Advice on division of assets in divorce

enthusiasticsaver

I am looking for some advice I can pass on to my sister who is in the process of going through a divorce from my brother in law. They have been separated for more than 2 years now. My sister lives in the family home with my adult nephew who is working. My niece is still in the final year of University and will be doing a Masters in a London University from September.

They were married for 29 years and have a mortgage free home near London worth £750k and my sister has some savings mainly gifted by my mum who has been very generous with me, her and my brother. She also paid for a lot of home improvements and paid off the mortgage with money gifted by my mum. However my brother in law has been very fair I think. He gives my sister maintenance and pays towards my nieces costs at University. He is renting a flat but considering moving to another part of the country. He is in a well paid civil service job and must have a big pension as he has worked in a high grade for many years.

They have decided to work out division of assets between them for the divorce and going through an online form and my brother in law is saying he will accept around £60k-£70k presumably which he can use as a deposit for a new property. That is less than 10% of the value of the property. My sister thinks that is fair and is considering using her savings to pay him off.

My question is should they not also be looking at his pension as it will be a lot higher than hers given she worked part time for many years when the children were small in a much lower paid job. She is now working full time and I have told her to up her pension contributions to make up the gap. She is 54 and my brother in law is 51.

I think she should also be asking for a small percentage of his pension even though he is giving her 90% of the house. It is a large house but anyone in London knows even a small one is expensive so even if she downsizes she will not be able to release a lot of equity and my niece and nephew are in their early twenties so will be living with her for a while. I am anxious she will not have enough income in retirement given she does not have much time to make up her pension.

Is there anyone who has been through a similar situation or who knows about assets split in divorce? I think personally she should see a divorce lawyer rather than do this online divorce my brother in law is talking about to keep costs down. Is there anything else she should consider? Sorry about the lengthy post.

Pollycat

enthusiasticsaver wrote: »

I am looking for some advice I can pass on to my sister who is in the process of going through a divorce from my brother in law. They have been separated for more than 2 years now. My sister lives in the family home with my adult nephew who is working. My niece is still in the final year of University and will be doing a Masters in a London University from September.

They were married for 29 years and have a mortgage free home near London worth £750k and my sister has some savings mainly gifted by my mum who has been very generous with me, her and my brother. She also paid for a lot of home improvements and paid off the mortgage with money gifted by my mum. However my brother in law has been very fair I think. He gives my sister maintenance and pays towards my nieces costs at University. He is renting a flat but considering moving to another part of the country. He is in a well paid civil service job and must have a big pension as he has worked in a high grade for many years.

They have decided to work out division of assets between them for the divorce and going through an online form and my brother in law is saying he will accept around £60k-£70k presumably which he can use as a deposit for a new property. That is less than 10% of the value of the property. My sister thinks that is fair and is considering using her savings to pay him off.

My question is should they not also be looking at his pension as it will be a lot higher than hers given she worked part time for many years when the children were small in a much lower paid job. She is now working full time and I have told her to up her pension contributions to make up the gap. She is 54 and my brother in law is 51.

I think she should also be asking for a small percentage of his pension even though he is giving her 90% of the house. It is a large house but anyone in London knows even a small one is expensive so even if she downsizes she will not be able to release a lot of equity and my niece and nephew are in their early twenties so will be living with her for a while. I am anxious she will not have enough income in retirement given she does not have much time to make up her pension.

Is there anyone who has been through a similar situation or who knows about assets split in divorce? I think personally she should see a divorce lawyer rather than do this online divorce my brother in law is talking about to keep costs down. Is there anything else she should consider? Sorry about the lengthy post.

Won't she have £750k of equity?
How much would a smaller house cost?

My friend came out of a divorce with 60/40 split in the house (in her favour) plus a share of his pension from the start of the relationship (or marriage - I can't remember which).

Is he really paying your sister spousal maintenance?
Or do you mean he is paying child maintenance?

Spousal maintenance is quite rare nowadays, especially if the ex wife is working.

I could see your sister ending up with a share of her ex's pension but a lesser share of the house, and maybe no spousal maintenance.

Fosterdog

I can't imagine his pension would be worth anywhere near the 90% of the property value he is offering to leave her with. If she wants some of his pension he is likely to also want his fair share of the property value which would leave her in a worse financial position than what he is offering now. It really sounds like right now she has an amazingly generous offer that most people would gladly take.

swingaloo

The savings your sister is hoping to use to pay him off are actually not just hers. They are part of the marital pot and as such should be shared fairly. he sounds like a remarkably fair man and seems to be walking away with very little considering the length of the marriage and the fact that both children are now adults.

To go after his pension is just greedy and may make him feel less generous towards your sister. She is getting an amazing deal especially as he probably has a right to some of 'her' savings anyway.

In her retirement she will be able to downsize from the property she is in and have a tidy sum to retire with.

elsien

The fact that the children will still be living at home for a while is irrelevant now that they are adults so that's not part of the equation.
She's getting most of the house, and spousal maintenance although she is working full time.
If they don't want to go down the solicitors route, they could always look at mediation which would involve full financial disclosure from both parties. Including her savings.

enthusiasticsaver

Pollycat wrote: »

Won't she have £750k of equity?
How much would a smaller house cost?

My friend came out of a divorce with 60/40 split in the house (in her favour) plus a share of his pension from the start of the relationship (or marriage - I can't remember which).

Is he really paying your sister spousal maintenance?
Or do you mean he is paying child maintenance?

Spousal maintenance is quite rare nowadays, especially if the ex wife is working.

I could see your sister ending up with a share of her ex's pension but a lesser share of the house, and maybe no spousal maintenance.

She cannot really move to a smaller house until the adult children have left home. In London it is expensive so he does not want to force them to be in a worse position than they would be if my sister and brother had stayed together and they would have been happy to let them live there until they were able to buy their own. Even a small house in her area is around £400k. A flat is no good as her income would not be enough to pay extortionate service charges but she may have to consider that.

Part of the maintenance is child maintenance for my niece who is still at Uni. I don't think the maintenance will continue after they have finalised their finances. He is just paying it now to help her with the bills. I think she recognises he is being fair.

enthusiasticsaver

To be clear the spousal maintenance will not continue once my niece has left University and my sister has bought my brother in law out of the house. He gives her money now as his income is three times higher than hers and the house is expensive to maintain.

enthusiasticsaver

Fosterdog wrote: »

I can't imagine his pension would be worth anywhere near the 90% of the property value he is offering to leave her with. If she wants some of his pension he is likely to also want his fair share of the property value which would leave her in a worse financial position than what he is offering now. It really sounds like right now she has an amazingly generous offer that most people would gladly take.

I have asked this same question on the pensions board and surprisingly most people there have said she should not ignore the pension and his fair share of the equity of the property (which probably should be around 30-40% considering my sister used an inheritance and family gifts to buy it and pay off the mortgage and do home improvements) is probably around £300k. His pension CETV considering he is a high ranking civil servant and has worked there for more than 34 years is probably worth around £500k at least.

Pollycat

enthusiasticsaver wrote: »

I have asked this same question on the pensions board and surprisingly most people there have said she should not ignore the pension and his fair share of the equity of the property (which probably should be around 30-40% considering my sister used an inheritance and family gifts to buy it and pay off the mortgage and do home improvements) is probably around £300k. His pension CETV considering he is a high ranking civil servant and has worked there for more than 34 years is probably worth around £500k at least.

which is pretty much the point posters on this thread have made.

Your sister can't have her cake and eat it.

pmlindyloo

Since your sister and her ex husband appear to have an amicable relationship at the moment then I would strongly suggest that they attend mediation together. This is a very cost efficient way of settling all financial matters.

Perhaps, more importantly, the final decisions can be made into a legal document which is binding.

The possible problem with deciding between themselves without a legally binding agreement is that some time in the future both their personal situations might change. Both need to be 'protected' in case of this.

There is a good link here:

https://www.citizensadvice.org.uk/family/ending-a-relationship/how-to-separate/mediation-to-help-you-separate/

enthusiasticsaver

swingaloo wrote: »

The savings your sister is hoping to use to pay him off are actually not just hers. They are part of the marital pot and as such should be shared fairly. he sounds like a remarkably fair man and seems to be walking away with very little considering the length of the marriage and the fact that both children are now adults.

To go after his pension is just greedy and may make him feel less generous towards your sister. She is getting an amazing deal especially as he probably has a right to some of 'her' savings anyway.

In her retirement she will be able to downsize from the property she is in and have a tidy sum to retire with.

The savings were part of her inheritance or family gift from my mum. They were married when she received them but technically the money is hers and he agrees with that. He is not being unreasonable and my sister agrees with that.

She is not "going after" his pension but I think she needs to investigate this further considering I would think it is worth at least £500k at the moment working it out on his salary and length of service.

He is the one walking away and does not want his children to be in a worse position than they would be had they stayed together. This means not forcing them out of the family home until they are able to support themselves. As anyone who lives in the London area knows both rent and homes are expensive and they are only in their early twenties and my niece has not yet left University.

It is not a question of his generosity. They have been separated more than 2 years and quite rightly he wants to move forward. He has been paying £1k rent for a flat a month and wants to get another mortgage while he has enough time to buy again probably in a cheaper part of the country. A fresh start you may say. My sister is not ready to sell the house so they have to come to an amicable agreement and the only cash available is the money left from her inheritance so he is asking for around £70k which she thinks is fair. He does not want to go through solicitors as he thinks they cost a lot and wants to be fair.

They are trying to come to an amicable agreement and so far all the discussion has been about the family home as he obviously can only use his share in that as a deposit for a new home. I have suggested she take the pension into consideration as I think that her half share in that is worth around £250k. Obviously given he is being generous with the house she should accept less than that but I don't think it should be ignored.

There will not be spousal maintenance going forward I don't think but what happens when the income differential is so pronounced? He earns three times what she does.