DEATH KNELL FOR FAMILY LEGAL AID
Latimer Hinks withdrew from legal aid work in 1998 and numerous other firms across the country have taken the same step. Resolution has warned that new fixed fees for family legal aid work published today by the Ministry of Justice are likely to mean a further exodus of lawyers from family legal aid and so undermine access to justice for ordinary families.
The new fees represent a further cut in legal aid remuneration at a time when family legal aid is already in crisis. The number of family legal aid practices in the country has dramatically dropped, from 4,500 in 2000 to 2,800 in 2006.
“The potential of these new fees to cause substantial and long term damage to the provision of family legal aid for separating families has been grossly underestimated,” said David Emmerson, Chair of Resolution’s Legal Aid Committee, strongly urging the government to reconsider the fees for private law cases before they come into effect in October 2010,
“Some of these fees represent a cut of more than 40 percent to hourly rates that have already remained static for the last ten years. Faced with this uneconomic scenario there is a very real danger that firms will walk away from legal aid work, further undermining access to justice.”
Lawyers estimate that for a very simple child contact case taking around 14 hours a legal aid firm would currently receive £960 on the basis of the hourly rate. The new fixed fee would be just £471 a cut of more than 50 percent.
Similarly a legal aid firm managing a straightforward divorce finance case which goes to full hearing, would be paid £2,106 at present; this will reduce to £1,299 under the new fixed fee regime, a cut of almost 40 percent.
The new fees represent a further cut in legal aid remuneration at a time when family legal aid is already in crisis. The number of family legal aid practices in the country has dramatically dropped, from 4,500 in 2000 to 2,800 in 2006.
“The potential of these new fees to cause substantial and long term damage to the provision of family legal aid for separating families has been grossly underestimated,” said David Emmerson, Chair of Resolution’s Legal Aid Committee, strongly urging the government to reconsider the fees for private law cases before they come into effect in October 2010,
“Some of these fees represent a cut of more than 40 percent to hourly rates that have already remained static for the last ten years. Faced with this uneconomic scenario there is a very real danger that firms will walk away from legal aid work, further undermining access to justice.”
Lawyers estimate that for a very simple child contact case taking around 14 hours a legal aid firm would currently receive £960 on the basis of the hourly rate. The new fixed fee would be just £471 a cut of more than 50 percent.
Similarly a legal aid firm managing a straightforward divorce finance case which goes to full hearing, would be paid £2,106 at present; this will reduce to £1,299 under the new fixed fee regime, a cut of almost 40 percent.
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The future educational expenses of college-bound children are growing. According to The College Board’s annual report, Trends in College Pricing—2007, the average sum of tuition, fees, room, and board for the 2007–2008 school year was $13,589 at public colleges and $32,307 at private colleges. Because educational expenses are only expected to increase, the need to plan for future financial security during divorce becomes even more paramount. Let’s look at several different scenarios.
Consider Potential Circumstances
After divorce, if the spouse paying alimony and/or child support were to die, then the custodial parent may be hard-pressed to maintain the children’s current lifestyle, let alone be able to afford the potentially significant college fees. On the other hand, if the custodial parent were to die prematurely, the ex-spouse may be at a loss to cover daily childcare expenses. For these reasons, divorcing couples may want to strongly consider making life insurance policies part of the divorce decree. Obtain free term life quotes at www.termco.com.
A custodial parent may want to look into purchasing a life insurance policy on his or her ex, but if this turns out to be an impossibility, transferring ownership and beneficiary arrangements on an existing policy may be another option. If policy premiums fall outside of the budget, the custodial parent may request alimony or child support increases to cover the costs. If the non-custodial parent remains the policy owner, the divorce decree can include arrangements to ensure the custodial parent is named as the irrevocable beneficiary and receives ongoing proof that the payments continue to be made and the policy remains in effect. A parent without custody may wish to keep the policies he or she already has to protect the financial interests of other family members, such as children from a new marriage. In this case, the non-custodial parent should consider purchasing a new policy on his or her life with the ex as the owner and beneficiary. If this is done before or during the divorce proceedings, gift tax will not be owed. Premiums may be tax deductible as alimony if policy ownership belongs entirely to the ex.
Update Existing Policies
For existing policies, individuals should remember that the insurance company must be notified of any beneficiary changes: Using a will for this purpose will not be valid. In addition, should the insured remarry and the policy name the “husband” or “wife” of the insured as the beneficiary, the new spouse may receive the proceeds. If the insured does not remarry and this same policy language is in force, then the proceeds may be paid to the secondary beneficiary. If the insured’s estate is named as the new beneficiary, insurance proceeds will likely be held up in the probate process. If minor children are named as the new beneficiaries, additional problems may arise, as insurance companies generally will not pay minors directly. For this reason, it may be a good idea to create a trust for minor children and name the trust as the beneficiary of the policy proceeds.
Laws vary from state to state, so consulting with your tax and legal advisors is very important. Divorce is rarely easy, but with a well planned strategy, the short- and long-term financial needs of children can be ensured should life take an unexpected turn.