Pensions v House Equity

I'm looking for some advice or guidance. I'm based on Scotland and currently pursuing a divorce against my wife. I'm aged 41 and she is 38. We have one son (8 yrs old) who stays at the marital home full time and we share custody (co parent on an alternative week basis).

Me:
Annual Salary = £49k
Pension (Defined Benefits) = £103k
Pension (Defined Contributions) = £5k
Total debt = £28k

Her:
Annual Salary = £26k
Pension (Defined Contributions) = £35k
Total debt = £6k

The main asset we have is the marital home - which has £80k left on the mortgage (but is valued at £180k) - so has £100k equity

I've been going through the motions for over a year now - and the latest is her solicitor has now suggested/proposed that they offset my pensions against the house - which would transfer the title to her, I'd be left with all of my debt (£28k - the VAST majority of which was spent on the house i.e. new bathroom, furnishing etc) and I would need to pay her £300 a month for 18 months to allow her to 'adjust'... this can't be acceptable or right can it?? - a pension doesn't put a roof over your head or provide a house for your son! - and I'm ~30 years off getting anywhere near it (and even when I do reach it - it might be worthless by then anyway!)...

The exact wording for the proposal from the letter is:

 Your client would transfer title of the matrimonial home to my client for nil consideration;
 Each party would thereafter retain all other assets and liabilities in their own name and
 Your client would make payment to my client of the sum of £300 per month for eighteen
months by way of periodical allowance to allow her to adjust.

Has anyone found themselves in a similar situation or could they suggest options? I'm just REALLY struggling to understand how a £ in a pension i might never see - relates to a £ in an actual asset that is there today!? - seems incredibly unfair if this is the case.

I think its normal for the pension to be accounted for on a £ for £ basis, but others may have a different view.

The proposal on the table is not bad overall % split wise but problematic because it leaves you with a large debt and no lump sum for a deposit for a home for yourself.

Some potential options I see are (assets include debts):

1. Splitting all the assets (e.g. 50:50) with your ex staying in the house until the child is 18 years old then the house being sold. This way you will retain a % of the house equity and would receive it as a lump sum in 10 years.

2. Splitting all the assets with your ex buying you out of an agreed % of the house sooner rather than later (e.g. 2 years), which you could put down as a deposit for your own place and pay debts.

3. Sell the house now and split all assets in a way that provides for both of your housing needs. It might be reasonable for her to get a greater % of the split (e.g. 60:40) as the child stays with her full time.

The key question is how many bedrooms is the former family home and how much would it cost to rehouse both of you, say 2 bedroom place each, and could your ex afford the mortgage? I presume she can afford the mortgage if she can take on the existing home.

Hope this gives you food for thought to start running calculations for percentages and counter proposals.

Others may give you more ideas.

If you contact a solicitor they can advise you professionally and give an opinion on what a judge might think.

VIG

Vigorate wrote: I think its normal for the pension to be accounted for on a £ for £ basis, but others may have a different view.

The proposal on the table is not bad overall % split wise but problematic because it leaves you with a large debt and no lump sum for a deposit for a home for yourself.

Some potential options I see are (assets include debts):

1. Splitting all the assets (e.g. 50:50) with your ex staying in the house until the child is 18 years old then the house being sold. This way you will retain a % of the house equity and would receive it as a lump sum in 10 years.

2. Splitting all the assets with your ex buying you out of an agreed % of the house sooner rather than later (e.g. 2 years), which you could put down as a deposit for your own place and pay debts.

3. Sell the house now and split all assets in a way that provides for both of your housing needs. It might be reasonable for her to get a greater % of the split (e.g. 60:40) as the child stays with her full time.

The key question is how many bedrooms is the former family home and how much would it cost to rehouse both of you, say 2 bedroom place each, and could your ex afford the mortgage? I presume she can afford the mortgage if she can take on the existing home.

Hope this gives you food for thought to start running calculations for percentages and counter proposals.

Others may give you more ideas.

If you contact a solicitor they can advise you professionally and give an opinion on what a judge might think.

VIG

thanks for the reply VIG - it does give some ideas...

However, just for clarity - we share custody of my son - he resides at the property full time (just now) and we alternate week about until a permanent solution can be reached - whereby, he will then spend one week with me (in my house... wherever i end up) and one week with my wife (whether that be in the matrimonial home or another property)

I probably should have also advised that this was their counter proposal.. my solicitor had already offered them my initial proposal - there was 2 scenarios offered/put forward to her (along with the schedule) - in summary, these were:

* If your client is able to achieve transfer of title and remortgage of the matrimonial home then my client requires payment of £19,500 to achieve equal sharing of the net assets

* If your client is genuinely not intending to cohabit long term with her partner then plainly the matrimonial home will require to be sold. In that scenario the value of the property and the amount of the mortgage should be removed from the schedule. On that basis your client retains net assets of £28,664.83. On that basis my client will retain net assets greater than your client of £55,961.30. On that basis my client requires the sale of the matrimonial home on the basis that your client retain the first £55,961.30 of the net profit on sale with the remaining profit being shared equally between the parties.

n.b. she is currently co-habiting with a new partner (for context r.e. above)

Sounds like you have been through the options already and have advice from a solicitor. What do they say about the counter proposal?

I am in a similar position in terms of wrangling over the details of a financial settlement but no proposals forthcoming and unrealistic expectations to deal.

However, I am pretty comfortable my offer is solid based on legal advise I have received... so I am proceeding with mediation then court if we cannot agree close to my original offer.

If you are confident in your position based on the legal advice you have received then you may want to reject the counter offer, restate your offer (may only give 1 of the 2 options e.g. sell the house now) and give notice of intention to proceed with the court process in a specified number of days to focus the mind of the other side. Then get the process started if further negotiations are fruitless and a waste of time.

I am not sure if mediation is a prerequisite to court action in Scotland but that might be a good starting point.

Good luck!

Vigorate wrote: Sounds like you have been through the options already and have advice from a solicitor. What do they say about the counter proposal?

I am in a similar position in terms of wrangling over the details of a financial settlement but no proposals forthcoming and unrealistic expectations to deal.

However, I am pretty comfortable my offer is solid based on legal advise I have received... so I am proceeding with mediation then court if we cannot agree close to my original offer.

If you are confident in your position then you may want to give notice of intention to proceed with the court process to focus the mind of the other side. Then get the process started within xxx days if further negotiations are fruitless and a waste of time.

Good luck!

I've not had a detailed discussion with him yet as they've thrown in some spurious claims about a loan which was made to use from her parents (the vast majority - if not all has been repaid back) and she had received money fairly infrequently from her parents (£100 here and there) - which they are now claiming are 'Pay Day Loans' - you honestly couldn't make this nonsense up.. so I've waiting on receiving copies of bank statements so I can prove the payments made etc - (I requested these previously and she must have received them at the home address on the week I wasn't there and disposed of them) - so I've re-contacted my bank to request more copies and explained the situation and they're sending them to an alternative address.. so we agreed I'd get the bank statements and review and comment against them.

In all honesty, I would like it to go to court for resolution as much as anything (as I don't think she will be reasonable about any proposal) - she is dragging this out for as long as possible with no incentive on her part to resolve.. given how far apart the proposals are then any agreement seems slim. Also, I'm not sure the costs of litigation would be worthwhile given the modest assets in dispute (although, inevitably - it might come to that)..

I hope you manage to get your situation resolved/settled!

Is there documentation and evidence of repayment of these "loans".

If not court won't be interested. They'll have heard it all before!

WYSPECIAL wrote: Is there documentation and evidence of repayment of these "loans".

If not court won't be interested. They'll have heard it all before!

yep - there is an email saying they gave us the money (which I didn't know about until it was in our account) - i then told her to return the money (and she refused) so I then replied and said we would pay it back (that constitutes acknowledgement that it was a loan and not a gift) - however, the vast majority (if not all) of this has been paid back (bank statements to prove) - there has been small amounts of money £100 here and there which they have sent her -which she is now claiming were 'Pay Day Loans'!! - but I'm going through the accounts just now (as much as i can until all the statements come through) and can show that there was decent current balance in the account (i.e. usually between £500-£800+) -so why would we need 'Pay Day Loans'!!??!.. it's laughable, but unfortunately this is the kind of nonsense she comes up with. There is no messages or emails around these 'Pay Day Loans' or any acknowledgement on my part..

Looking at some of the ones she's highlighted in detail - one was a gift to me (for my birthday), one was for a holiday she was going on with her parents (foreign currency and you can see the money going on one day and being spent on her debit card the next day at the foreign exchange)... it's just a joke and very frustrating (and time consuming having to try and go through it all)

thanks for your reply!