Settlement

[paris100]

Posted this before but no one answered, so hoping for a little guidance.

In splitting our assets and liabilities my solicitor is using the formula of :
Total joint assets less total liabilities which gives a Figure to be divided in two.
From this, deduct each party’s individual assets which leaves you with a figure which each party should be entitled to.

Does this sound correct? My husband is arguing that his debts should be factored back in even though they have already been accounted for in liabilities.
I’m in Scotland if that helps.

Sounds about right to me, but I'm not legally trained.

Thanks for replying.Which bit do you think is correct? The first calculation or the adding personal debts back in?

If it is part of the liabilities then yes you are correct and you have effectively paid off half of it

@louisianafalls thank you, that is what my solicitor and I both think but my STBEXH is an accountant. I don’t think it’s right that he drew up the proposed schedule of assets and liabilities himself, I think that should have been done by a neutral party.

Yes agree it should be neutral particularly now there is an area of disagreement. Is it that his sole debts shouldn't be included in the total liabilities because it's not joint ?

So if total joint assets less total joint liabilities then his sole debt won't be in that and also is the deducting figure net individual assets or just assets ? If sole assets and debts are kept seperate which I believe in Scotland they are then it shouldn't be in first figure

Disclaimer : not a lawyer but an accountant

Not an accountant, but even I can tell if they have been counted in liabilities then they shouldn't be counted again

how on earth can he say his debts should be put back in?

Probably best to try with an example.

The debts are in his name only (credit cards, loans etc) and we’ve had separate bank accounts but solicitor says that as we are married, they are unfortunately classed as marital debts.

So, in providing an example:
Marital home valued at £250000
Husbands personal assets £200000
Wife’s personal assets £180000
Total assets £630000

Liabilities
Outstanding mortgage £150000
Husband’s personal debts £20000
Total liabilities £170000

Assets minus liabilities =£460000 (net matrimonial assets)
Divided by 2 for a 50/50 split =£230000

So from this figure subtract individual assets:
Husband £230000 -£200000 = £30000 due as settlement from wife if being bought out.
Wife £230000-£180000=£50000 due as settlement from husband if being bought out.

But husband thinks his personal debt of £20000 must be added in to equalise things, so in effect, he would receive £50000 instead.

Please note that this is just an example, not our actual figures.

He also used to be the accountant for the legal firm who are representing him.

why are you including his personal debts, I would say "hey sunshine, they're in your name, they're your personal debts" and give him this

So, in providing an example:
Marital home valued at £250,000
Husbands personal assets £200,000
Wife’s personal assets £180,000
Total assets £630,000

Liabilities
Outstanding mortgage £150,000
Husband’s personal debts £20,000 (REMOVED)
Total liabilities £150,000

Assets minus liabilities =£660,000 (net matrimonial assets)
Divided by 2 for a 50/50 split =£330,000

So from this figure subtract individual assets:
Husband £330,000 -£200,000 = £130,000 due as settlement from wife if being bought out.
Wife £330,000-£180,000=£150,000 due as settlement from husband if being bought out.

then see how he likes that!!

You could use Tome of something way then give him £1Ok ie 50% of his debt if in law it is seen as a matrimonial debt...

My solicitor says they have to be included as incurred during the period of the marriage unfortunately.
I wouldn’t mind if they had been used to finance family things, like holidays, but they were his own personal spending.

Usually personal debts are deducted from personal assets.
IS there a reason why they should be treated separately?

IF you are both legally responsible for the debt then yes they should be added back in. if the debt is shared then the husband should pay £10k less - which he uses to pay wife's share of the debt
or wife should pay £10k more- again to pay wife's share of the debt.

You and your solicitor are right in the methodology to establish your share of the net assets. He is right that the £20k needs to be taken from the asset pool to pay the debt. Not from his £230k. Which is what you are proposing.

Basically you are not taking into account the need to settle the marital debt before you divide out the money. This is in his name.

You secondary calculations mean that he would end up with
£200k in personal assets
£30k from the equity release
But be liable for £20k debt which he has to pay.
So he only ends up with £210k from the split.

A simpler way to look at this is to net off the debt against his personal assets. So he has £180k not £200k. Then his share of the equity release is £50k just like yours.