Inherited Property

Please help as I need some advice with respect to a financial settlement. I have rounded figures as it is the principle I need guidance on.

Last June I and my husband separated. I remained in the family home while he and his girlfriend rented a flat together.

I have filed for divorce.

Summary of situation
- We are both 48
- We co-habited for 4 years plus at the time of separating we had been married for 18 years.
- We have no children.

We are both able to support ourselves salary wise going forward so neither is looking for maintenance. Our preference would be a Clean Break.

Assets
- marital home – Equity of £360,000, held in joint names
- My pension funds - £230,000
- Husband pension fund - £200,000
- Second property – Equity of £530,000, held in husband’s sole name
- Other assets - £90,000 (ISA, savings at bank, husband’s car, etc.), all held in husband’s sole name

Just after we married my husband inherited a property, listed above as the second property, jointly with his sister whom we bought out in 2010. The property is currently converted into flats, which are rented out. There was a mortgage taken out to cover repairs which is funded by the rental income.

Over the time we have owned the property we contributed money to improve it. Including the sum to buy out his sister this has been a total of £200,000.

I have borrowed £10,000 from joint funds to buy myself a car which I am repaying by meeting all the costs for the marital home, including the mortgage payments. I have excluded the car value from the list of assets as my intention is to repay the balance of this loan when we settle.

My suggestion is that a 50/50 split is the fairest. So my proposal is as follows:-
- We both retain our own pensions.
- I keep the marital home and take on the outstanding mortgage.
- My husband keeps the property he inherited.
- My husband gives me £115,000 funded by a mixture of liquid assets and raising a mortgage against his inherited property.

To enable things to proceed as quickly as possible, although not my first choice, I have also suggested that the £115,000 could be paid in monthly instalments over a period of up to 10 years, I would not charge interest. There could be a solution whereby the monies are partially paid monthly and partially in a lump sum. Alternatively my husband takes responsibility for paying a percentage of mortgage on the marital home equivalent to this sum but the house is transferred to my sole name (not sure if this is possible/sensible).

However my husband’s argument is that as he inherited the second property it should not be included in our negotiations. It has belonged to his family for many generations and, not having children, I had always agreed it should be left to his family members when we died. He feels that we should only be considering assets we accumulated due to our efforts.

He does acknowledge that as we put money into the inherited property so proposes the following:
- We both retain our pensions
- He keeps the property he inherited
- He keeps all assets
- I increase the mortgage on the marital home by £50,000 to buy my husband out

Until we can agree on the treatment of the inherited property we have reached a stale mate. We are both reluctant to the incur costs with a court case but unless we agree on the handling of his inheritance I do not see how this can be avoided.

Thank you

There seems to be more than enough in the pot to exceed both parties needs as you only really need a one bed property each.

The second property will be part of the pot. It was partly inherited and partly bought during the marriage so your ex''s chances of claiming it should be ring fenced seem remote.

You don''t mention salaries and presumably there is rental income from the second property in excess of the mortgage?

Your suggestion is complicated and will keep you financially tied for many years when you don''t need to be. What if your ex''s situation changes? He seems to really want to keep the inherited property and may go on to have children to leave it to. You may be able to use his focus on this one asset to get what you want which seems to be the FMH.

His suggestion seems very weighted towards him.

You don''t break down the assets that you say are worth £90k in his name. How liquid are they?

Why have you not included the value of your car?

It is usual for whoever is still living in the FMH to pay all the costs associated with it. The argument being that you have sole use but are not paying your ex rent for his share.

Thank you very much for the response.

We are both on similar salaries. In addition his girlfriend is working.

The rental income from the second property more than covers the mortgage with the excess going into a bank account in my husband’s name.

I did think my suggestion was complex however I am trying to give my husband options so we can resolve this. He has said that he and his girlfriend want children so it is more sensible we find a clean break option. This also makes me want to get to a solution as soon as possible as I can’t imagine him having a child will do anything other than complicate the situation further.

The assets in his name are approximately 50% ISAs and bank accounts. The other 50% his car and a share in a light aircraft. With respect to the aircraft he has calculated the likely “quickish” sale price excluding agent fee which I have used. He is marketing it for more than this at the moment.

Could you please how does the liquidity have an impact? What needs to be considered?

My mistake on my car front. I assume the position would be as above but I keep my car and adjust the balance sums accordingly. Adding total value of the car to the assets and then counting this in my allocation.

I am currently paying all the bills including the mortgage for the FMH. However the property had a leaking roof so I did use joint funds to get this fixed.

Any advice on a pragmatic solution would be appreciated? I really have no desire to spend money going to court to reach a solution we could have found on our own. If I could get an idea on how this might be concluded if we did put it before a judge then hopefully I can save us both a good deal of upset. I expect the solution is a compromise of some sort and to lie between our two view points.

A pragmatic solution would be:

You retain marital home and your pension
He retains the other property and his pension
You split the value of other assets 50:50.

This gives him a bigger share over all of the assets which can be seen as acknowledgment of his inheritance. He retains control over the property and can leave it to family members in his will.

It is pretty simplistic but has the benefit of allowing a clean break, acknowledging the contribution from his inheritance and allowing you to avoid a long and potential costly court battle.

If you can live with this, I would put it to him as an Open Offer to settle. I am pretty certain a judge would see it as fair.

Hadenoughnow

You keep FMH (the asset you seem to most desire) and have the cash assets that are currently in his name, presume about £45k from what you say.

He keeps the inherited house (the asset he seems to most desire) plus his car and aircraft.

If you keep your pensions out of it works out £635k to you and £775k to him or 45:55 in his favour. That doesn''t include value of your car though so that evens it up a bit and maybe you could negotiate about money released from sale of aircraft?

Both of you will have far more than you need even though he will have slightly more.

Depends how much time, money and emotional energy you want to spend on it to some degree but little point spending thousands of pounds arguing over a relatively small, percentage wise, difference.

Thank you. You have definitely given me something to think about. Hopefully with your advice we can resolve.

Back again – best laid plans and all that. Unfortunately we seem further apart in our discussions so I am back for advice/support/help.

We have exchanged a couple of offers, mine to him along the lines of one property each, keep our pensions and split the remainder. His offers mainly wanted to completely or at least partially exclude the second property.

My husband is now adamant that as he inherited our second property from his family and intends to leave it to his cousins that it should not be considered as a property from an asset perspective. To my mind what he eventually does with the property is irrelevant. As he is still mentioning having children so his plans could change. If nothing else he is getting rental income from the property.

Although I have used a solicitor for advice I realised I cannot currently afford the court route. So in an attempt to reach a solution we have had a couple of mediation sessions.

He is now offering to count the money we put in as the property value rather than the market value less mortgages. However he does not intend to add interest even though some has been invested for nearly 20 years. This means a difference of over £300,000. I am really uncomfortable about this.

Last week he suggested he also allow £140,000 to be counted as his asset. I am not even sure where this came from. He said something about a capitalised value but as he has yet to produce any information on rental income, running costs etc. I can’t understand how he has calculated this. He has also said him including this is all dependent upon him using an Internet calculator he has found to value my pension rather than use the CETV I got from the trustees and the Zoopla value for the marital home.

On the pension front the mediator has suggested a local firm to do a review to see how my final salary scheme equates to his private pension and I have agreed to this. With respect to Zoopla it wrongly lists the house as larger than it is and houses in the area are been marketed for at least 15% below what Zoopla claims. Also to be honest I have no confidence in Zoopla as changing a couple of variables immediately knocked off £50,000. I am happy to have the house valued again by a firm listed with the RICS.

I increasingly feel I been asked to accept valuations he provides which continually reduce what he wants to keep and increase the things I would prefer to retain.

I have now said I will not continue with mediation until he provides a full financial picture of his property as I cannot agree his valuation over the market valuation without understanding how it is been reached.

I feel the same as I did after my last postings that a fair solution is one house, own pensions etc. Now I am struggling to sleep with figures going round in my head, he produces very complex spreadsheets to support his position. I keep thinking I have missed something fundamental but have no idea what.

Thank you in advance for any feedback.