Hi all. I have so many questions...hopefully you don't get bored before the end!
Basically my wife and I are divorcing, amicably, and we have 2 kids who are the biggest focus and highest priority in our lives. Providing a future for them and some sort of happy consistent life is of paramount importance to BOTH of us. We are currently separated, and I am living with my Dad, and my wife and kids are still in the "marital home". To avoid lawyers etc we decided it was best to just agree everything ourselves and sell the house etc, split assets and so on BEFORE getting officially divorced, that way we only need to involve a lawyer latterly to "rubber stamp" it and deal with the paperwork etc. That has all been fine, and we've agreed on what we thought was a good plan.
The problem we have (or potentially have) relates to "the deliberate Deprivation of capital/savings/assets" for the purposes of retaining eligibility for Universal Credit...
My wife only works part-time as a freelancer, and does not earn very much money. So (if you ignored any savings/capital) based purely on INCOME, she is entitled to full UC. She is currently getting this as her half of our JOINT savings is approx £4000 (which is below the £6000 threshold before you start to face a reduction in UC).
However, we will shortly have sold the house, which, when it goes through, I have calculated that when the house is sold, after fees, will give a lump sum of approximately £55,000. I know that traditionally (and I would imagine the DEFAULT position in law) this amount would be split evenly, giving us both £27,500, and as a result my wife would no longer be entitled to UC. Again, fair enough, that's the rules. However...our own circumstances are not quite so simple, which really brings me to the main reason I am seeking advice...
As I mentioned aboe, for us, above all else, the wellbeing and future of our kids is most important to us. To minimise the impact of our divorce on them, and to ensure some sort of "consistency" in their lives, we want to ensure that they not only stay at the school they've come to know and love, but that they remain in the same neighbourhood, have the same friends etc.
But in order to ensure that, it means both my wife and I will need to find a property in the local area after we separate. So that was the plan, however there are 2 main issues with this:
1) My wife would be reliant on benefits to be able to afford to live there, as, as well as UC she would be entitled to money towards a private rental. This, in addition to her small salary would mean she could afford to live in the area as planned.
2) In order for me to be able to afford to live there, I would need to pay off a considerable amount of debt in order to free up enough monthly income. My debts are such that I simply wouldn't have enough left each month to survive after paying rent etc as well as my debts.
In addition to the above, we both firmly believe that a HUGE priority in life should be to own a property. Renting just feels like throwing money away. That's just always been a personal view. Also by puying a property instead of renting, this means we would have some sort of inheritance for our children in the future! Given my wife's low income, it makes sense that the only feasible option to achieve this goal of purchasing a property would be for ME to do it instead of renting. But in order to afford to buy somewhere I would need to pay off my debt and also get a deposit together.
So, to achieve this, the plan was for me to use the money from the house sale to pay off my debt. Simple as that.
The reason I am providing this longwinded explanaton is that I want to emphasise that our plan is NOT, nor was it ever, to deliberately reduce my wife's savings to ensure she gets benefits, but it is to legitimately use our own money to try and A) get me out of debt, and provide a future and inheritance for our children through the only means we have available to us. This was always the priority in our lives, even before we decided to divorce, and certainly before my wife planned to apply for benefits! To me and my wife at least, this is a perfectly justifable use of the money from our house sale. The question is, do you think this rationale would be acceptible in the eyes of DWP with respect to "deprivation of savings/capital", or do you think there's a risk that they would deny my wife benefits on the grounds that they feel she deliberately "gifted" me money to ensure that she was still entitled to UC.
In all the documentation I have seen with respect to cases that have gone to court, the key phrase seems to be "significant operative purpose" - i.e. it needs to needs to be shown that the main reason you did what you did was to be eligible for benefits. To me that is exceptionally difficult to prove. Again, to me, the reasons above give an explanation as to why we used the money.
The fact is I have a lot of debt, and not only my life, but my wife's and my childrens' futures would be substantially brighter if I was to get rid of that debt. Both my wife and I shared this view, even though it was MY debt. So despite our differences we decided the best use of the money would be to pay off my debt.
So my question to you all is - what do you think? do you think someone looking at this would be likely to view it from our perspective, or take a more cynical view???
I forgot to say also that in addition to the rationale stated in my original message, it was actually me who'd been paying the mortgage for the last 3.5 years, and it was also my Dad who gave us the money for a deposit, which we'd agreed to give him back. All of this (again, to us at least) is justification for ME getting the bulk of the proceeds from the house sale. Again though, the question remains as to whether or not the DWP are likely to take a different view!
My first question would be why are you selling the family home?
If you have children, the priority is providing a secure and stable home for them. It is possible for you to retain an interest in the property so you get your share when it is eventually sold (or you are bought out).
A lot depends on the specific financial circumstances. We would need a lot more information to be able to advise effectively.
Incomes inc benefits
Length of marriage plus cohabitation
Children, ages, genders and proposed arrangements
Market value of Former matrimonial home (FMH)
Size of FMH
Pensions CEV and type
Value of other assets in sole or joint names
Loans/debts in sole or joint names and how accrued.