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Date : 15-jun-2020
News Details
Update Date : 19-Dec-2024
Created Date : 07-Aug-2023
Reference : ET Wealth
When Sourav Kumar’s marriage fell apart after eight years, divorce seemed the only viable option. The emotional turmoil was expected, but what Kumar did not anticipate was the extent of the financial impact. For, when the divorce came through in 2020, the businessman was ordered by the court to pay Rs.20,000 a month as alimony and Rs.15,000 a month as child support for his five-year-old kid. This was in addition to the Rs.1 lakh fee he paid his lawyer. “I will now have to try and increase my income from other sources because the alimony and child support will make a big dent in my monthly income,” says the 40-year-old from Guwahati.
In a country where women usually bear the financial brunt of divorce and are victims of dowry and domestic abuse, most advice and sympathy are directed towards them. In the process, men are often ignored when it comes to highlighting their financial and legal rights in a divorce, or even when they are victimised in fake cases of abuse and dowry. To gain an upper hand during divorce proceedings, women are known to file fake cases to put pressure on their husbands. In fact, in a recent observation, Justice Sanjay Kumar Dwivedi of the Jharkhand High Court said that although Section 498A of the Indian Penal Code was introduced to address cruelty inflicted by husbands and their relatives, it is now being misused by women.
Mumbai-based Vikas Singh knows it all too well. His former wife filed a fake case of domestic abuse against him when talk of divorce came up after just a year of marriage. “While many men would have agreed to pay a huge sum to dismiss the case, I was prepared to face a court trial because I was aware of my legal rights,” says the 44-year-old businessman. The result? His wife ended up paying Rs.12 lakh as damages for filing a fake case, besides shelling out Rs.1.75 lakh as his legal fee. Typically, however, men end up bearing a heavy financial burden, especially when the woman is a homemaker and financially dependent on him. While the visible costs in a divorce include the legal fees, maintenance and child support, there are the invisible costs, which result from a lack of preparedness or inadequate action before the separation is set into motion.
These could be in the form of money taken from joint accounts, investments where the wife’s name was not cancelled as a nominee, or gifts that were given by the husband and his family to the wife, which became her streedhan, among other such instances. This is why it is important for men to be aware of their financial and legal rights. The ET Wealth cover story this week addresses the concerns of such men heading for a legal separation. We have listed the costs they may have to bear in a divorce, the manner in which courts decide maintenance and child support, as well as the legal fees they might have to pay. More importantly, we tell them about the precautions they can take when they know that separation is imminent.
Mutual consent vs Contested divorce
HOW IS THE MAINTENANCE AMOUNT DECIDED?
Alimony or maintenance is the financial assistance provided by one spouse to the other during or after divorce. “It’s no longer a gender-based decision, but depends on the financial capacity of the spouses,” says Dinesh Rohira, CEO, 5nance.com. Typically, however, it’s the man who ends up paying alimony whereas women are either homemakers or have a lower income. “However, this is not a rule, and if the husband is disabled or incapable of earning, the court can grant alimony to the husband as well,” says Rohan Mahajan, Founder, LawRato.com. “It may deny alimony if it finds that the party seeking alimony has been unfaithful or unchaste in marriage,” he adds. Also, if the wife is earning well while the husband is not, she may be denied any maintenance by the court.
If she is earning but unable to maintain a comfortable lifestyle, the husband will have to shell out the required amount. “Though there are no set rules for alimony, the Supreme Court has laid down a benchmark of 25% of the total monthly salary of the husband when the alimony is paid periodically. In case the alimony is paid as a lump sum in a one-time settlement, there is no set benchmark. It ranges from one-fifth to one-third of the husband’s total worth,” says Sudershani Ray, Partner, Vanta Legal. “However, the husband has the right to any jewellery, valuables or gifts given to him by the wife’s parents before, after or during the marriage. Also, any asset that was bought by the husband in the wife’s name, without passing it on as a gift, does not belong to the wife. If the wife has spent any of her earnings on the household, these cannot be claimed,” adds Ray.
Interim and final alimony: In some cases, the husband also needs to support his spouse financially during the divorce proceedings and this is known as interim alimony. The objective of interim alimony is to provide support to the financially weaker spouse while the divorce is in progress. It helps the recipient's spouse maintain her standard of living and cover the necessary expenses. Such alimony is temporary and lasts only till the final divorce decree is issued or until a final alimony amount is determined.
THE FACTORS THAT ARE CONSIDERED BY THE COURT TO DETERMINE THE QUANTUM OF FINAL MAINTENANCE ARE AS FOLLOWS:
1) The financial status of spouses: The court considers the financial situation and earning capacity of both spouses. If the husband earns significantly more than his wife or has substantial assets, he may be required to provide alimony.
2) Duration of marriage: Marriages that last longer may result in higher alimony compared to short-term marriages.
3) Age and health of spouses: Both these factors are taken into account to assess their ability to support themselves financially after divorce.
4) Income and earning capacity: The court evaluates the income of both spouses and their potential to earn in the future. If a spouse has the potential to increase his/her income through education or job opportunities, it may affect the alimony amount.
5) Standard of living during marriage: The lifestyle and standard of living enjoyed by the couple during marriage can influence the alimony. The court may aim to maintain a similar standard of living for the recipient spouse after divorce.
6) Non-monetary contributions: The court may also consider non-financial contributions made by the non-earning or lower-earning spouse during marriage, such as homemaking and child-rearing responsibilities.
7) Reason for divorce: In some cases, the reason for divorce, such as desertion or cruelty, may affect the alimony amount.
CHILD CUSTODY & SUPPORT
A father’s right to child custody depends on various factors, including the child’s age and welfare, the kid’s own wish and the parents’ financial capabilities. However, the paramount consideration for the court is the welfare of the child. There is no specific preference for the mother or father, and the court will consider the parent who can provide a stable and nurturing environment for the child. A father can seek custody only if he can prove that he is better suited to meet the child’s needs and provide a stable environment. In some cases, parents may opt for joint custody or visitation rights, where both parents are actively involved in the child’s life post-divorce. As for child support, this is the maintenance amount that is paid to the financially weaker spouse who has the child’s custody.
THE FOLLOWING FACTORS DETERMINE THE AMOUNT THAT IS PAID AS CHILD SUPPORT:
1) Income of both parents: The income and financial capacity of both parents are crucial factors. If you earn more than your wife, you may be required to contribute more towards the child’s financial needs.
2) Child’s needs: The court considers the child’s needs, including education, healthcare, lifestyle, and other expenses, to determine an appropriate amount.
3) Standard of living: The child’s standard of living before the divorce is taken into account to ensure that the child’s quality of life is maintained as much as possible. Child’s age: Younger children may have different needs than older ones.
4) Custodial arrangement: The custody arrangement (sole, joint, or shared custody) can affect the amount of child support. The parent with primary custody is likely to receive more support from the non-custodial parent.
5) Educational & medical expenses: The court considers school fees and related costs, as well as the medical and healthcare costs, for the child.
6) Ability to pay: The court also assesses the paying parent’s ability to provide child support without experiencing financial hardship. “If one has a daughter, the paying spouse will be responsible for providing maintenance till her marriage. This includes the cost of education, medical bills, shelter and expenses related to her wedding. However, in the case of a son, one will only be responsible for paying maintenance charges till he reaches the age of majority,” says Raj Lakhotia, Managing Partner, LABH & Associates. “In the case of a special child, one may be required to provide maintenance even after they reach the age of majority,” he adds.
FATHER’S RIGHTS IN CHILD CUSTODY
The right to a child’s custody depends on various factors, including the child’s age, his wish and welfare, and his parents’ financial capabilities. A father can seek custody only if he can prove he is better suited to meet the child’s needs and provide a stable environment.
HINDU LAW
Under the Hindu Minority and Guardianship Act, 1956, if the child is below five years of age, the custody goes to the mother. The father gets custody only if the court feels the mother is unfit to take care of the child. If the child is older, the custody can go to either parent.
MUSLIM LAW
The first and foremost right vests with the mother and is known as the Right of Hizanat. The mother’s right to custody over her son terminates when he is seven years of age, but she is entitled to the daughter’s custody till she reaches puberty.
CHRISTIAN LAW
Due to the absence of child custody rights in Christian law, these are governed by Sec 41 of the Indian Divorce Act, 1869. The court has the right to decide the custodianship by keeping the child’s welfare at heart and can even deny it to either parent if it does not consider them fit to take care of the child.
Sourav Kumar
40 yrs, Guwahati
Married for: 8 years
Divorce type: Contested
LEGAL FEE: Rs.1 lakh (one-time fee for court appearances, documentation, negotiations, and other expenses.)
ALIMONY: Rs.20,000 a month
CHILD SUPPORT: Rs.15,000 a month
FINANCIAL PRECAUTION: Has made a child the sole nominee in all his investments and financial assets.
Note:“I will now stick to a proper budget and try to increase my income from other sources as the alimony and child support will make a big dent in my monthly income.”
LEGAL FEE
The legal fees during a divorce case can depend on several factors, including the complexity of the case, the lawyer’s experience and expertise, the duration of the proceedings, geographical location, and the specific terms of engagement between the lawyer and the client. “In case of mutual consent divorce, the fee may vary from Rs.5,000 to Rs.1 lakh, and in case of a contested divorce, the fee may vary from Rs.50,000 to Rs.5-7 lakh, or even more, depending on the case,” says Lakhotia. “Some lawyers charge a fixed fee for the entire case, while others may charge on the basis of appearance and drafting. It is advisable to discuss the fee before hiring a lawyer if it suits you,” adds Mahajan.
Anupam Bordoloi
33 yrs, Bengaluru
Married for: 1 year
Divorce type: Mutual consent
LEGAL FEE: Rs.10,000 (one-time)
ALIMONY: Nil (mutual consent)
CHILD SUPPORT: Nil (no child)
FINANCIAL PRECAUTION: Didn’t share financial assets with the spouse, so lost nothing. However, gold jewellery, clothes, etc. gifted to his wife became her streedhan and he had no claim over it.
Note: “Since my marriage was shortlived, I did not incur a huge financial burden. I will still transfer my financial assets to a family trust to protect these from future marital troubles.”
Vikas Singh
44 yrs, Mumbai
Married for: 1 year
Divorce type: Contested, but changed to mutual consent after the wife filed a fake case.
LEGAL FEE: Rs.1.75 lakh (paid by the wife as part of mutual agreement.)
DAMAGES WON: Rs.12 lakh (paid by the wife as damages for filing a false case of domestic abuse.)
CHILD SUPPORT: Nil (no child)
FINANCIAL PRECAUTION: Kept business assets separate from personal assets and out of reach of the spouse.
HOW TO PROTECT YOUR FINANCES
The most tricky part of a divorce is splitting the assets and property. In the case of a mutual consent divorce, this is settled mutually between the spouses, but in a contested divorce, the court takes a decision by scrutinising all financial aspects of both spouses. While it’s easier to gauge the finances of salaried professionals, for business owners it’s complicated as the income may fluctuate. “It is advisable to include all liabilities to provide a more comprehensive view of one’s financial situation. If there is any material development which may impact the earning of the person significantly, the fact should be brought to the knowledge of the court,” says Lakhotia.
Joint assets are often a tricky area. In many cases, the husband’s contribution is more than the partner's in the acquisition of such assets, but they are shortchanged when the split is done equally. To avoid such situations, financial disclosures should clearly state the division of ownership so that you are not disadvantaged. To ensure that you don’t end up losing the better part of your wealth, it is not only important to be aware of your legal rights when it comes to property and assets but also to take appropriate precautions and steps way before the divorce proceedings start.
1) Hire a financial planner or a lawyer: Seeking professional help should be the first step because there are many legal and financial aspects that you will not be aware of, and their expertise will help you protect more money than the fee you pay.
2) Know your rights: Whether you consult a lawyer or research on your own, it is important to know your legal rights when it comes to assets and properties so that you do not lose your claim over these. For instance, you have no right over the wife’s streedhan, which includes all movable, immovable assets, or gifts received by a woman prior to and during marriage. Similarly, she has no right over your ancestral property (see Husband’s right to movable and immovable property).
3) Know your assets & liabilities: Make a note of your income from all sources, household expenses, debts and assets. Make a list of all your savings and investments, jewellery and other assets. Collect all relevant financial documents, including bank statements, investments, property deeds, tax returns, insurance policies, and any other assets or liabilities you both hold jointly. You should also be aware of your spouse’s income, if any. Assess all debts and liabilities as well, both individually and as a couple, to ensure that these are also split in a fair manner. “Just like assets, debts are also split depending on factors such as the kind of debt, in whose name and the purpose for which it was taken. If possible, arrive at an amicable settlement with the wife so the decision is not left for the court, in which case the wife could benefit more than the husband depending upon the contentions and accusations made by her,” cautions Mahajan.
4) Separate your finances: Start separating your financial accounts from your spouse’s. Close all joint bank accounts and transfer money to your individual account. Stop using joint credit cards and foreclose all fixed deposits and other joint investments.
5) Change nominee details: Make sure to remove the name of your spouse from your list of nominees in all financial investments like life insurance, mutual funds, bonds, bank and demat accounts, Provident Fund, PPF, etc. Similarly, if you have a will where she has been named a beneficiary, alter it to remove her name.
6) Transfer assets to parents: “If you have assets and properties from before marriage, it is a good idea to transfer these to your parents’ names so that these are not considered during the split,” says Rohira.
7) Make a trust: Transferring one’s assets to a family trust is another way of keeping these safe from an estranged spouse. A former spouse will not have any legal claim to such assets during a divorce.
8) Draft an Agreement: A prenuptial agreement is not valid in India, but you can draft an agreement as a business partner. During a divorce, co-owned properties and businesses are divided, and if the assets are in the wife’s name, the division may not be fair to the husband.
Date : 15-jun-2020
Date : 15-jun-2020
Date : 15-jun-2020
Date : 15-jun-2020
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