Financial Provision for Children

Financial Provision for Children

Schedule 1 claims Children Act 1989

Schedule 1 Claims are claims made in accordance with Schedule 1 to The Children Act 1989. These claims tend to arise where cohabiting parties separate. Unlike married couples, those who cohabit (live together) do not have any claims against each other as a result of their relationship.

Where there are children of that relationship the only claim that a party has is for child support which is the money that a parent without day-to-day care of the children must pay to a parent with day to day care to assist with the maintenance of the child or children involved. This is calculated by the Child Support Agency, or the Child Maintenance Service, in accordance with a fixed formula. Other than child support which maybe paid through a voluntary arrangement between the parents or through the Child Support Agency/Child maintenance Service there are no other claims that a parent can make against an ex partner. This can be particularly worrying for a parent who does not own or have any rights in the property in which the family were living. This could be particularly concerning where that parent will continue to be the main carer for the children. This is where the Children Act can play a role in addressing the financial needs of a child.

Schedule 1 claims allow the Court to address some of the financial needs of dependent children. It should be noted that the needs met are those of the child/ren and not those of the parent.

The Court has the power to award the following:-

  1. The transfer of a property. The housing needs of a child are met by transferring property (usually the former family home) to a parent until that child is an adult. The property always, except in very rare circumstances, reverts to the payer.
  2. Lump sum payments to cover capital expenditure. This is usually for items which depreciate such as cars, computers or perhaps to cover expenses already incurred.
  3. Periodical payments to address the costs of a child’s disability or school fees, or to provide top up maintenance. Such payments are not awarded for general maintenance of a child as these payments come under the jurisdiction of the Child Support Agency.  The Court can only award general maintenance (i.e. Top Up) payments where the paying party has a net income in excess of the CSA/CMS maximum threshold (£104,000p.a. for CSA, and £3000 per week gross for CMS).

What Factors do the Court take into account

A Court will take into account all the circumstances of a case, but in particular they will have regard to the following factors in relation to the parent making the application:-

  1. Income, earning capacity, property, financial resources has/is likely to have in the foreseeable future;
  2. Financial needs, obligations and responsibilities has/is likely to have  in the foreseeable future;
  3. Financial needs of the child;
  4. Income, earning capacity, property and other financial resources of the child;
  5. Physical or mental disability of the child;
  6. Manner in which the child was being or was expected to be educated or trained.

The Court also has regard to the same factors when considering the Respondent’s position (the party against whom the application is being made).
Schedule 1 claims can be very complex because there are many factors to consider. Such as;

  • If one party owns the property outright there may be trust claims to resolve. This means that if one party has been contributing towards the property through mortgage payments, a contribution towards the deposit when the property was first purchased or has paid for renovation works they may have created an interest in the property even though the property documents state that they are not a legal owner of the property. Where there is a dispute about whether one party has created an interest in the property there may have to be separate Court proceedings to deal with that issue. Our page on unmarried couples will give you more information.
  • Where the Court is dealing with couples who have modest resources it can be very difficult to try and create two households out of one.
  • The Schedule 1 application can override property rights meaning that the Court can transfer a property belonging to one person to another (although the property will usually be returned to the paying party when the children reach majority).
  • The Court will only make financial provision for the benefit of the children and not the adults concerned. Therefore some thought must given to future financial planning. If a parent has the benefit of a property transfer but that property must be returned to the other party when the child/ren reach 18 they may find themselves in difficult financial circumstances some years down the line especially if they are not on the property ladder.
  • There can be tax implications to consider especially where the Court makes a transfer of property order. When the children reach majority and the property is to be returned to the other parent that property will no longer be his or her main residence and this could give rise to tax liabilities. Specialist tax advice may be required.
  • It is very important that where a transfer of property is agreed between the parties in say mediation (i.e outside of Court proceedings) that the agreement is turned into a Court Order. The Court can only ever make one property transfer order and if it is made at an early stage this prevents an applicant from coming back for a second bite of the cherry in the future.
  • Parties should also be very wary of costs orders. If a parent proceeds with a claim under Schedule 1 they must be aware that if they are unsuccessful in that claim the Court can order that they will be responsible for not only their own legal costs but the other parent’s costs too.