Children "sharing in the wealth of their parents"
Does it make sense for children to share the wealth of their parents?
Sharing wealth and the "Small Fortunes" research
Sharing wealth with the Treasury
How could and should wealth be shared?
Related topic - The cost of children
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Does it make sense for children to share the wealth of their parents?

"Our child lived with us in an expensive house because of my ex's high earnings for years. Now that we are separated, of course our child should continue with that lifestyle, even though our child now lives with me".

"I had a quickie with her in a broom cupboard. Neither she nor the child ever experienced my expensive lifestyle. Why should the child now benefit from my wealth?"

"I want our child to share in my wealth. But my wealth is in my house, etc. I haven't the money left to bring my ex's household up to the level where our child can experience my wealth. Besides, I want our child to share in my wealth, not my ex".

Anyone with a just knee-jerk reaction that children should share in the wealth of their parents even after separation is probably missing the point.

My view is: Children should share in the wealth of their parents even after separation. But it is impossible to have fair & workable "wealth sharing" using a child support system.


Should children share the wealth of their separated parents?

First, get back to basics. There is no universal or logical principle that a father (or for that matter a mother) must support his children. This is simply something that a society, at some point in time, may decide should happen. Western societies have so chosen, for various reasons. I think it is useful - others don't (always).

This doesn't say to what extent they should support the children. It is up to a society to decide whether children should share in the wealth of their parents. (It is also up to a society to decide whether this means social parents or bio-parents or some other sorts of parents).

The UK is moving from a "liability to maintain" model to a "share in the wealth" model, and changing quite a few laws & throwing away previous arrangements to do so. I don't have a hang up about this (I'm not affected!) but I do believe that the way it is being done is badly thought out. There are too many implications that are not being questioned properly.

From now on, this article considers the case where a society has decided that children should share in the wealth of their bio-parents. Remember the financial stakeholder model, and note that there are rights & responsibilities both ways:

Why fair wealth sharing can't be achieved via a child support system

The children in a wealthy intact family typically benefit a lot from the wealth. They do so in several ways:

After separation, how can the children continue to share in the NRP's wealth? (It is easier for them share in the PWC's wealth). This topic is concerned with amounts per child significantly above the "Small Fortunes" amount of about £67 per week (at 2001 prices). In the reformed scheme the amount for one children can rise to £300 per week for well off NRPs.

Refer to the sharing wealth and Small Fortunes article.

Sharing can't be done just by the NRP handing over lots of money to the PWC. It won't all be spent directly & fully on the children, for example as pocket money, food, clothes, etc. Research shows that children in better off households don't get such a large amount extra directly spent on them. The better off parents spend on average perhaps 20% more than the poorer parents. The advantage children get isn't mainly from the easy to measure direct expenditures such as these.

The children can only benefit from much of the money if the PWC also benefits:

For the children to benefit from luxury surroundings, such as a luxury house, enough extra will have to be spent on the house to benefit not just the children but the PWC too. This simply isn't a plausible proposal.

For the children to have an expensive holiday, often the PWC would have to go along too, and if the PWC wouldn't otherwise have such a holiday, some of the so-called child support will have to be diverted to pay for the PWC's holiday. While plausible, this is hardly fair.

These can't be compensated for by direct spend on the children. Having vastly more expensive food & clothes isn't a compensation for the advantages of wealth they had before separation. Indeed, it would be very naive to believe that PWCs supplied with large quantities of child support money will spend it all on such items for the children and not divert it to uses that the PWC can also benefit from. (For example, will PWCs spend vastly more on food for the children yet continue to buy their own food from their own earnings?)

It is even worse where the PWC has a new partner - that new partner will also benefit from any shared wealth which is not directly spent on the children. This is a massive source of anger for better off NRPs.

So - however much wealth sharing appears to many people to be "a good thing", it can't be achieved in a fair & workable way via a child support system which simply involves distributing money from NRPs to PWCs.

Other aspects

Sharing wealth goes wrong when there are overlapping CSA cases too.

When the PWC is on a means-tested benefit, typically Income Support, the PWC and children gets no useful advantage from attempts to share wealth, it is simply about benefits reduction.

Proposals for a fairer wealth sharing scheme

This summarises an article under development.

This is concerned with amounts per child significantly above the "Small Fortunes" amount of about £67 per week (at 2001 prices).

For some of the advantages in the above diagrams, the only fair way that children can share in them is to spend part of their time living with each parent. They can eat caviar when the wealthy parent does, swim in the pool, ride in the Roller, etc. And in this way, "child support" is more than money.

If the NRP doesn't want to share care, then the NRP will have to pay lots of money anyway instead!

If the children don't want to spend part of their time with an NRP willing to share their care, then the NRP has satisfied the requirements by making the offer. The payment can then be close to the "Small Fortunes" amount. The children have a responsibility to cooperate in having wealth shared with them - and if they don't, so be it. (The PWC also has a responsibility to create an environment where the children are willing to share in the wealth this way).

For other advantages in the above diagrams (such as better education), perhaps some of the money beyond the "Small Fortunes" amount should be placed in savings accounts & trust funds for the children to use later. It is probably very useful for the child support to be awarded to the children rather than to the PWC.

Social engineering & broom cupboards

What about the wealthy man at the head of this article who had a quickie in the broom cupboard?

He should have avoided fathering a child. And if emphasising this to such men requires that they pay an amount of money that they notice, rather than just what a "random" or "average" child gets, so be it! No extra rules are needed - so it is not necessary to determine whether it really was just a quickie.

References

In evidence to the Social Security Select Committee in November 2000
Sue Middleton said: "We also found, at first sight strangely, that average spending did not vary greatly with income of a family; about 20 per cent from the bottom quartile to the top income quartile."

Small Fortunes: Spending on children, childhood poverty and parental sacrifice.
Sue Middleton, Karl Ashworth and Ian Braithwaite
Published by the Joseph Rowntree Foundation.
ISBN 1 85935 032 1

People who say you can't buy happiness just don't know where to shop.

Page last updated: 17 December, 2003 © Copyright Barry Pearson 2003