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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.


advice please !

  • scoobydoo22
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07 Feb 08 #13116 by scoobydoo22
Topic started by scoobydoo22
My wife has said she wants a divorce. We have a house worth abourt 700000, with a mortgage of 95000. We have children of 8,7 & 3. I have am joint owners of a number of buy to let properties, which have a fair bit of equity in them.

My question is what is she entitled to, she will probably be inheriting a house within the next few years which is worth about 280000

Can the equity in the buy to lets be taken into account as as I only own half of each property? is it not difficult fo value them ? as my business partner would not sell any of them as this would mean capital gains tax being paid?

Many thanks

  • mike62
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07 Feb 08 #13123 by mike62
Reply from mike62
Scoobydoo,

Not good news for you I'm afraid. The buy-to-lets are an asset of the marriage, and therefore form part of the marital asset pot for division.

Yodont mention length of marriage. Assuming it is 8 yrs +, it is a fairly long marriage so would probably start at 50:50 split of assets.

You don't mention either yours or your wife's incomes

Do either of you have any pensions?
Are there any other sig assets over £500?
Do you have any debt (singly or jointly)

Add up all the assets. Deduct all joint liabilities.

That's your pot.

Making lots of assumptions, but trying to give you a pointer. Assume children stay with your wife, she has no income.

You would be looking at a slew in the asset split in her favour. It might be anything from 50:50 to 90:10, depending on the factors above. 75:25 is a good mid point.

If your wife has a significantly lower income than you, she may claim spousal maintenance. This can be negotiable against equity and assets.

You also have child maintenance obligations - 3 children = 25% of your nett income. This is statutory.

THe value of the buy to let investment may be offset against equity in the house, so she ends up with a greater share of the house value.

The buy to let would need to be valued by a mutually agreed surveyor, or by three different sources.


It's going to hurt, Scooby. Sorry!

Mike

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07 Feb 08 #13146 by Fiona
Reply from Fiona
Good post from Mike but I wouldn't be quite so pessimistic about the split. When the marriage is long and there are sufficient assets to meet both part's need the emphasis moves more towards sharing the assets equally 50:50. However, if there is a discrepancy in incomes SM might be a factor and one option is to capitalise SM and pay a lump sum to end any future claims and obtain a 'Clean Break.'

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07 Feb 08 #13180 by scoobydoo22
Reply from scoobydoo22
my income is about 35000 and she does not work. Surely i need somewhere to live and house my 3 children when I have them ? Do they take into account that she is likely to inherit a house worth about 280 within a few years as her father is not well and she is the sole heir ?
Many Thanks

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07 Feb 08 #13183 by mike62
Reply from mike62
Scooby,
Only the tangible assets at the time of making the Consent Order are taken into account. What might or could come her way is not considered.

Of course you your needs are taken into account in the process. But as she has no income and will probably be the Parent With Care (PWC) of the children, their housing needs are paramount. Perhaps she does not need to live in a £700,000 house, so the house may be sold to fund adequate housing for both of you. It is hard to give a reasonable analysis and suggestion without the facts.

For example, if your share of the value of the buy to lets were three times the value of the family marital home (FMH), then it is highly unlikely that the sale of the FMH would be considered.

You need to provide a lot of financial information to enable someone to make a suggestion as to what the possible options are.

Unfortunately Divorce is not a simple x+y=z equation, and if it becomes contentious and goes to court, the outcome could be completely different depending on the judge on the day.

Sorry Scooby,

Mike

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08 Feb 08 #13255 by scoobydoo22
Reply from scoobydoo22
Thanks Mike

My share of the equity when ignoring the mortgages is about 145, so hat would you think that would mean for me ? A 3 bedroom house can be bought in the area for in the region of 340 to 400 !
Thanks again !

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08 Feb 08 #13261 by mike62
Reply from mike62
OK

Family Home = 700,000 + BTL Property 145,000 = 845,000

Mortgage = 95,000

Nett asset pot (need to add cars, home contents etc) = 750,000

Split 50:50 = 375,000

You have 35k income, she has none. You can get a mortgage, she can't

If she were to apply for Spousal Maintenenance, she would probably get 33% of nett joint income, less 25% child maintenance

So 25% of 35K = 8750
SM - 8% of 35K = 2800

How long for Spousal Maintenace? How long is a piece of string? Depends on her skills, her ability to look after children, her health etc etc. So a couple of examples

If SM were awarded for 5 years = 14,000
IF SM were awarded for 15 years = 44,800 (until eldest child 19) - assume FT education

offset SM against equity

Split 389,000 : 361,000 for 5 year SM

Split 419,800 : 330,200 for 16 year SM

You need to nett of BTL properties from your share.

So looking at above, she could own a 3 bed house locally outright, and you have to to get a mortgage to allow you to purchase something similar.

Just an illustration of one or two possible scenarios. You need to fill in the blanks and take a view.

Have a go with the Wikivorce calculator and see what that suggests:

www.wikivorce.com/divorce/Divorce-Calculator-Start.html


As I said previously, the rules are 'There are no rules'. Every case is different.

Try the calculator and if you need some more help, just ask

Best of luck

Mike

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