Money Box Live/Phone In - Monday 13 November 2000

THIS TRANSCRIPT WAS TYPED FROM A RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT. BECAUSE OF THE RISK OF MISHEARING AND THE DIFFICULTY IN SOME CASES OF IDENTIFYING INDIVIDUAL SPEAKERS THE BBC CANNOT VOUCH FOR ITS COMPLETE ACCURACY.

Tape Transcript by JANE TEMPLE

MONEY BOX LIVE

Presenter: Vincent Duggleby

Guests Helen Howard, David Davidson

TRANSMISSION 13th NOV 2000 1500-1530 RADIO 4

ANNOUNCER : Now it's two minutes past three - time for MONEY BOX LIVE with Vincent Duggleby.

DUGGLEBY Good afternoon. On this MONEY BOX LIVE we'll be dealing with your questions about divorce and separation. According to the latest figures 160,000 couples petitioned for divorce each year - -r looked at another way, two out of five marriages are likely to fail, some in a matter of months. So, if you're in the process of splitting up, then you can ring us for advice on 08700 100 444 What you need to bear in mind is that divorce law has been radically changed in recent years and that process is continuing. A couple of weeks ago in the case of White versus White - -he House of Lords ruled that the assets there should be divided 50/50. This seems to overturn the 1973 matrimonial causes act which was based on the financial provision for reasonable needs and some experts believe the case marks a revolution in family law. Pension splitting is another key issue. From the 1st December it'll be possible under the Welfare Reform and Pensions Act of l999 for rights to be transferred to husband to wife, or vice versa as part of a divorce settlement and replaces an interim solution known as 'ear marking' which raised almost as many problems as it solved. The fact is that for most couples there simply isn't enough money to go around - and matters are made worse by the cost of maintaining second families, especially if you get involved with the Child Support Agency. Changes here are also in the pipeline which will be based on a fixed percentage of income. So if you need advice on any aspect of divorce now's your chance to talk it through with my two guests Helen Howard the author of the Which Guide to Divorce, and a solicitor and mediator at Richard Howard and Company - David Davidson is the head of family law at Charles Russell. The number is 08700 100 444 and I should mention we shall mainly be dealing with the law as it applies in England and Wales but we have no problems with John who's in Birmingham - are you there John ?

JOHN Yeah

DUGGLEBY Your question

JOHN Right my divorce took place in March but the financial settlement hasn't taken place yet but it'll probably take place in the next few months. What I want to ask is will the pension splitting come under the whole ear marking clause or the new rules?

DUGGLEBY Right, you have a pension at stake here have you?

JOHN I've got company pension of about £10,000

DUGGLEBY Okay - David?

DAVIDSON The court will only be able to apply the ear marking rules because your proceedings started - your divorce decree has already been pronounced. Pension sharing is only going to apply to proceedings started on or after 1st December.

DUGGLEBY So John do you understand what ear marking means - and I'm sure even if you do the listeners don't - so better get Helen just to explain what ear marking is and how John will be affected if the court decides to use this method?

HOWARD Well the idea about ear marking is - is that a percentage of the husband's pension will be sort of ear marked for the wife in future. Now the couple are still going to be very much tied together - there can't really be a clean break in terms of the pension under the old rules and - if the wife were to remarry she may not be able to get an income under the pension later on, so there are quite a lot of limitations about the ear marking, whereas pension splitting or pension sharing as it's more correctly to be called starting from1st December this year means that the pension is actually going to be split into two pieces and so that the wife is going to have her own pension, assuming it's her that's claiming a share.

DUGGLEBY So John it appears that in your case it would be possible for the court to ear mark part of your future pension when it's paid to your ex-wife. It's possible but David it isn't necessarily - the court might not do that might it?

DAVIDSON No it'll only do that if that's the appropriate answer having regard to all the financial circumstances.

DUGGLEBY So they might trade off the pension against some other asset like the house or some shares or a Pep or something?

DAVIDSON They could do but it may be the case in John's matter that the wife needs continuing maintenance and if that's so then it might well ear mark the pension in payment.

DUGGLEBY So your pension is not immune from the settlement John - it may or may not be taken into account, but you don't come under the new splitting rules.

JOHN Yeah - but well there are no other assets at the moment so and another thing I wanted to ask was will the transfer value of the pension be taken as it is now or as it will be when I retire?

DUGGLEBY Quick one David?

DAVIDSON As it is now.

DUGGLEBY Okay that's the answer John. Thank you for the call and Maureen now in Hemel Hempstead.

MAUREEN Hello

DUGGLEBY Hello Maureen

MAUREEN Hello - if I could just give you some background- my husband was divorced from his ex-wife 5 years ago - for financial settlement she kept the family home, the mortgage was paid off. A court order was settled for maintenance for her and another one for her children and 5 years on she's now living with somebody but my husband's been told he's got to carry on paying maintenance unless he can prove that the person she's living with is actually contributing to their household budget or they get married.

DUGGLEBY Okay right - there are children involved for which he's paying is he?

MAUREEN Yes - we have absolutely no problem with that whatsoever.

DUGGLEBY Well Helen can you just explain this is an on going situation where presumably the case can be reviewed?

HOWARD It can indeed. What he can do is he can apply to the court for a variation of the maintenance to her and then through those court proceedings - use those as a hook really to ask his ex-wife what her income is and what her out goings are and ask her to produce bank statements and so on. And from those bank statements it's very often possible to see how people are contributing - I mean if for example they're sharing the mortgage equally that may well be apparent from the bank statements. It's sometimes possible, sorry.

DUGGLEBY Sorry

MAUREEN My husband paid off the mortgage - the man she's living with has decided to keep his own home and we've been told by our solicitor that unless we can actually prove - which is going to be very difficult if they've set out to cover that.

HOWARD It is - it's a difficult one Maureen because to really - what lawyers will tell you is that the - whether or not he will be successful in getting a variation will be the extent to which her income is freed up by her new partner's income.

MAUREEN She hasn't got any independent income - she's perfectly capable of working but has refused to do so - my husband paid for her to go on several courses to keep up to date with things.

HOWARD Right okay - well another possibility is going to apply back to the court again and asking the court to make a lump sum order to deal with it once and for all and to try and say to the court look she's - the ex-wife's got an earning capacity here and she ought to be going out to work so seeing if you can get it that way, but I mean it is quite a tricky one.

DUGGLEBY Mmm - David a comment from you?

DAVIDSON The only other thought is to have to serve the ex wife's boyfriend with a ?.to make him establish what his income is and whether he's got a capacity to contribute.

DUGGLEBY I suppose the solution in the end if a marriage took place then of course that would put the whole matter beyond doubt and that - that would of course end the previous maintenance payment - marriage ends maintenance to wives?

HOWARD It does yes

DUGGLEBY Sorry - it's a very obvious question but I thought I'd put it on behalf of other listeners. .Sorry we've got the bathroom quality - I can assure you that the people ringing in aren't ringing in from the bathroom but let's see what sort of quality we get on Margaret ringing us from London - Margaret:

MARGARET Hi yes - I'd like to ask my husband and I were divorced in l993 and it was quite amicable - we - I didn't contend the divorce at all - I didn't ask for any support - we have two children - I just carried on. And my husband wrote a will in l994 and in it expressed the wish that any pensions that he had through the state should pass to me. Well he died 2 weeks ago and I wondered if this was still possible or not?

DUGGLEBY Did you say it was part of a state pension?

MARGARET It is a state pension

DUGGLEBY Well the basic state pension of course that doesn't apply anymore because you're not - you're not a widow - you're not his widow. Well I've probably answered the question - I don't know Helen

HOWARD I think you have Vincent - I mean it's - obviously the intention was that his ex-wife would get something but in terms of a state pension there's no entitlement.

DUGGLEBY If it had been an occupational pension then the trustees David could take of course into account the needs of even an ex-wife could they or not?

DAVIDSON Depends very much on the terms of the occupational pension scheme.

DUGGLEBY Possible maybe but

HOWARD And it would have depended if - if the husband had filled in a nomination form saying - nominating his ex-wife

DUGGLEBY As a dependent?

HOWARD As a dependent.

DUGGLEBY Yeah - but unfortunately the state doesn't recognise these sorts of things.

HOWARD Sorry to hear that Margaret.

DUGGLEBY Sorry about that Margaret indeed and Valerie now in York - what can we do for you? Valerie are you there?

VALERIE Hello

DUGGLEBY Yes hello Valerie? - Valerie are you there? - no sounds as though the bathroom quality's taking us over - we've got some real funny gremlins in the system - let's see if we can find somebody else who can talk to us - Richard in Bracknell are you there? - no I think we're - I think our system now's gone from bathroom quality to complete zero, so I'll pick up a question we've had e-mailed into us which is quite a common one Helen and that is the status of two people who live together without being married and I must say the times you keep reading about this - I am a common law wife - fact or fiction?

HOWARD Fiction - I mean it's fiction that's been around for a very long time now because common law marriage was abolished back - by Lord Hardwick I think in 1753 so it's about 250 years out of date. And what's - there's such a big difference between being married and not being married - if you're not married as - and you split up you're not entitled to any support from your ex partner. If you are married and you split up you are entitled to support from your ex husband so it is a huge difference it really divides people into one camp or the other.

DUGGLEBY But of course if there were children involved then that changes the picture in so far as the child support agency was - would get involved wouldn't it?

HOWARD The Child Support Agency will get involved as long as the children are natural children - so as long as you know they're either natural or adopted children the CSA's got jurisdiction so the CSA's certainly there but in terms of getting a division of property that's hugely difficult for ex partners and many of them haven't actually made an agreement about what will happen when they split up and then they're faced with real problems.

DUGGLEBY Did I understand David that the legal profession is looking into the possibility of the government perhaps changing the law and giving a non married partner some sort of additional rights?

DAVIDSON Oh it certainly has been - it's a regular hot potato and no government likes to touch it.

DUGGLEBY Right - that's pretty final - now then are we getting our callers back? Yes we are and Alan is I think on the line now - Alan?

ALAN hello

DUGGLEBY Hello Alan

ALAN Yes I'm ringing on behalf of the situation my daughter finds herself in - she's in the process of being divorced - you had a settlement with the child support agency but her husband has now become self employed - and the money has stopped coming because of course he's no longer working for a firm. And I just wondered what the best way to proceed with this - the other fact I should mention is that a second court appearance is due towards the end of November when the financial settlement is supposed to be completed.

DUGGLEBY So can we give some guidance on this - what's likely to happen in the court in November Helen?

HOWARD In the court in November that's an interesting one - I mean can we just deal with the point about the CSA first - and about dealing with the self employed - I mean the CSA in theory do have teeth to tackle the self employed. They haven't proved very good at it- I think because they're really suffering from a back log of late payments and not getting around to assessments and so on, but in theory the Child Support Agency can get a liability order from the magistrates so that they can actually do something rather funny term here - the garnishee - somebody's bank account or they can even take steps to imprison somebody but they very very rarely do it. They've got the teeth but they pretend they're toothless. What it maybe possible to do in terms of the November hearing is to say well it's going to be very difficult actually getting him to pay child maintenance so seeing whether the court might be willing to compensate her or pay off - pay her additional lump sums so that it's money in the hand now rather than possible maintenance later on.

DUGGLEBY Any ideas here David at all as to.?

DAVIDSON No simply would follow up what Helen's just said - mention it at the hearing in December - see if the court will compensate her in other ways.

DUGGLEBY Okay - And we're still having problems with our computer system here - the bathroom is still operating fully and in fact we're not getting any communications at all - however, I have Valerie's question has been brought in to me and she said that her husband - she divorced her husband in l986 but he's recently died - but he hasn't left a will and she's wondering about the rights of the three children. Helen of course a will - a will's no longer valid at divorce because the wife is no longer the wife -now under an intestisee she clearly wouldn't get anything would she because she's no longer a relative?

HOWARD If - well he hasn't left a will - so it's the intestisee rule's that'll apply. And in terms of the rights of the three children- I think there's a big difference between whether they're minor children- whether they're under 18 or whether they're adult and already financially independent.

DUGGLEBY But they would have rights because they are the natural children of the deceased husband?

HOWARD Absolutely and particularly if there was on going maintenance being paid and he hadn't left a will - they will be entitled to something under the intestisee rules and if they're not happy with that then what they could do is they could apply to the court for a variation - for an increase in the provision made to them.

DUGGLEBY And the only -the only rights that a wife might - the first wife might have in that circumstances David would be possibly as part of say maintenance had been paid - would she then be entitled to go to the court and ask for some provision?

DAVIDSON Yes she could consider making an application under the inheritance provision for family and dependents act if she were maintained and had lost - therefore lost all maintenance on his death.

DUGGLEBY Right but the message when you are advising somebody who is in the process of a divorce - is that wills actually matter don't they because you have to change them to reflect your new circumstances and here clearly you had somebody who didn't do a new will and is really - it really makes it really very expensive for them to sort it out probably?

HOWARD It does and they probably end up paying more in legal costs to sort it out which is - which is a huge pity. I mean it's a classic advice to - is to make sure everybody should make a will - I think only about one in four of us statistically gets around to making a will but it's so important to make sure that you know the people who are dependent on you are looked after and that your wishes are carried out.

DUGGLEBY Indeed I think it's - there's one of the will promotions going on at the moment - I think in fact we're going to do a programme on wills within the next two or three weeks so anybody with a problem there - watch this space. Now we've got Jane - I don't know where she's ringing from - James I'm sorry - James is ringing us from somewhere - hello James?

JAMES Hello

DUGGLEBY What can we do for you?

DUGGLEBY Well when my wife and I divorced and we had a financial settlement about 4 years ago - the arrangements for the house were that my former wife remained in the house with our child who was - who is now 18. And I was granted 25% of the equity value of the house. When my daughter reaches the age of 21 - now the agreement also provides for if my former wife remarries or sells the house or co-habits that I can enforce the order. My former wife is now living with a woman of the same sex - now I wonder whether the law allows - will take into account in a definition of co-habitation single sex arrangements?

DUGGLEBY Right so your daughter's currently 18 is she - so - did you say she was 18?

JAMES I'm sorry?

DUGGLEBY Your daughter's 18 is she?

JAMES My daughter's no my daughter is 18 yes she is.

DUGGLEBY Right I just wanted to clarify that there -there's technically three years to go on this.

JAMES I would have 3 years to go - no if my wife were to marry I would be able to enforce the sale of the house

DUGGLEBY But she's not - she's .

JAMES .of the proceeds to me straightaway and I would be glad of it because I've got another relation ship and I want to make arrangements for my own housing needs.

DUGGLEBY .enough information for David to give us an answer?

DAVIDSON Yes normally the fact that your wife is co-habiting with another woman wouldn't matter and therefore you would be able to invoke

JAMES I can't hear a word that you're saying

DUGGLEBY Sorry we're having problems - all sorts of problems in the studio - obviously there's some problem with the - the listener ringing in can't hear what we're saying but others can because we're on air so David can you just pick it up for the benefit of other listeners and indeed James if he can hear us on the radio?

DAVIDSON The fact that your order says that you're entitled to get your 25% interest in the house when your wife co-habits - will enable you to do this - the fact that she's co-habiting with another woman doesn't matter.

DUGGLEBY The thing is that here you 've got - really trying to accelerate a court judgement and the element of proof would the court - Helen would have to be satisfied that this was indeed the case before they would be - it would have to be a court decision wouldn't it?

HOWARD If his ex wife were not to agree to sell the house - no it would indeed probably need to be a court decision and co-habiting - I mean there's no -there's no absolute rule on this but it tends to be about - for about 6 months that people after - you know when they've been co-habiting for 6 months then that technically counts as co-habitation. And I mean sometimes these court orders are framed so it's - cohabitation as man and wife - now if he's got that in it - I think it's going to be difficult and you - and James you will be looking for waiting for a 3 year period until your daughter's 21.

DUGGLEBY Right okay - now where are we now? - let's see what we can do for - no .right no - we're still having trouble with our computer so what I will do is perhaps ask you both to bring us up to speed on the pension splitting arrangements which will apply from December 1st so just to clear up one point if you go - you go now it's too soon right? - December 1st is the point at which this operates - what will David - what will you be doing when you - when a client goes in with this - what will you be saying to the court -how will you be arguing?

DAVIDSON Well pension sharing is going to affect what one might call Mr. Blair's middle England - people who are in their late 40s, early 50s where the pension fund is a substantial part of the family assets .

DUGGLEBY So we're talking about something like a final salary pension fund which might be two thirds of an income of let's say £40,000 and you're perhaps - you've built up maybe more than half of that amount - so we're talking about a future income of maybe £20,000 - is that the sort of thing that you'll have in mind?

DAVIDSON Well if all that is at stake is a pension of £20,000 you may well be looking at off setting that - it's giving the spouse who hasn't got pension rights a larger share of the other assets to compensate for not getting a pension because to share out a pension of £20,000 is not gonna leave either of them self sufficient.

DUGGLEBY Right so we're still remain with the option of off setting the pension against some other assets so where do you think Helen the pension splitting will if you like bite - I mean where - what sort of cases - give us a thumb nail sketch of the sort of case where and amounts involved where it will be affective?

HOWARD Well I think - I mean it depends - it depends very much in terms - as David said - you're gonna have to be looking at couples who are probably late 40s or early 50s although technically it can apply to everybody and where the pension is a reasonable asset - the pension sharing legislation is actually framed pretty widely so it covers all sorts of different things including unfunded occupational schemes so people like NHS doctors and so on will be covered by this. And I think the beauty of pension sharing legislation is that wife would be able to get her own pension so that the pension will actually be split into two and the wife will be able to get her own provision in future

DUGGLEBY So the law then does clearly instruct the trustees of a pension fund who as we know are pretty independent characters that they've got to as it were maintain this pot for the benefit of the wife - is that right?

HOWARD That's right. It's going to be split into two and the wife can either keep it with the existing pension provider or indeed could move it into her own new pension if she wanted to and then - and then start building that up - but this is going to be of particular benefit to wives who haven't worked throughout the marriage and so who haven't had the possibility of building up their own pension entitlement - they're still going to be able to get a pension in future - it's actually a very radical change that you don't have to be employed to be able to get a pension.

DUGGLEBY Yes of course and in future when the stakeholder rules come in you don't have to have of course earnings to pay the - pay future contributions which is quite a neat addition

HOWARD Absolutely -

DUGGLEBY Right - now then I think we've got somebody on the line - Nicola?

NICOLA Hello - I'm unfortunately in the middle of getting divorced now and I want actually a clean break - but my husband doesn't want that and he wants a share of the house - what I was asking really was that if I .an ear marked pension and unfortunately he died after we've sorted everything out - would I still get that pension - it is a company pension that he's got?

DUGGLEBY David can you answer that one?

DAVIDSON Not if the pension were already in payment and it were ear marked to be paid to you - but if you had ear marked the death in service lump sum you would get that lump sum cos the trustees would be told they'd have to pay it to you.

NICOLA I see. Right - okay thank you very much

DUGGELBY Right - we're gonna end the programme early because apparently there's real problems with this - these lines and so I've got just about a minute left and I want to ask both my guests to comment on another e-mail question which is this gentleman is a director of a PLC from which I take it he's pretty well heeled and he says what's the legal position over a pre-nuptial agreement ? - David?

DAVIDSON Well he may well be able to do something cos if he's already a director of a PLC it seems to me it's likely he's well advanced in years and he's probably likely to be thinking of marrying someone who's possibly been married before - maybe beyond childbearing age - and if you have full disclosure of your financial circumstances, proper professional advice on each side then there is a chance that you'll be able to do a pre-nuptial agreement that might be persuasive if that marriage subsequently breaks down. Where prenuptial agreements are really of little help is with young people who are likely to have children, cos once children come on the scene you just can't legislate for what's going to happen in the future and the court won't pay so much attention.

DUGGLEBY Okay well alas I'm afraid we're going to have to end it and I'm very sorry we've had such a messy programme but it's not fault of Helen Howard from solicitors Richard Howard or indeed David Davidson from Charles Russell - thanks to both of you for putting up with it. I won't tell you the details of how to get more information cos I'm not sure what information is going to be available but in the meantime you can join Paul Lewis for MONEY BOX at noon on Saturday and hopefully I will be back to take more of your calls on MONEY BOX LIVE same time next Monday afternoon without the gremlins.

BACK ANNO That was Vincent Duggleby - the producer today was Paul O'Keeffe.