Divorce or Not ?

Hi,
I have been separated from my husband for 7 years. He has never pushed for a divorce (although his actions caused the initial rift) but I feel it is time we sorted out the finances so we can plan for the future.
After my husband left, he was happy that the children (now 14 and 12) and I remained in the matrimonial home and he retained his investment. He currently rents but will at some point need money out to buy somewhere himself. This will probably mean us having to move depending on what is agreed.
He has a good job with the same company since leaving university at 21 and a final salary pension scheme which has recently been re-evaluated from 1/60 to 1/75 but is still continuing. He earns about £80k per year. The house is worth about £700k with a £140k mortgage. I work part-time at £11.50 per hour, 16 to 20 hours per week. I have two small COMP pensions from way back valued at about £15k in total but no other pension. The only other assets are about £10k in savings each.
The children live with me and he has them for one day and one night every other weekend and usually will come here one/two evenings midweek for a couple of hours to see them. We have no family locally so essentially I have had the responsibility of bringing up the kids but he has of course borne the responsibility of the cost for which I am grateful.
Although it was difficult at first, we have managed to keep things amicable. I have talked to him and he agrees it would be better to sort out figures ourselves rather than have solicitors involved too much.
The valuation of the house is relatively straight forward.
The pension is more complicated. I would like an actuarial valuation but he suggests that the CETV is adequate. I plugged the figures into the EPV calculation that BDM provide and the valuation was about £320k (CETV £230k) although I am aware the difference may be overstated. The pension would allow earmarking (don’t think I’m keen but may be wrong) or a lump of it to be transferred out to a pension I set up. The other alternative would be to offset my share of the pension against part of the house so that the pension remained intact as it is likely to be quite valuable. That of course would have to be balanced against my ex having enough ready cash to buy somewhere of his own if he needed it. I am also aware that solicitors give more value to cash now rather than cash later (ie a pension)so that would need allowing for.
My questions are, at this present time, should we still pursue a divorce or would it be financially better for us both to just wait for the children to reach 18 and then sort it out? Are there any benefits or risks to myself or the family pot as a whole in delaying further? I am anxious that we are not planning for the future. Are there any tax implications? Once we did agree on valuations, what percentage split would be realistic? Who would be best to give us advice and help us agree some fair figures?
Thanks for reading through all of this and for any ideas or suggestions that you may have!

Hi,

I will try to add in some thoughts on the questions raised:

- I think the decision to pursue a divorce is a personal one and it would be difficult for anyone to be certain it is financially better.

- If both your wills and pension death benefit nominations are to each other and have not been changed and you have mortgage protection then the risk of dying is removed. I cannot immediately see any other risks other than the risk of inaction in terms of your future planning.

- Because you have been separated for longer than the year of separation there could be some tax implications which need to be factored in but these could be potentially minimised.

- If yours is a long marriage then the normal starting point on division of assets is 50:50. Then you look for reasons why the split might be higher for one party. This could be sex (women live longer than men and need more pension asset to achieve the same income), age, ill health, etc.

- I would argue that you need assistance from a competent actuary for the calculation on how to divide the pension and a competent and trustworthy IFA to advise on the options including the transfer (if appropriate).

I would suggest that you spend some time deciding what you want and if you did decided to divorce what you would want to achieve from the financial settlement. It can be difficult to know your goals and objectives at this time but it is worth the effort of trying.

The next step would be to see what your options are within the marital assets and decide how best to achieve this including the pension options and the housing issues. As the settlement is a negotiation you will have to decide what to concede on and what not to.

Regards

Phil

Thank you so much Phil for your thoughts and time spent replying. Sorry it has taken me a while to answer. You have put my mind at ease that there's nothing major that I'm not doing at the moment anyway but I think that we probably need to sort it all out sooner rather than later so that we each know where we are up to. I think that I had come to the same conclusions about using an actuary and an IFA as you suggest but it is helpful to hear you say the same. I now just need to convince my ex that this is the fair way to proceed!

Ok,

Good luck and I hope you manage to persuade him.

If you need anything else, please post again or send me a PM.

Regards

Phil

In terms of achieving certainty it would be better to divorce now.
The normal way of dealing with pensions is to get an actuarial report as to how equality of retirement income could be achieved between you.
Picking a percentage yourself to offset your interest in his pension is risky business, and actuaries are used because it is very complex.
You should also get some advice as to whether capital gains tax would be due if your husband transfers his share in the property to you, although there may be a 'deemed occupation' exemption.
Hope this helps.