How to split house/shares/pension
- would financial advisor help?
I'm in the process of divorcing my husband. We have 2 primary age DC. So far, I've been able to stay in the family home as his work provides accommodation for him at his place of work.
I've got a lawyer, spoken to our mortgage company, and done some rough calculations (hope to start negotiating a settlement soon) and I think I could push to stay in the family house. His maintenance plus what I earn would enable me to cover the mortgage and have a decent level of living.
H is against this, and wants to sell the family home, split equity, and him get a small flat and me downsize with the kids.
He wants (and even I agree he needs) to buy a small flat in order to see the DC on his contact weekends (currently he has to stay with relatives when he has them).
But I think he could do this without selling the family home - he has enough company shares (around 200k) to sell some of them and fund a deposit.
So I have 2 options:
1. Push to stay in family home (take 100% of the roughly 600k equity in it), but in order to do this I'd probably have to sacrifice any claim to his shares. I may also have to accept a smaller share of his company pension.
2. Sell up, take a good bit of the equity, and downsize.
In both scenarios, my monthly mortgage payment would be about the same. But in option 1, all my assets (bar what I negotiate from his pension pot) would likely be sunk into the house. In option 2, my assets would be more evenly spread (a less valuable house, but possibly a bit more in the pension pot and maybe some shares too).
I really CBA to move house, but wonder if this is the financially prudent thing to do.
Should I be spreading my 'investments' more evenly? Would it be unwise to push to stay in the house?
Also, has anyone used a financial advisor to address these types of questions?
Great to hear from others who've had experience of this.
Interesting points as in negotiating similar
Couple of points
- cost of moving and stamp duty are big
- think about capital growth of where you are vs where you move to
- if you downsize, will house be fine for next 10-15 years as little kids grow to be teenagers
I feel our house is big with two little ones. But want to keep it if i can to ensure space with two big teenage boys.
Why would you need an IFA when you have a solicitor?
Specialist matrimonial finance solicitors are very good at giving advice about financial security and what you would have to trade off in the different options.
I agree that an IFA would be the person to go to if you wanted advice about diversifying your portfolio. But you are facing issues about where you and the DC will live, not whether to shift your shares into a different equity fund.
Typically capital split starts at 50:50 so you would need to add house equity, shares, pensions and then determine what the split is.
Is he a high earner? If so you may be entitled to spousal maintenance and could ask for a larger capital split but the courts will ultimately know he has housing needs which are not dissimilar to yours.
If he has an ability to remortgage (due to high salary) and you do not then this is also taken into account.
Is the house deemed to be correctly sized? Ultimately the courts would look to ensure housing needs are adequate for both parties and it would seem 600k vs 200k isn't fair but of course iit deponds on his salary, pension and future earning potential.
Solicitors are your best route as they have experience of settlements, either negotiated or court decided.
Thanks everyone. Much to mull over.
sunnyandrainy - House feels very slightly large for us now (mainly when kids are with STBXH) but am very conscious they will need more space and privacy as they get older. Whenever family and friends come here they all say it's a perfect size and I should try to stay (although they would say that!). Back of envelope calculation is it will cost us 90k to sell up and buy 2 new places. Which is an awful lot of money. The other thing weighing on my mind is if we need to move for secondary school. Then I'll have to do a second move, potentially just 3/4 years after this one. That really would be a nightmare and waste of cash!
traviata - I haven't quite got to the asset schedule part of my divorce and I'm sure my solicitor will advise me on all this, but I guess I'm just looking for more information and perhaps a second opinion on whether to prioritise bigger house or bigger pension. I'm the sort of person who likes lots of information and weighing things up!
hermonie - He's a high earner who earns about 3 or 4 times what I do. His career is also on an upward trajectory - scope to increase salary by quite some way again. He has a pretty large pension pot so I could forsake some/most of that in lieu of the house, but equally I don't want to be left impoverished in old age!
I don't think anyone would argue our house is too big (it's 4 bedrooms but family all live overseas, so really need the spare bedroom), although we could move to a not-so-nice one or a doer-upper. But that means a) hassle and expense, b) moving to a less nice part of the neighbourhood, and c) long walk to school for kids.
I guess I'll see what my lawyer advises me as we near negotiations.
Thanks for the replies
I'm a divorce lawyer. I am not a financial adviser. Most of my clients need mortgage advice, as part of their divorce, and many need advice on insurances, pensions, investments, at the higher end, to maximise income and widen options.
I am neither qualified, nor appropriately regulated to give that advice. IFAs and their ilk are.
Sounds to me as if good financial advice would be a good idea, OP. Your solicitor may well have someone good they can suggest.
Would it be best for the kids for you to stay in the house? If so, I'd push for that, to be honest, ahead of the other considerations. There is an emotional and psychological cost to moving as well as the financial.
Thanks MrsBert. I agree that it can't hurt to see an IFA as well. I actually contacted one today and they said they'd be able to advise me on pensions and house share stuff, so I may proceed with getting that advice and combine it with whatever my lawyer tells me. Either way I'll need an IFA once the divorce goes through to sort out my pension etc, so I may as well get one lined up now.
Boring17 - Yes, it would be best for kids to stay in the house. They are very upset if I ever mention moving (although of course they'd adapt if we had to leave). And after all I've been through the past couple of years the last thing I need is a house move and a major renovation project. It would be very disruptive to our family, plus I work, have little family to help me etc. Staying put would be far easier.
Hello WayWithWords. I am in a similar situation but the DCs are older. I think you should definitely see an IFA. It sounds as if there are significant assets including the pension(s). Good luck. I am in the midst of trying to agree a financial settlement having had to issue court proceedings as my STBXH has refused to engage. It is proving to be an extremely stressful and expensive process for me, but you might feel better if you feel you have explored every angle and gathered your facts. It certainly helps me.
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