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What are we each entitled to in our divorce settlement?

What does the law say about how to split the house, how to share pensions and other assets, and how much maintenance is payable.

What steps can we take to reach a fair agreement?

The four basic steps to reaching an agreement on divorce finances are: disclosure, getting advice, negotiating and implementing a Consent Order.

What is a Consent Order and why do we need one?

A Consent Order is a legally binding document that finalises a divorcing couple's agreement on property, pensions and other assets.


Do you need help sorting out a fair financial settlement?

Our consultant service offers expert advice and support to help you reach agreement on a fair financial settlement quickly, and for less than a quarter of the cost of using a traditional high street solicitor.


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  • Its time
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26 Sep 12 #357939 by Its time
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Dear all

I have struggled to find much in the forum about limited companies and would appreciate some guidance on financial settlements.

I left my wife 18 months ago. She began a relationship 3 months later. I am single. She has wanted to begin divorce proceedings for a while. I now feel I have some attention to do it.

I am hopeful that we will be able to reach an amicable financial settlement but want to understand the parameters before beginning a dialogue.

The Facts:
I am 48, she is 52.
Married 19 years ago.
Cohabited for about 3 prior.
18 year old daughter in full time education who lives with me permanently.
11 year old son who is with me 1-2 nights per week.
She continues to live in the marital home. I am in a rented flat.

Financials:

marital home has a value of approx £600k and equity of about £350k some of which is from her inheritance and the rest accumulated from my mortgage payments and property appreciation over the years.

I own and run a company which I founded 17 years ago and has supported the family since then with occasional tiny earnings from her. I began as a sole trader 17 years ago but when it became Limited Comapny about 11 years ago I was advised by my solicitor to put some shares in her name to make dividends more tax efficient so she owns 10%, I the other 90%.

During the last 18 months I have carried on making all the same payments that I did when we were together. Ie mortgage, utilities etc etc and whatever she asks for to support her life and our son. (she is reasonable and sensible about this). Plus of course I have my additional overhead.

The whole lot costs over 100k which I take as a dividend from the business but most of which goes to her in one form or another.

Her earning potential is modest (hundreds rather than thousands a month). This was the case before the marriage, during, and is likely to continue to be the case. She is not physically disabled or anything.


The Future:

My inclination is to let her have the house in exchange for the 10% of the business. Whilst it has had a difficult two years the business is viable and has significant potential. And then agree a fixed monthly maintenance until my son is 18 or finished full time education. This would seem to be the cleanest arrangement all round. Apart from leaving me with nothing for a deposit on a place for now – but hey it would be worth it for the closure.

I would appreciate any guidance on this before launching in and finding I have wandered into a quagmire. Whilst it is likely to be amicable it is by no means certain and I would very much like to understand the lie of the land first...

:)

  • Fiona
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26 Sep 12 #357983 by Fiona
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You really need specialist advice form a family solicitor with experience of businesses. Sometimes most or all the value of a business is the income stream it produces instead of capital but it still has a value. Before deciding how assets are to be shared the assets need valuing for the purpose of divorce, including the business.

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26 Sep 12 #357988 by Action
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I agree with Fiona, from personal experience of advice given at mediation.

Although on paper the business is 10% hers and 90% yours, the whole of it is still a marital asset to be divided along with the house, savings and pensions etc.

Will your wife be able to afford the mortgage on the current property? Could she move to a more modest three bedroomed property so at least you have something as a deposit to buy a house yourself? Is your wife co-habiting with the other man or does she intend to in the near future?

There are so many things to take into account and I fear that it will not be as straight forward as it first appears.

A good starting point is to look at your individual ''needs'', i.e. what you need to live each month, and see how short your wife is.

  • Its time
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26 Sep 12 #358080 by Its time
Reply from Its time
Thank you Fiona and Action.

She is talking of wanting to sell the FH and move to something smaller and more manageable. This would release some capital and reduce the over head thus reducing the amount of maintenance she would need from me.

She is not cohabiting.

But my sense from your responses is that I first need to get clearer on how the law would view the business from a financial perspective in our case. And should therefore talk to a solicitor on this. If the starting point for negotiation is fifty/fifty on business equity and/or profit I would view the equity in the house very differently.

Relative to money for a deposit for myself I would be willing to wait to earn it if necessary and rent in the meantime in the interests of a clean and final solution.

Any further comments welcome - or otherwise the next step is a solicitor?

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26 Sep 12 #358094 by Action
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You definitely need specialist advice as valuing businesses for divorce purposes is very complicated - it''s not just a case of looking at the ''book value'' but, as Fiona indicated, the value of the business as an ''earning vehicle''/future growth potential etc.

My ex husband pulled a ''changing direction'' stunt to make his business temporarily fail, and he ended up on benefits for a short period. I''m sure, from what you have said, that you would be much more honest and decent about it than my ex was!

Keep us posted what happens. I''m sure you''ll be back with other questions very soon.

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