whether there is a legal reason why it the % can't be paid as a lump sum.

Shares - Mike says that if the paying spouse has over £65,000 in assets over and above his/her house, business (and tools of the trade?) then 8% of the total value of the assets is taken as income. In other words let's say your friends stbx has £100,000 of shares. This is treated as £8,000 of annual income, so 20% of £8,000 is £1600 and therefore the extra monthly payment will be £133.33

I haven't heard of a norm regarding children at Uni. My own order (which my ex and I agreed) stops SM when the youngest finishes her A levels - we both assume she'll be doing them. I'm doing what I can for one son at uni, which isn't much unfortunately - but then every parent does what they can - every sane parent that is.

Goo dluck to your friend and perhaps one day they'll have the time to visit Wikiland for themselves?

Good luck!

YA