What is reasonable with this money from PILs in our marriage breakup?

[SadieAmberson1960]

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?

Alwayschanging.

I think you nailed it.

I also think OP is being more than fair with her interpretation of how to split the finances. She could easily justify a 50 / 50 split and probably zero your partner could do about it other than loose a lot of money fighting you with solicitors.

Stand your ground OP or this may be the beginning of some very entitled behaviour from your ex. I speak from experiance.

A best wishes for your future.

I would split everything 50:50 and your suggestion that he gets 40k more is more than generous. The majority of the money from his parents were frittered away long long ago. That money is spent. He does not get to "unspend" it by subtracting it from the equity in the house which is from another source entirely.

One thing that worries me from your OP is the couple of times you mentioned that you suggested that funds should go into his pension as if this would have kept the money as "his". His pension (and yours if you have one) should also be valued and accounted for in the "splitting everything 50:50" - a decent pension can be worth way more than a house. 50:50 is the right way to go as you have both worked hard for the partnership you formed and all assets should be considered as having been accrued by both of you corporately rather than by one or the other.

No, we definitely wouldn't have made the same financial decisions without that money. We probably would have bought a cheaper house in the first place. And with a less valuable house we wouldn't have been able to lend as much against the mortgage and so wouldn't have got in as much mortgage debt. We would have had more disposable income with smaller mortgage payments, so I could have used that income to clear the debts, and could have paid the mortgage down earlier too - putting more money into savings/retirement. On the other hand, of course that smaller property wouldn't be worth as much as this one is now. It's swings and roundabouts.

We also wouldn't have spent £20k of our own money on home improvements - the improvements were a "nice to have", not essential. And with the remaining £40k that we overpaid the mortgage with, that's what I'm offering him back.

Something else he said in this conversation was that he could pursue the interest/growth he would have earnt on the £90k had he put it in savings rather than using it for things I benefited from instead. He seemed genuinely taken aback that I should get half his parents' money and couldn't see the point that that money doesn't exist anymore for him to take back.

With regards to my original suggestions that the money gifts go into a pension for him. I was always very keen that I am never reliant or answerable to anyone else financially. I have my own career and I always contributed 50/50 to the household expenses - and I wanted the same for buying a house: I wanted us to do it on our own without any financial help from anyone else. It was him who insisted on using it for a deposit and on buying a bigger house. If we ever split up in the future, it would have been my intention that we keep our own pensions, regardless of him having £90k plus growth more in his than me.

PS yes, I do feel very guilty. And I also suffer from being a people pleaser, which has led to quite an unhealthy balance in our relationship.

Something else he said in this conversation was that he could pursue the interest/growth he would have earnt on the £90k had he put it in savings rather than using it for things I benefited from instead

I have a strong suspicion that if he hadn't had you to manage his finances, he would have been bankrupt before now - he seems to have had no financial acumen whatsoever.

As it is, he has a very comfortable home, a secure pension and a decent job - and only himself to worry about.

He should be grateful. Let's hope he can hang onto it without your help.

And Sadie

Don't feel guilty.

You have nothing to feel guilty about.

Sometimes relationships - even wonderful ones - run their course. It's sad, but it happens - and you are far too young, and have (hopefully) too many years in front of you, to waste them in an "OK" relationship. (And actually that goes for your husband, too - in 5 years time he may have re-married and be happier than either of you have a chance of being just pottering along together.

Of course, he's feeling rejected and angry and can't see that now.

Assuming PIL are not expecting the money back at any stage then your suggestion sounds more than fair

As you say the first £30K was swallowed up by debts and £20K of the second gift was spend at the time so the remaining £40K which you used to pay off the mortgage is the only part of the gift who which has resulted in equity in the house

His proposal sounds very unreasonable

If he only went self employed this year he may not be able to get a mortgage to buy you out. Has he even got an agreement in principle?

If he finds a way to buy you out he is likely to return to spendthrift ways and blow the money anyway.

His attitude would annoy me, think on it, don't let guilt make the decision. He certainly isn't feeling guilty about suggesting you don't get your legal entitlement.