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familylawexpert
familylawexpert, Family Solicitor
Category: Family Law
Satisfied Customers: 311
Experience:  Substantial experience (14yrs +) in divorce, financial cases, cohabitation, pre-nuptial agreements and civil partnerships.
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I am seeking advice about my impending divorce and specifically

Customer Question

I am seeking advice about my impending divorce and specifically how best to deal with the financial aspects of this divorce. This matter is obviously confidential.

I am 52 years old and head of IT for a medium sized global business.

My wife is 55 years old and the co-owner of a small boutique careers advisory business.

We were married in October 2002 (11 years). We have no children of our own, but my wife has a son from a previous marriage; he is nearly 22 and in his final year at university (graduates in July 2014). My wife’s son has lived with us (visiting his father some weekends) since we first started our relationship which was in August 1996 (17 years). He attended a state primary school and then a well know public day school until the age of 18. His father has paid next to nothing towards his son’s upbringing and in particular has not contributed to his schooling which has been paid for by my wife and me.

We jointly own a property which has recently been valued at around £1.75m. We have a mortgage of approximately £220,000 on this property. When we originally purchased the house, the mortgage was £600,000. We have paid this off through maturing investments and some payments my wife has made from dividends / bonuses paid to her as a company director. Of the £380,000 that has been paid from the mortgage, I estimate that I have paid approximately £100,000 and she has paid the remainder – approximately £280,000.

We have a joint bank account which we have had from day one. I have always paid more into the account than my wife. Presently her monthly contribution is £1,600, whereas mine is £3,000. In the past I have been paying in as much as £4,200 per month, with her contribution unchanged.

If I add together “capital” payments and monthly payments from 2005 to the end of 2013, my wife will have paid approximately £492,000 and I will have paid a total of £529,000. If we roll back further than 2005, the gap between us widens since she did not make any other capital payments.

My approximate gross earnings (including a bonus) per year are around £225,000 and I would guess that hers would be around £150,000 (she works a three day week). There have been periods when she hasn’t worked and has stopped paying into the joint account. Similarly, there have been periods when I have not worked, however I have maintained payments at all times.

I have approximately £140,000 is “cash”. My guess (I actually don’t know) is that she has between £200,000 and £250,000 in cash plus other investments.

Although we have not had a detailed conversation, there is no doubt in my mind that our relationship is coming to end, in my view hastened by the fact that she had a (declared) affair a couple of years ago. My desire will be to divorce and split our assets, the main one being our house. So, the key questions for me are:

1. How would the legal process / system view our financial situation?
2. Is this a fairly simple case of “half and half” with respect to our house? If not how would any calculation be made?
3. What rights – if any – would my wife have on my pension (approximate value £500,000)? This should be seen the context of the fact that I have been putting as much as I can into a pension plan whereas she has not in spite of the benefits of doing so as a company director
4. Is there anything I need to know about my legal position from a financial perspective? Are there likely to be any other factors not mentioned here that I need to consider to protect my financial position?
5. Is there any action I should be taking now before engaging in a conversation to end our marriage?
Submitted: 3 years ago.
Category: Family Law
Expert:  familylawexpert replied 3 years ago.
Hello,

My name is Mac and I can help you with your questions.

You have provided a good amount of detail in relation to the finances, but I will need to ask for some more information.

- did either of you bring substantial assets into the marriage?

- did you cohabit prior to the marriage?

- how much does it cost to run the family each month?
Customer: replied 3 years ago.

Replies:


 


Did either of you bring substantial assets into the marriage?


 


Yes. I owned a property prior to us meeting and cohabiting then marrying. I can probably find the details somewhere, but I going ot guess at this stage that I probably brought about £120K to the purchase of our first property (before we were married).


 


My wife co owned a property with her ex husband and I think she probably brought about £80K towards our first house

-Did you cohabit prior to the marriage?


 


Yes. We lived together from August 1996 until we were married (October 2002). We initially lived in my house, then purchased a property together.

How much does it cost to run the family each month?


 


I guess this means how much do we put into the joint account each month? In which case the answer is £4,600, or which I contribute £3,000 and my wife £1,600


 


 

Expert:  familylawexpert replied 3 years ago.
Thank you for the extra information.

The court will take the view that your relationship moved seamlessly from cohabitation to marriage, which will mean a total 'married' relationship of c.18 years. That difference is not crucial, but it does eliminate any lingering doubt that this could be described as anything other than a long marriage.

You brought assets to the relationship, but so did she. The size of the assets in themselves, together with the comparison to one another, means that they will not be a relevant factor in the consideration as to whether the outcome should move from the starting point of equality.

In short, this is a situation where the assets will be divided equally. That does not mean that each asset must be divided equally in half, but it does mean that after division of all of the assets, you will broadly have roughly equal total capital assets.

The equal division of assets includes pensions, so if she has less pension provision than you, this will mean that she will have a pension sharing order in her favour to equalise the situation. The balancing of pension assets is generally calculated separately to the other assets, as most people would consider that £100 of pension is less valuable than a £100 of cash or realisable asset.

Whether that is an end to the matter will depend on what the court considered your wife's (and your) reasonable needs to be. If her housing needs are met by her share of the capital (which I would expect a court to consider that they were), and then her income needs could be met from her own income (see next paragraph) then that will be the total order that is made, and all of your respective remaining financial claims will be dismissed.

Your wife currently earns c.£7k per month, choosing to work three days a week. I would expect a court to accept that she could work more days a week than that if she chose, but that she should be expected to live within her means in any event. I cannot tell from the facts you have provided with absolute certainty, but I would expect that your wife would struggle to establish that she could not afford to maintain herself. However, if she did, the court could make an order for maintenance in her favour as well. I regard that possibility as unlikely.

I hope that is helpful. If you would like me to clarify anything, please ask. If not, I would be grateful if you could rate my answer.

Regards,
Mac.
Customer: replied 3 years ago.

That is helpful, thanks.


 


I asked if there is anything I could be / should be doing before starting the process to protect my financial position?

Expert:  familylawexpert replied 3 years ago.

Sorry, I did register that part of the question originally, but then overlooked actually typing my answer of 'not really'.

In my opinion, the outcome is most likely to be equal capital division and a clean break with no maintenance, so there's not anything you could do to affect that in a positive way.

Precautionary steps can include things like cancelling any joint credit cards etc, but you should take care not to do things that are likely to upset your wife unnecessarily. I say that primarily because the one thing that is likely to hurt your finances is a full-blown divorce battle with hot and cold running lawyers, when the alternative could be a relatively civil agreement reached between the two of you privately or in mediation. So if you think she might start heavily abusing joint credit cards / overdrafts etc in the shock of hearing you want a divorce, then perhaps take some steps, but otherwise just maintain the status quo (and try to be civil whatever the provocation you receive).

Good luck.

Customer: replied 3 years ago.

Apologies for this, there is one further question I need to ask. Happy to pay a little more because its new question or get a very simple answer.


 


If things get bad at home and I were to move out, would that jepodise my position in any way.


 


Many thanks again - excellent advice.

Expert:  familylawexpert replied 3 years ago.
Hello,

I'm happy to answer as many questions as you like, if you feel like adding a bonus at the end I'd be delighted, if you'd rather just pay the set amount, that's fine as well.

On the figures you gave me above, the total family capital (excluding pensions) comes to around £1,895,000. You can therefore expect to end up with around £947k, of which you currently have c.£140k in cash / liquid assets. That means you would probably expect to receive around 52.7% (based on £807k) of the house sale proceeds, as evidently the house would need to be realised. These figures are appproximate as they don't take into account costs of sale etc, but they'll do.

Now put yourself in your wife's shoes: you've told her you want a divorce, relations between you have gone downhill since then, and you've moved out. She's living in a £1.75m house, but is ultimately going to have to move out and downsize to a smaller house. She might like living in the house, and may not be able to afford a new house as nice. It would potentially be in her interest therefore to delay the sale as long as possible, which she'd be in the perfect position to do, of course, because she'll be the only one there to make sure the place looks nice (or wholly unappealing) for potential purchasers.

So, I always advice husbands in this position, if they can bear it, to stick it out in the house until it is sold, as it is the only way to produce a prompt sale. Once you move out, your interests are no longer aligned on the realisation of that major asset. In the meantime, you'll potentially have to keep sharing the cost of the mortgage, and won't have the capital to buy your new place.

I don't mean to be the harbinger of doom, but that is the potential downside. Of course, your wife may be keen to move to a new home and make a fresh start, in which case she'll be as keen as you to sell.

I hope that's useful.

Best,
Mac.

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