What a mess - anyone any ides how to sort?

Hi,

First time posting on here so help would be appreciated.

Without boring the pants off everyone, I ahve been with my wife for 15 years and we have three children (14, 9 and 8). About five years ago things began to change and for the last three years my wife has planned to leave; the last three Christmas's have been a nightmare.

My wife fianlly plucked up the courage to leave in december 2006 and took my daughters with her (my 14 year old son has stayed with me in our house).

I have now recieved a letter from her solicitors saying she is going to issue divorce proceedings.

We have really complex financial issues, which are of concern so if anyone has any advice I would be most gratefull.

Here goes:-

1) The FMH - this is valued at around £225k with a mortgage of £170k. Since leaving, my wife has continued put some momey into the bank to help service our debt so I am assuming the £55k would go into a pot that eventually we would divide up.

2) We have an endownment worth about £20k; again this will go in the pot.

3) We met when I was 31 and she was 21, and we have always contributed to her pension plan; I havn'nt got a pension. Does anyone have a view on wether this goes in the pot, and how do you value it anyway??

4) My wife's parents started a compamy many years ago, but they gave their shares to my wifes two brothers some years ago. Some time later (about 12 years ago), her brothers re distributed the shares so that my wife and her two brothers were equal partners. In 2001, the three of them created a new Ltd. company, and tranferred all the business assetts of the partnership to the ltd company, again, they had equal shares in the new company. The original partnership still continues but is now used for two completly separate businesses.

Questions, are - as this new company was formed in 2001 (after we had been married some 12 years), do I have any writes to include the value in the "pot". If so, how do you value it.

5) The business sits on a piece of land which is owned personnaly (mortgaged) by my wife and her two brothers. As this is owned personnally does her 1/3rd go in the "pot". If so, how do you value it? (also, do you value it as commercial land, or building land? - the plan was to sell it when her brothers wanted to retire for houses)

6) The original partnership is now used to control two children's nurseries - does the value of these go in the "pot".

7) further complications; my wife actually owns the mortgage on the property that her mother and father live in. Does the equity on this property go in the "pot"?

8)Debts. Where do you start? We have substantial debts which were always going to be paid off when the land/ businesses were sold. Most of the debts are on credit cards and are in my name. Are we jointly liable for these debts, or because my name is on the credit, am I likely to have to pay these off myself.

9) Although my wife keeps putting money in the bank each month, she isn't paying her half of the debts. - what can I do to ensure she has to put enough money in?

Told you it was complex; any comments would be appreciated.

Thanks

Mike

Dear Mike

1. FMH : You have an unusual situation in that your son lives with you and the daughters with your wife. They must be living somewhere. In general the Courts' objective is to make sure that the children have a home while they are still dependent. This may mean that you could have the right to live in the FMH until your son reaches 18. In any event the Court will consider the housing needs, both of yourself and your wife, as a high priority,

2. If you have an endowment, I think you are correct in assuming it would be an asset available for division.

3. Pension - in principle, there is no reason why a pension cannot go into the ' pot ' - more usually it is the other way round, the husband has a pension and the wife doesn't. Valuation of pensions is a bit beyond me, I'm afraid.

4, If your wife has an interest in the business then the value of her share can, in principle, be included. The actual valuation of businesses is a matter for a qualified valuer. The Courts need to be careful because it can happen that if someone who is the sole or part owner of the business needs to realise cash to pay off a spouse, it can have an effect of the viability of the business.

5. Would the value of the land not be reflected in the accounts of the business ?

6. It could do, but it depends on the nature of your wife's interest in the business. I think you'll probably need an accountant sooner or later.

7. I'm not clear what you mean by ' owns the mortgage '. Exactly who owns the property ? Is this one of those arrangements where parents give property to children to avoid or minimise liability for inheritance tax or care home fees ? Do the parents have an enforceable right to live there and how is this secured ? Can you please be more specific ?

8. If you signed for the debts then you are liable to the lender. Spouses are not automatically liable for each other's debts, though there are exceptions.

There are is one thing you haven't mentioned - your incomes. This could be significant but without knowing anything I can't advise. There could be issues of child support ( for which see the CSA website ) and whether it is appropriate for one spouse to offer financial support for the other.

I am sure there will be others who will add to what I have to say, but I agree with you, your case sounds a bit complex and I think legal advice should be sought.

Mike 100468

Hi Mike,

Many thanks for the reply.

Point 1)When my wife left, I begged her to not break the children up but she was determined to take the girls and she asked my son who he wanted to live with. He chose me and I coulldn't face forcing him to go so he is with me. His relationship with his mother is deteriorating and he is becoming resentfull of how he is treated in comparison to the girls.

Point 5)In terms of the land. My wife's accountants advised her and her brothers to purchase the land outside the business and pay something called "taper tax" because this was a far more efficient way of dealing with the tax issues when the land was eventually sold. It is because of this fact that the business doesn't make any money as the land isn't reflected in the accounts, so they are being quite clever (providing the business remains viable on paper).

Point 7) My wife's parents owned there own home outright. But her father was quite ill and needed to go to a respite home every day of the week so that he could get looked after. This was going to be very expensive so (it would appear) her parents handed over there property to the company (so they had no asetts), and then put their house up for sale. My wife then bought a house for them (taking out a mortgage in her name), opposite our house so she could help look after them. I believe that the house her parents now live in is owned by my wife and the payments for the mortgage are paid for by the company and are accounted for in my wife's directors loan acccount (boosting her earnings on her P60).

Interestingly enough, my wife now lives in her mothers "old" house completly rent free and all her food and bills are paid for by the company (nice work if you can get it).

Point 8) In terms of incomes, it depends how the courts look at it. My wife is trying to only declare her net pay which goes in the bank every month. The problem I have with this is that if you look at her P60 her earnings are double that which she is actually declaring (the remainder is made up of pension, health schemes, her parents mortgage, car etc etc).

In terms of monies, as I understand it we both earn such sums that the CSA scale would put us at the maximimum payments that could be imposed. However, as my son lives with me and my daughters live with her, the payments could actually cancel each other out.

Last year, I earned around £78k, and my wife's P60 was in the region of £94k.

Told you it was complex??

Thanks for the comments so far. To be honest, I can see this being an absolute minefield and something that I never wanted but what can I say?

Thanks

Mike

Hi
Just to clarify one thing. Although a debt maybe in just your name , that makes you responsible to loan company to pay it. But if it is a loan taken out during a marriage it becomes a joint loan even if its only in your name. She may not pay one penny towards that debt, but when all the finances are sorted at court, they take it into account. So you need to keep all documentation about loans, i.e. how much original loan was for, how much you have already paid on that loan, whats left ect ect. DO NOT THROW ANYTHING AWAY!
At our FH the judge ruled that all debts that were in one name only were still marital debts therefore one owed the other half. However, any loan taken out after seperation became that persons debt, unless it was a consolidation loan and you could show it was used to pay off former matrimonal debts.

Hope the above makes sense.
Kind regards
Louise

Hi Louise,

Thanks for the reply. I think I understand. From what I was told last week, my Ex has decided to take out a new loan to consolidate some of our debts. So I suspect that she will be responsible for this new loan legally, but the debt it clears will be taken in to account at the final hearing.

Many thanks

Mike

Hi Mike

Yep yep you got it! Lol
I just re read my post, I was half asleep when i wrote it! i must of been!

Yes any debts incurred throughout a marriage are considered joint marital debts, even if its only in one spouses name. ( I dont think that would apply if one died though as far as the loan company is concerned) Whilst the person whos name it is in, is reponsible for the payments, the actual debt will be taken into account at any financial hearing.

Kind ones
Louise

P.S (well this is what happened at our FH.) I dont honestly know where the law stands on this.

Hello mate cant help you on everything else but I can tell you about the pension.

I was in a similar senario, my pension was underperforming so I sacked it & ploughed the money into my ex,s very very good civil service pension instead.

It all goes in the pot. You,ll need to tell her to get a cash eqquivalent transfer value off the pension providers tho. You,ll only be able to claim on the years you were married aswell. So if she had the pension a few years before you married you cant claim on that part.

Book up a family mediation session, they are bang on in helping solve delicate financial matters like that. I cant praise them highly enough. Good luck.

Dobbs