How best to separate into two homes?

Hi, and well done Wikivorce team on building up such a useful internet resource.

I live in England, am in my forties and have two teenage kids. I find myself on the slippery path to divorce by mutual agreement (more-or-less). My wife wants a trial separation but I suspect that this will lead to divorce as we have both 'tried to change' in the past and the love has gone from our relationship.

The reason for my post is to ask for property/mortgage advice from anyone knowledgeable enough to help, as to how best to handle the process of separating into two houses, on the assumption that the separation will probably end in divorce in two years' time. My wife and I both earn a reasonable wage and we both have more-or-less the same savings, pensions and other assets etc. The house we live in is fully paid off and will therefore need to be split down the middle assuming that we manage to pull off a mutually agreed 50/50 financial settlement. (Yes, I know that most divorces end up with acrimonious solicitors' battles, but I can be optimistic can't I!) My wife wants to stay in the house we have, so I am looking for another house nearby, big enough that the kids can stay with me either permanently or as and when they please.

So, should we remortgage the family home (which is in both our names and the original mortgage account is still open so a remortgage would be very simple I am told) and buy a second home with the proceeds in both our names? If so (as I understand it), at the time of divorce, I will need to transfer ownership of the second home to my name (only) and take out a new mortgage to pay off part of the remortgage. We would also need to transfer ownership of the original house to my wife, along with arranging a new (cheaper) mortgage in her name. There may be a CGT issue with this but I'm not sure.

Or, should we transfer ownership of the current house to my wife now, so that she can take out a new mortgage in her name (only) for half the value to buy me out, so that I can buy a second home in my name with an additional mortgage in my name only?

I'm doing my best to understand all the many issues of divorce, whilst keeping myself in check emotionally. It's not easy, but I'm managing so far. But now I'm starting to get confused and would appreciate some help. How have others in my situation handled this? Does the law recognise this situation and how to deal with it for the best of both parties? What are the risks with each strategy and which will cost more in the long-run?

Any help gratefully received

It's probably more sensible if your wife buys you out as that will be more straightforward. You need to get an agreement between you sorted out that will hold up in court - which basically means that you each have to have had legal advice. Collaborative family law is a good way to do this.

In my experience, teenagers prefer to be based in one house and don't much go for staying at the other parent's place, no matter how close they are - and they tend to want to stay put in the house they are used to. So you may well have to accept that the children will want to stay in your current home with their mother, which may give her an entitlement to a larger share of it and will mean that you will need to pay child maintenance.

Sadie

Thanks for responding Sadie Following your advice I have googled 'collaborative family law' and have read a very long (and often heated) thread about it on this forum. My experiences of solicitors are nearly all bad, to the point where I am currently representing myself in a Fast Track claim and am laughing my head off at the way the defendant's solicitor is so obviously trying - at every opportunity - to escalate the case and create meaningless correspondence. I can see so clearly now, from the inside, that such cases are a licence to print money for unscrupulous solicitors! That said, I also know one or two very honourable people who are solicitors, but they are the exception not the rule.

My daughter is aiming to go into law for a career - oh the shame!

Anyway, as long as my wife and I are on speaking terms, I want to avoid solicitors at all costs BUT it would seem that as you say, if we want our agreement to have the best chance of being final, we both have to have legal advice and we have to have our agreement ratified by the court. So it seems to me that the best course of action is to discuss the financial settlement between ourselves, to put it in writing and then to enter into a 'collaborative family law' scenario hoping that it is just a matter of both solicitors agreeing that we have come to a fair agreement. If successful, this might prove to be very cost effective. However, if we disagree then we're on the road to ruin whereby the cost of the collaborative approach will end up as insignificant in the ensuing battle.

So I take it then that if we go through this process and end up with a ratified financial agreement (Consent Order?), I should be as safe as I can be to sign the property over to my wife on (simultaneous) receipt of half (subject to the agreement) it's value in cash to use as a down-payment on a second property in my name?

Is it the case then that our finances can be totally sorted out at the point of separation, and that if we individually loose or gain assets or liabilities between the separation and divorce, that those assets or liabilities are not then shared?

On the issue of the children, I have it in mind that my wife and I agree a daily cost for feeding and housing each child, which we then settle up each month according to how many days each child spends with each parent. We would then keep a record of any essential expenses for each child (e.g. school uniform, casual clothes, sports equipment, club fees etc.) and square these up each month too. If we trust each other enough to agree to this in the Consent Order, does anyone with experience of such matters think that the 'system' will allow us to do this, and does it seem like a good enough idea in theory to try and put into practice?

Hello Dognut

I think you are way ahead things the divorce has not yet started and you intend to use a two year seperation as the factor.

Its unwise to to make plans for an outcome that may well be three years down the line consent orders come at the end of the divorce so that issue is along way from today.

You are keen to aviod sols but you should take advice in this case and i would not reccomend self repping without a sound knowledge of the procces by all means fill in forms and do the leg work as it were and that will save money but as you are planning a two year seperation you must be carefull that what you do now will not adversely effect proceedings later please do not sighn over property or indeed sighn anything without legal advice.

Also can you post the ages of your children they are very important, the courts first duty is to them both wellbieng and wellfare.

I look forward to your answers

dukey

If you are going for two years' separation you could get solicitors to draw up a separation order to sort out the finances at the point of separation. I believe these are usually just ratified on divorce if drawn up with legal advice.

I think your idea about working out costs and then splitting them is probably fine for the moment but you will need something more robust in the longer term. As time goes on you may start to disagree about how much should be spent on what for the children, particularly if either of you has a new partner and other commitments.

Sadie

Thanks both of you for responding, even if you don't agree about my options. My kids are aged 12 and 14 and we have been married for 16 years. I have no intention of self-repping a divorce.

As I understand it from reading many posts on this forum, my options are:

(1) Buy a second house now with a remortgage of the first house in joint names, then divide up the financial 'pot' if we formally divorce after two years' separation [ notes/issues: quick and easy in first instance; jointly responsible for mortgage; first house and mortgage to be transferred later; CGT liability on second house (?); continued sharing of assets and liabilities for two years ]: or

(2) Draft a financial agreement now with independent legal advice (be it via Collaborative Law or the traditional format) and formally ratify it via Court, then transfer the first house to wife so that she can remortgage it in her name to buy me out, so that I can buy a second house with a new mortgage. If I understand it correctly, provided neither party goes back on the financial agreement, it should then serve as a Consent Order at the formal divorce [ notes/issues: financial independence from time of separation onwards; minimal house/mortgage transfers; no CGT (?); possible waste of time if either party goes back on agreement ].

As you understand things (that's an open question to anyone reading this), does this correctly summarise my options, please?

Hello, this is my second attempt after losing my post. I guess it logged out without me knowing such was my concentration over the matter at hand. Maybe it was for the best, maybe I don’t need to be as specific as I was. I just wanted to say to you, Dognut, (great name by the way) that it’s great to be optimistic and you certainly can be, but beware if you will…

“All’s fair in Love and War”
.
I write out of personal experience where my ex and I during Separation purchased a house (40% of the value of the FMH which he stayed in) out of joint funds during our separation. Both houses—my little converted bungalow and our 4 floor, 5 bedroom house were mortgage free. I was advised by my solicitor that me staying in a rental was eating up resources. My ex-husband didn’t want a mortgage and therefore I had to find a house that was less than our joint bank account. I was told that he would allow me to have the difference between the house price and what was left in the joint bank account so I could furnish the house. Unfortunately, his mind changed somewhere along the way as did the maintenance I was receiving up to that point.

Unfortunately, in my situation I wouldn’t know that he had another almost 60,000 pounds in his personal bank accounts for another 9 months after financial disclosure on the day of the First Hearing! My husband seized the opportunity to claim Ancillary Relief while I was ‘between’ solicitors and waited for the LSC to amend the Certificate of Public Funding. Then my legal aided solicitor prevaricated in neither meeting the deadlines or doing the preparation necessary by Court appointed deadlines. It was my ex-husband, earning an excellent income versus me unemployed and looking after the children who initiated the Ancillary Relief Hearing. [Read another cautious tale ahead: preparation is key.]

The morale I think is this: ‘Trust is great, checking is better”. The financial disclosure process of the form E from both parties is needed so that resources can be ideally split equitably in matrimonial cases. For example, when I completed the Form E, it was a foregone conclusion that I already had a place to live, and thus my needs had already been pre-determined BEFORE true financial disclosure from my miserly ex-husband.

Buying a house for me even if that house I now had was a very much smaller house –albeit in my sole name -- was considered 'suitable' regardless if it was worth approximately 40% of our FMH . I didn’t know that by buying a house during separation, that it would prejudice the future decision of the Court, or that a spin would be put on by husband’s surprise Barrister that it was ‘suitable’ for a mother and two kids, where it clearly was not. But I had a solicitor who couldn’t or wouldn’t defend me against the mistruths of the other side, and because she neglected so in not doing essential preparation on the day of the First Hearing; I was defenseless.

Because of my ignorance of not knowing that I did not have to make a decision on the day of the Ancillary Relief Hearing, and having an incompetent solicitor; I was under extreme duress to sign over or transfer the large and spacious FMH to my ex-husband. Buying a house, whether it was in my sole name or not did not matter, as we had bought it out of joint funds and being a legally aided client meant that this was considered ‘preserved’ for me, and I would have to pay the commission 25% out of my ‘Clean Break’ lump sum settlement from my ex-husband. The settlement left me a stay-at-home-mom without any spousal maintenance, retirement provisions, or sufficient child support.

If I had to do it all over again, turning the clock back 7 years now, I would have stayed in the 4 bedroom rental I had in the first six months of the separation. It was paid out of joint bank account. I would have waited until after financial disclosure (Form E) was filed and discussed, before I would even begin to consider how we would separate into two houses.

Hindsight is 20/20…

Certainly, I would not even begin considering signing over my substantial interest in our mortgage-free house until after MY Residency Order for the Children was considered fully. I lost out not only financially, but in losing the house that the kids would still call home. Although I live in the same village, the children who are young adults now take their friends over to the FMH, spend all their free time there with all the computers and luxuries that I can’t provide.

If after the true colours of a former partner come out in all their glory, I perhaps would have had the strength to demand that it was he that move out of the FMH and that I stay in the beautiful large house where the children most wanted to be. My point is, attitudes change as they must as a couple are splitting…Seven years later if I am honest I truly wish that I would have had the strength not to concede to my ill-advised solicitor to hurriedly buy a house, or to be forced to sign over my interest in the FMH without proper recompense. Neither, would I allow my ex-husband through his emotional blackmail to force me into accepting far less than what the children and I needed.

I sincerely wish you luck and clarity that perhaps you and your wife can come to an amicable settlement for the benefit of the children.