Starting to talk about financial settlement

Maureen43

Ok, dh and I have had an initial discussion about finances. Our situation is this:

House worth approx £250k, with mortgage o/s £41k.
Approx. £41k of savings
My pension is worth about £10k.
His pension is worth about £45k.
He earns £50k, I earn £5500k

For various reasons his job is unstable so we both want the main home for the children (mine) to be mortgage-free. This will mean me getting all the equity in the home (approx. 200k). (He earns enough that he can get another mortgage or rent).

He keeps all the savings bar a few thousand for me (rainy day fund).

He would also pay child maintenance at whatever rate is deemed fair by solicitors.

I wouldn't take spousal maintenance or a share of his pension.

I think, on paper this doesn't sound like a fair deal for him however it is probably best for everyone. What would a court think though?

We've been married for 18 years and have two children aged 13 and 11.

kingfisherblue

Wouldn't your husband get some of the equity when the house is sold at a later date, or do you anticipate keeping the house after both children are grown and have left home?

Maureen43

Sorry, I wasn't clear. The plan is to sell the house and buy somewhere smaller for me and the kids, using about pretty much all the equity.

This would leave him with about £40k savings which he could use as a deposit to buy another house if he wanted. Alternatively he could rent and keep the savings.

irishjohn

£5500 per annum is not a lot of money to run a home with two teenage children. You will of course be relieved to be living mortgage free but you should do a budget to work out how much it will cost you to survive month by month and how much it will cost you to survive and have a bit of fun. Most of your monthly costs will be to pay for day to day needs for you and the children so the child maintenance should be to pay towards all these costs not just child specific ones.

Your rainy day fund must be a minimum of 6 months expenses.

Your pension is not too bad and you will be able to supplement that when the time comes by perhaps downsizing your home.

Hope that helps

rpc

He could have preserve his stake of the equity, to be given to him at a later stage such as if you cohabit/remarry or when youngest leaves education. The actual handover of cash does not have to be now.

You have combined assets of c305k so a 50/50 settlement gives you each about £150k. That could be paying off the mortgage with savings, he keeps his pension and gets a charge on the house for 105k to be realised at a later date.

Maureen43

The £5500 is what I get from paid employment. I think I would be entitled to quite a bit of tax credits, and child benefit on top, as well as maintenance from my husband.

If I were mortgage/rent free I think I could get by but I would look to increase my working hours.

I don't like the idea of him having a "charge" on the house - I want to be free!

Maureen43

Btw, the value of the pensions I am giving is the value of the fund now, not an estimate of what it will pay out if that makes sense?

I don't think my pension, with a current value of £10k, will give me very much per month when I have retired.

rpc

Maureen43 wrote: »

Btw, the value of the pensions I am giving is the value of the fund now, not an estimate of what it will pay out if that makes sense?

That is all that matters in this context.

I don't think my pension, with a current value of £10k, will give me very much per month when I have retired.

No it won't.You might get £600pa at current rates but in reality you would withdraw the £10k under triviality rules.

rpc

Maureen43 wrote: »

I don't like the idea of him having a "charge" on the house - I want to be free!

Is he happy to take less than 30% of your joint assets? (savings plus his pension) It doesn't sound a fair share.

If not, you can either sell the house to get access to the equity as cash and use what is left to buy somewhere significantly cheaper or you can accept that he has a claim to some of the equity and defer payment of it. That lets you stay in the house while the kids are at home and you won't have to look at possibly moving schools etc. That way, he gets a fairer share but you and the kids don't need to 'uproot'.

Maureen43

He is happy with this deal. But would a court rubber stamp it?

Maureen43

I have seen a solicitor today for a free half hour consultation.

She felt that I might be better off having a "charge" on the house for it to be sold when the children have left home, and take a share of his pension, rather than take all the equity in the home now.

She said if I just owned the house and did not take a share of his pension I would be putting all my eggs in one basket, whereas taking a share of both house and pension would give a better "investment spread".

She also commented that many divorced women take the "whole house and only the house" option and live their retired lives in poverty.

What do people think about this advice?