How do post divorce finances actually work?

[fooleder]

I know that's a huge, huge question.

But on here, women ( even married women ), are always told to work work work, otherwise they end up screwed.

Even if they're at home with young kids or working part time or not at all.

What do you actually leave yourself vulnerable to if you don't work ?

Say husband owns the house ( say it was purchased after marriage, but with husband's funds ) doesn't it also belong to the wife ? So in the case of divorce and a sale, she'd get 50 percent? If a house sale was required in order for them to both live in a similar way as they did in the marriage. I thought the idea is that everyone should live in a similar way as during the marriage- so if there's a 800 k house, then that's sold, so each party can buy themselves a flat or whatever.

Kids then split time between parents and depending on incomes etc, child maintenance will be payable etc.

I know I have very little idea of what I'm talking about. I'm just kind of plucking at my very broad understanding. But surely women / men cannot be left with nothing, if they're the ' home maker '.

The contribution is recognised surely ? Often men can't work if the women doesn't stay at home etc. sometimes men are ' home makers ' now too.

I'm not asking for myself , just interested broadly as someone close to me is considering it.

But men can work without a SAHM. Childcare exists. So the Ex SAHP is expected to work post divorce as how else can they pay their own bills now? It's all well and good getting the initial lump sum pay out but short of those 1% that's not going to last forever.

So now they have to enter the work force with very little appeal to them in a world where a waitress and bartender have a masters because the job market is so burtel.

Well yes they’d get some of the property.
but as pp said, if for example kids are 50/50 then there’ll be no maintenance paid. How are they going to live? They now need to get a job. And if they’ve spent 10 years out of the workforce as a SAHM they’re not going to get a great job are they. Far better to ideally keep your hand in with a career so you can stand on your own two feet if needed.

If one person gives up work & later divorce then the working spouse’s income is likely to be a lot higher than the non-working spouse can hope to achieve after years out of the workplace. Even with child maintenance, running two households from one income is really difficult.

If both work, then in the event of a split they are likely to have a better quality of life as both will have had the potential to maximise their earnings.

Even then, though, life will (in the experience of people I know) be a lot harder financially post-split. The equity in the marital home won’t be enough to buy two equivalent houses, so everyone is likely to feel the downgrade.

It is much worse to give up work if you aren’t married, marriage does offer more protection.

That's a good point but doesn't the court take that into account when deciding maintenance?

Say the husband makes quite a bit of money and the woman has X earning potential- especially while she builds her career back up. Surely the maintenance should take that into account ? Or does it not ?

It does not, it doesn’t give a shit. Women could be unemployed and unable to get a mortgage with her large deposit, also can’t get benefits due to deposit. Man earns 100k but if he has the kids 50/50 he pays zero maintenance. I think you can apply for spousal maintenance but I think it’s pretty rare to get it. The women would have to spend her house money living and probably paying rent to survive until she got a job.

Courts rarely deal with maintaince. And even if they do it lasts 1 year.
The they can go through CMS which solely relies on the paying parent co operating. If they don't then there's no money.

Child maintenance is a straight percentage of the non resident parent’s income with deductions for the nights that they have the kids. There are loopholes like self employment which means that CM can be avoided.

Spousal maintenance is only payable if the non resident parent is a high earner and it’s temporary eg a couple of years so resident parent can retrain

Let's take your example of the 800k house. If that's fully paid off, then yes, 400k will buy a flat for each of the divorcees... depending on your area etc.

But in most cases, houses are mortgaged. So if it's an 800k house with only 200k equity, then the 100k that each divorcee makes from the sale of the house isn't enough to buy a flat. The husband, who has a job, can use his 100k as a down payment on a flat and get a mortgage for the rest. The wife, however, doesn't qualify for a mortgage as she doesn't have an income. She also doesn't qualify for benefits because she has 100k in savings. So she's pretty much screwed.

I hope I explained that well...

Spousal maintenance is not generally granted any more other than in some very specific circumstances- for example if the spouse is very close to retirement age, or has a disability. And even then it's likely to be very short term and only granted if the paying spouse has a very high income.

Child maintenance is calculated on a percentage basis and is quite low. 10-20% of gross income after pension contributions. The court can order more, but this can be challenged after a year.

How is a SAHP without a job going to get a mortgage to buy a flat? You seem to be assuming all married couples have mortgage free homes, or enough equity to buy two separate properties.

In reality, this is rarely the case. I sold 3 bed family home for £400k and had £200k equity, so £100k each. A two bed flat here costs £280k. So working parent has a chance to get a mortgage for two bed flat if they earn enough. Non working or part time working parent is stuffed.

Child maintenance isn’t usually taken into account as income as it’s variable as dependent on where child lives, new children arriving, NRP income, and in any event will often end before the mortgage term finishes.

Your option would be to rent, so your £100k goes down fast, £1500 a month here for two bed flat. £18,000 a year on rent alone, never mind anything else, and you won’t get benefits until the savings are nearly gone.

I hope this, admittedly simple example explains better.

I think you're looking at it idealisticly.

Say, more realistically, my husband and I have a 4 bed home worth 400k and 2 kids. 60% is mortgaged.

So we list it for sale for £400k.
60% goes to the bank, leaving £160k.
We then have to deduct fees for selling and divorce fees, so best case £140k left in the pot, divided 50/50.

The wife gets £70k and both parties need to buy a 3 bed house for £320k. Wife has 70k to put toward it but also needs to replace 50% of furniture and pay purchase fees. So really only has 60k.

Who will give an unemployed woman with 2 dependents a mortgage for £260k and what job will she pick up to afford that?

Man is already in employment and hasn't sacrificed career progression so more likely to earn enough. He will probably not seek 50% custody as he cant work his hours around it and wont change job so he will probably be happier with a 2 bed and get kids to share.

Meanwhile kids are full time with mum who is expected to carry on working around her ex husbands job and pay childcare fees due to primary residency. If she works weekends, it's unlikely to be a high paying corporate job. She is probably going to get stuck in the rental market and her settlement from the divorce means she will be ineligible for much welfare support.

Never forget that the man you marry is not the man you divorce and some men hide money so it's better to have your own back.

Sounds shit !

What about if the husband is actually quite cash rich. House owned outright - as well as other assets.

How about if husband sells some of his shares in a company and makes a tonne of money from that- the wife would be entitled to that?

Sorry I know how dumb I sound.

But thanks for explaining so far.

Your post is full of ideals an assumptions

I think people often forget that there a period between separation and divorce. If you are a sahm, hopefully your husband doesn’t leave you without much money. But it does happen. If they move out and pay the mortgage and even CMS is often not enough, even with benefits. Which also take a while to kick in.

if you are a sahm you may get a larger portion of assets. But you actually have to get divorced for that. Which can take years.

Splitting the assets doesn’t mean the sahp is fine forever. They will need to work. Having a big gap in your CV really damages earning potential. So many Sahms find themselves with their ex moved out, not much income trying to find a job that will pay enough. And cover childcare.

Having and maintaining your career makes that period and post divorce finances better. Being in that position meant that the divorce and separation was much easier on me and the kids. Or more easy than it would have been if we had been on the breadline.

it’s rare that people have assets where the sahm will never have to work again after a settlement. Spousal maintenance is extremely rare. Only in the case of high earners.

So post divorce the sahp will need be able to support themselves and their kids. Even if it’s 50:50 you need bedrooms, clothes at each house and so on.

if it’s 50:50 CMS isn’t usually payable

If you are talking about people divorcing and they are jointly millionaires or billionaires it’s different. But most people are not.

Men who are rich are not going going to hand over 50%. They didnt get rich through philanthropy.

How much access does the wife have to finances? Does his full salary go into the joint account? If not then he already has means to plan to hide money.

They will find a way to keep as much money s they can and then play disney dad.

What do you actually leave yourself vulnerable to if you don't work ?

Low or no State pension if the stamps aren't fully paid. No private pensions.

Your salary, post divorce, will be national minimum wage. His might be too but generally it isn't. Potentially less hours as usually mothers are unable to do variable shift patterns.

This results in less available funds for food quality or quantity, less holidays (or none), maybe unable to afford or run a car. Unable to afford medications. Unable to put the heating on, unable to buy or replace a washer or boiler immediately. It's not just one thing but an accumulation to making a person vulnerable.

It’s different if there are assets. It’s likely she will get a good share - not always 50%, but enough to house her. I’ve seen payouts way over £1m after housing and so no issues, but you need a lot of money to not need to work.

When? When you are married?

Technically all money is shared but no one makes married people actually share money.

But all assets are shared (unless there’s been some legal work before hand to protect assets) in divorce.

The shares, the property is all part of the communal pot. However, if you are married to someone who has all these, you may also find that they are quite adapt at making sure they are hidden or protected. By the time divorce comes round. Like businesses that magically change hands. Or seem to have a huge downturn in profit and so on.

Yes other assets would be divided up, but it’s really the exception and not the norm that a husband has hundreds of thousands (or more) in other places other than the family home. But it’s not always just a straight 50% split down the middle; can be much more complex than that

the issue is, even if you get enough equity from the house to be able to buy your own property outright, you need to be able to afford the bills, food, childcare etc

also, some people are arses during divorces, a friend of mines husband said he’d rather spend all their cash (and even equity in their house) on lawyers rather than give her a penny. And he did just that ; £150k of solicitors fees

most divorced couples don’t have paid off mortgages, loads of cash/savings/investments etc

What do you actually leave yourself vulnerable to if you don't work?

Starvation ultimately.

Im divorcing but I’m much older, so no dependent children involved.

I was a STAHM - the nature of his job meant he was often away/abroad for weeks/months at a time. We are both retired, he has a full state pension plus a good work pension. I don’t have enough contributions for a full state pension although I have the option to pay a lump sum to increase it. We own a family home and the mortgage is paid off.

So after a long marriage the split is 50/50. I am entitled to 50% of the value of the property, and 50% of his work pension. Obviously he doesn’t want to do this and he is trying everything he can to get more of a share. There are ways he has found to undervalue certain assets etc.

My biggest regret is not paying into a private pension.

I was sahm for 10 plus years. Luckily (although emotional and hurting) we were sensible people who put our kids first.
The basic law in England is that you should start again on an equal footing. The pendulum starts at the bottom with a 50/50 split but swings back and forward according to various factors until it's fair.
For us that meant a 70/30 split of the house equity but me not claiming on his pension and no spousal maintenance. This recognised we have kids with SEN who cant be put in wrap around care so limited my career options. We both knew child maintenance isn't worth the paper it's written on after 12 months so agreed that separately.
But I was lucky we were both reasonable. It gave us the chance to buy houses of equal size - him with a massive mortgage but also with the salary and career prospects to pay it off.
Also we both asked our solicitors what the max they thought we could each get and what the minimum. And we had friends who'd divorced who warned us that solicitors might push us to go after stuff when their costs would be more than the thing we were pursuing.
Our shared disinclination to give a penny more to solicitors than absolutely necessary really helped.
If your friend's other half is a tight git who doesn't put his kids first then she should lawyer up and fight for the kids' right to not move across a huge disparity in wealth/comfort from one house to the other

If your friend thinks she is vulnerable, she could ask him to explore setting up an agreement now in good faith about things would be divided. I suspect her husband will find reasons not to, from "how can you possibly think so little of me" right through to brushing it off because she is protected in law by marriage.

That's why people do pre-nups, because people start out with good intentions and it's best to legally set the intention out at the beginning, before circumstances change and people think their contribution is worth more and fight to protect it.

What would everyone suggest in a post nup?

If the sahm has a husband who wants to agree legally to provide more security to her so she isn't left without earing potential or housing should they divorce.

If the husband has the ability to easily get a mortgage and housing. Could he leave the family house in the sahms name and agree to pay the mortgage untill she could? Or a mesher type agreement when the children were were 18?

The contribution of home maker is recognised, however the judge will look at the earning potential of each person and the wife will be expected to return to work in some capacity (depending on children’s age) the home if it was the marital home would be the sharing principle but it can get very complicated, the judge wants to ensure both parties can be suitably rehoused, it’s not always a split of assists 50/50

Your friend also needs to consider her pension pot. Once the kids have flown the nest, the ex husband will have a mortgage free home and 40+ years of private pension contributions from a high paying, uninterrupted salary. Your friend might have missed 18+ years of contributions by being an at home parent, she may then not be able to get back to her original career and have to take a minimum wage job which doesn't leave enough spare cash after paying for rent and bills to save for any pension provision at all.