What is reasonable with this money from PILs in our marriage breakup?(134 Posts)
I apologise in advance: this is long, but I don't want to drip feed.
Before we bought our house, PILs gave husband £30k. I wanted him to put it in a pension for himself, but he wanted to use it towards the house. So we used it as our house deposit. We bought the house for £150k, with the £30k deposit and a £120k mortgage. We then built up a lot of loan/credit card debt and so we lent £30k against the mortgage to consolidate debts, giving us a £150k mortgage - the original house purchase/value. We subsequently couldn't afford the mortgage repayments, so switched to interest-only on the mortgage.
Ten years later, we had built up more debts and we still owed £150k on the mortgage. But I had taken sole control of managing our money and cleared all our debts by careful credit card snowballing. I switched our mortgage from the terrible interest rate we were paying and got us a much better rate on repayment so we could start paying back the £150k mortgage. I also did a ton of research into investing and sorted us both out with pensions, S&S ISAs and cash ISAs. I did all the legwork and research: husband did nothing apart from sign things I put in front of him.
Another seven years on, we have no debts, have a nice stash of savings and pensions and are paying down the mortgage: thanks to all my efforts.
A few years ago PILs gave husband another £60k. Again I suggested it go into his pension, but he wanted to use it on the house. We spent £20k on the house: updating decor, new windows and doors, and a new drive, fencing, plants, and so on. We used the rest to overpay the mortgage.
We are now splitting up. The house is worth £350k. We have £270k in equity in it. Husband wants to stay in the house and I want to move out. The pensions and savings are simple enough to deal with: we have equal amounts in each of our names anyway. That leaves us with the £270k house equity to split and the question of the money his parents gave him.
There is nothing tangible to show of the original £30k. We did use it as a house deposit 15 years ago, but we took the equivalent amount back out of the mortgage to consolidate debts. Those debts were from things like cars that we no longer own, holidays, a computer we no longer have.
I've proposed we take off at least £40k from the £270k equity and then split the remaining £230k. Thus giving husband back the £40k from his parents that we overpaid on the mortgage. As he's staying in the house, he gets to keep the benefit of the other £20k from his parents that we spent on it.
He has proposed we take off £90k from the £270k: the original £30k from his parents plus the later £60k - leaving us with a remaining £180k to split equally.
I have no idea what would be reasonable here. While I know I'm officially entitled to a straight 50:50 split of everything, I'm certainly not after his parents money: after all, my original suggestion for both money gifts were for them to go into a pension for him only (and if that had happened, I wouldn't take half his pension now we're splitting up). But that original £30k doesn't exist anymore as we have nothing tangible to show for it, and £20k of the second lot of money was spent on the house that he's keeping. I do appreciate, however, that the equity that we do have is likely greater because of the £20k we spent on it and also because we could 'afford' a bigger house with having a £30k deposit in the first place. On the other hand, the reason I mentioned above all the work I did to get us out of debt and research into investing is because we wouldn’t have this level of money to split if it wasn’t for the efforts I put into our finances.
What do you think would be reasonable?
I think splitting 50:50 is reasonable over this length of time.
Officially, (legally) yes you are entitled to a 50/50 split. Your PIL's gave it to your husband as a gift, and as you were / are married, then it belonged to both of you.
Morally, that's for you to decide what you think is fair.
I'd ignore the initial £30k - not because you have nothing to show for it, but because of the time that has passed.
The later £60k is trickier. Do you have / can you get an estimate of what the value of the house without the home improvements would have been? If so, I'd offer to take half of that value, less the £40k overpayment. If not, I'd suggest half the current equity less £50k (so splitting the difference on the hone improvement).
Do the PILs want the money back? i.e. would they accept it?
I think 50:50. I think you've been very kind to even be free the 40k. Tell him it's 40k or the courts can decide.
Were the debts you paid off joint between you and your husband or just his? If just his i would say your suggestion is reasonable as he has had the benefit of that original £30k.
I had a similar situation, however only £10k was in question. Me and me exP both had differing opinions of how it should be split. In the end i was advised that it's best to come to an agreement without involving a solicitor as the fees alone will usually end up wiping out any benefit to either party. So we ultimately agreed to meet in the middle.
I think I agree with your dh but then you could argue that the one who earns more is entitled to a bigger share of the house so you are going through the looking glass
Are you claiming half his pension etc?
50:50 split is perfectly reasonable, but your original suggestion of taking 40K out and splitting the rest of the equity is very generous.
Your soon to be ex is trying to take advantage of you.
Yes it's the moral bit I'm struggling with. That's why I wanted husband to have at least £40k more than me that we used as the mortgage overpayment.
In effect though, the other £30k and £20k doesn't exist anymore in order for him to take.
I don't understand why you are looking at the equity. If the house is worth £350k (just forgetting about pil money for a minute) if he wants to buy you out of the house, he should give you £175k.
If he wants his 90 back, should that not come out of the 350k value and then you get half of the difference, so £130?
He will continue to pay mortgage as he will own the house.
Did you sign anything for the PIL/Stbexh? Did it set out what the money was to be used for or what happened in the event you split? If not then everything should be a 50:50 split because you could have spent it all on holidays etc. in that situation there would be nothing to discuss. In essence tough on your stbexh for not getting his behind off the sofa to protect his money.
If there was an agreement then that's a different matter. My PIL gave us some money specifically towards a house deposit and we signed an agreement that if we ever split that amount comes out of the equity and goes to my hubby. I had no issue with this as in essence it's my DH inheritance so why should I have access if we split!
Okay ignore me! Yes the outstanding mortgage should be taken off.
Well you could argue the money is fungible and that £50k enabled you to pay off more of your mortgage
If you look over what you both brought into the marriage in terms of assets and debts as well as any debts run up it could be quite complicated.
You could just try and settle by telling him it's what you offered or solicitors. If he knows 50:50 is norm he won't want to go down that route
No, PILs don't want the money back.
And we don't need to claim each other's pensions or ISAs as we have equal amounts in each.
The debts were joint debts that we both built up together. All our money has always been pooled/joint. Sometimes I've earnt more than he has, more recently he earns more than I do, but we've always had joint finances.
I think it's 50/50, or you're opening in a can of worms eg who got into debt and why?
You put the 30k into the house and then later withdrew it and spent it - so that's gone. I presume he has had the benefit from that money being spent.
Of the later 60k you spent 20k on the house - so that's gone too.
So to my mind there is only 40k left to talk about. And only you can decide what's fair.
I do know that him wanting all the cash back at the end of the marriage is massively unfair.
So if he had put the £30k into his pension would you have claimed half of that (as his would be more than yours)?
You have 270k equity but what mortgage do you have?
Did you get on well with your ILs? If so, surely they were giving it to you as a couple?
I think you're being very reasonable personally by offering him 50:50 of the amount minus 40k
I'm sure many would push you to get 'full 50:50'; but your approach, you would hope, should so it much easier.
He's whistling in the wind if he thinks he should have all 90 deducted befor splitting. That really isn't reasonable.
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