Divorce settlement and DD

[Newname50]

I’ve name changed as probably outing, I’m a long term user of Mumsnet.

Exh and I divorced 3 years ago. I offered to take a reduced settlement to avoid going to court. Ex and his solicitor insisted on the court route as they didn’t think the outcome would be a 50/50 split.

50/50 split was the outcome. House to be sold when DD is out of full time education at age 18.

So this time is fast approaching, she finishes college this summer.

DD is aware of the ruling, but not of all of the details.

It has clearly been playing in her mind. Her father has not sat her down and talked sensibly to her. He is pension age, has a decent civil service pension so income wise he is comfortable.
Nor has he started to look into what he can do accommodation wise. Realistically he would either buy a two bed terraced, or rent.

I have another 15-20 years to work, have a house with a mortgage. Ex resides in marital home, which is mortgage free.

DD has rung me tonight in hysterics. Saying it’s my fault that she will be homeless (!) as she will not live with me if her father cannot afford to buy a house big enough for the both of them. I am in no doubt that this will damage our relationship, which is absolute priority to me.

When I bought this house, I was self employed and my loan to value ratio was low. A family member offered to loan me a deposit which I accepted, with the plan that I will repay them when I have my settlement.

Last year, exh looked into equity release, and whilst this won’t be the full settlement, I am now considering accepting this in order to protect my relationship with DD.
I can use this plus a loan to repay family member the deposit.

I don’t know enough about equity release, what would happen when exh dies, would the house have to be sold then to repay the equity company?

Sorry this is long, any advice much appreciated.

Sounds like she's at the selfish teenager stage, so I would explain the situation to her as if she is you.

'Imagine you bought a house with a man, contributed this amount, paid this amount monthly towards the house. Then was so kind as to leave until your child turned 18, meanwhile you DD have to pay your own mortgage. Would you give it all up or would you want what you are entitled to?' If it still doesn't sit with her tell her to get a job to pay towards his living costs as it's not your job anymore. She'll come around as she gets older and understands the world more.

I agree with this-

Give her a factual account of the divorce arrangements as you have here and then step back. If there is an impact on your relationship it will be temporary.

Not sure if anyone else has mentioned this, but some mortgage companies will accept a civil service defined benefit pension as income. It's more guaranteed than an actual job! So he may be able to get a mortgage.

Op

follow the court order. This is a greedy manipulative approach that he is taking.

he is not your problem and nor should you take on his financial woes

you need to sit down with your daughter and give her a few home truths especially about pensions and how his was left alone and that he probably got a lump sum a few years ago.

Playing devil's advocate here, do you know how much he would be able to raise with equity release on the house? Your aim here is to get as close as possible to your £80k share minus selling fees. Whilst I wouldn't advise you to do equity release for yourself, the consequences of this would be on your exH, not you. Is there negotiation room regarding him handing over savings to top up what you need to be free of him? Not to cave in to his manipulation but to get out of this as cleanly as possible. Selling up won't be a bed of roses either. You could also appear reasonable to your daughter who is probably attached to the family home.

It's not uncommon for older people to not want to move house, that's what happened with my step father when my mother divorced him. Big age gap too He wanted to stay in the house, not a flat and ended up handing over the whole house to her in return for lifetime interest in the house, against the advice of both solicitors. She's effectively now his landlord and they have all sorts of issues with the arrangement. This is why clean break settlements are better.

I actually feel quite sorry for your DD who’s been poisoned and manipulated by your ex-DH.

I worked for a divorce lawyer with a similar case and age DC where the ex-DH was having to buy a smaller house and for I think study reasons his DC were living in the marital home. All got very murky and complex.

Do not touch equity release at all but continue to emotionally support your DD. Your exDH will be fine, he has financial options but he’s being very unfair dragging your DD into this and emotionally manipulating her.

If he could buy a 2 bed terrace then that's enough isn't it?

he is not your problem and nor should you take on his financial woes

I agree with that.

I wouldn't be taking out a loan to repay a loan if I was due the cash that would pay it off!

Also @Rookriver , suggestion. Many ways to divide a cake and all that.

I have a very limited knowledge of equity release but do personally know of someone who's family member took equity of c.50k which no one knew about until the relatives death. The amount owning was something like 750k (about 20-25 years later).

To those saying the DD is being a selfish teenager etc. Divorce is hard enough for younger DC but teenagers especially involved in divorces are hit emotionally very hard.

We don’t know if she’s studying etc. It also sounds like the exDH is doing a great job of then at time of the divorce and now, emotionally blackmailing and poisoning his DD against her DM.

Equity release is a terrible idea, it would basically mean your EXH is giving DDs inheritance to a finance company just so he can stay in the house.

That said, I guess as long as you definitely get your half, that is his selfish decision to make. I agree that if DD wants to be more invested, she could take out a mortgage for your half if she has an apprenticeship or similar. And later she would perhaps inherit the other half from her dad.

I did draw a diagram, as it’s a slow work day……

I am assuming you are tenants in common in this set up , not joint tenants so equity release, if possible, on his share not yours.

Sell, repay debt to family member, when she wants to buy give dd a leg up if you want to. Any other option is you buying a relationship with your child.

There are no guarantees, but as your ex is so much older, leaving your portion of the settlement tied up in the ex-marital home will possibly see it eaten up in equity release or future care costs. If your portion of the funds is in your home instead, DD is more likely to inherit long-term from one or the other of you, as the risk is split (unless both need care later of course). Or could you use the settlement from you rmarotal house sale to pay off your family loan now, but look at downsizing in a few years to release funds for a house deposit for DD. All gives you more flexibility and choice to support DD in the future.

Has your ex looked at housing for the over 50's? I often see less expensive 2 bedroom properties and flats on age-restricted developments. Fairly basic, not sheltered etc, but seem good value compared to the open market in some areas. Maybe shared ownership is an option for him as well?

Agree present to DD as this is the court decision and not her worry. I've seen teens in this position under a lot of pressure, with negative mental health and significant self-harm, all due to worry about reaching 18. It's a really negative aspect of these agreements. Keep being calm and firm that it is not her worry and she is to look forward to being 18 and all the freedom that it brings.

It's clear that he is manipulating your daughter.

Equity release might make life a bit easier for him, but you would lose out significantly, and so would your daughter. It would remove all her potential inheritance from him.

As a previous poster mentioned, teenagers are often selfish. Perhaps you could explain to her that although equity release might seem easier in the short term,
it is only in her father's benefit but definitely not hers.

He is already 70 and most parents his age are starting to consider what inheritance they can leave to their children. In contrast he wants to choose equity release which would leave her with nothing, instead of a life-changing lump sum.

Ask her how she feels about him being so cavalier about her future.

I think you just have to reiterate to her that dad went to court and this is what the judge decided is fair for everyone.
Dad is financially ok.
You have a loan you need to pay back with your share.
She will always have a home with you and/or her dad, but she is an adult now and will soon want to go to university, travel, move in with friends etc - she needs to look forward to her life and not worry about her parents who are both doing fine.

I'd also explain the equity release route to your daughter, and how it would leave her with nothing from her father on his death, which I am sure he wouldn't want. As if the interest builds up to more than the house is worth, I think they take out the shortfall from any other elements of the estate - which would be his pension I imagine. (I'm not 100% on this though, just what I have heard)

She needs to understand that he wanted a court order, a court order was obtained and now it will be carried out. My dad shafted my mum in a divorce "deal" like this. My mum consented because she wanted to be free and thought that ultimately he would leave his estate to us kids. However, having got the lion's share, he's leaving it to his new wife, who will then leave it to a charity. Depriving my mum's kids (four of us) of money that my mum wanted to leave us.

He needs to consider things like the following to live in the house forever with his daughter:

1. Can he get a mortgage (even based on his pension income) to buy out your half share?
2. Can he cash in his pension? I cashed all mine in aged 55 before they started paying out to help the older children with housing (HMRC took 45% of 25% o f it too - lucky Big State) and I will work until I die.
3. Can he get a job which could be used for a mortgage to buy out your half?
4. Then there is equity release which tends not to be a great option but is possible.

Ask her how she feels about him being so cavalier about her future.

No, don't. Do not pit her against her father. Just explain, factually, why this would be financially ruinous.

I completely disagree with all the people saying to stay away from equity release.

Because… it’s not your problem!!!

So what if it’s a bad deal? It’s his bad deal, not yours 🤷🏻‍♀️

The only thing I’d advise against is accepting less than your £80K if that’s the full release amount.

You are owed your £80K, the court decided that was fair, he’s had 3 years to decide how to manage it. If he raises the money in a way that’s a poor financial decision for him, that’s his lookout. People have a knee jerk against equity release, and I’m not a fan either, but he’s not always a bad decision. If you’re clear what the costs are, you can decide (he can decide) that it’s worth it. For some people, keeping the house is a valid pay off. A lot of the equity release horror stories are people who didn’t realise what they were doing. But none of that is your problem.

It might reduce inheritance for your daughter - but so might care home fees, you can’t worry about that 🤷🏻‍♀️

I would tell her: this is the court judgement, known about for 3 years, and you need to repay your loan so you don’t have a choice.

Don’t get into renting to him - he won’t pay, and you can’t evict him from your half of the house, all the while with your daughter in your ear about making him homeless…

Keep in my mind that he can’t just go to an equity release firm and do that easily - because you will have a charge on the house from the divorce. There’d have to be a sequence of steps (managed by a conveyancing solicitor) to remove your interest in the property.

I think to avoid court, it is worth accepting less. But I’m saying if you’re owed £80K you might take £70K. Not £40K!

Your relationship with your daughter: haterz gonna hate. Whatever way you do it, she’ll side with him for now. Be a broken record: this was agreed 3 years ago so you didn’t have to move until you were an adult. Go talk to your dad.

Firstly she needs to be made aware of what you offered and what the court ordered, it's not fair on you otherwise that she isn't being told the facts.

Is your DD going to Uni or going to work?
If she's going to Uni can you vary the agreement by 3 years so the house is still there for her till she is working.
Then can she buy her Dad's half (with you still owning your half) by raising her own mortgage? And her Dad paying you off with the amount raised by her mortgage. Obviously wills need to be in place etc
Would need to speak to a financial adviser to see if this is possible.

Yeah good advice here. Do not countenance equity release. Support your daughter but be clear that the court has made its decision plus half that house was always yours, plus he will have enough money to buy somewhere big enough for them both if he actually gets off his arse and starts doing something about it. Don’t be manipulated or drawn in to the hysterics.

It doesn't matter what he wants - a court made a ruling. End of.

Did you get half of his pension as well as half of the house? I hope so.

As regards equity release he will get a small amount and there will be no house at the end of it after all the interest is paid - no inheritance for your daughter. Explain that to her if you think she needs to be involved in it.

I’m going to go against the grain and say that if I was financial comfortable I wouldn’t want to see my ex struggle or lose a house he wanted to stay in if there was an alternative.
can you sit down and talk to him realistically about this?
if he can’t afford to buy a place with what’s left and he’s pension then it may be worth finding a compromise. I can see why your DD is upset.

How much can he afford to give you if the house isn’t sold? Do you need that money right away or can you put an agreement into place that he stays, you both own it and on his death his half goes to DD?

How much would Equity release give you - presuming his does it and you take that ££ with no other claim in the house?

I wouldn’t lose my DD for the sake of £80k that I didn’t really need - look at it from her POV, her DDad - elderly and retired- is about to lose his home.