Is this fair? Financial split and maintenance

[SweetestTidings]

My brother is separating from his partner, and has asked me what I think of his proposed financial settlement. He wants feedback from me before proposing it to her.

He: earns roughly £120k to £180k yearly through his company (he is sole employee and owner, and the company has no assets - it is just a vehicle for him to offer IT consultancy). He has roughly £180k in pensions. He has no savings or other assets.

She: earns roughly £30k (or she would do, if she switched to full time). She has roughly £20k in pensions. She has no savings or other assets.

Their house is worth maybe £425k, with a mortgage of around £350k. Mortgage payments are around £1,500 per month.

They have 3 children aged 16, 13 and 10.

He is proposing:

(1) That he has the children 2 or 3 nights per week (although he thinks the eldest one will just do what she wants);
(2) That his wife keeps the family home until the youngest is 18, but that he retains 40% equity, stays on the mortgage, and pays half of it. When the youngest is 18, the house is sold and the equity split so he gets 40%. He will pay 50% of any maintenance costs on the house during this time (even though he isn't living there).
(3) That he pays child maintenance assuming an income of £150k (the "average" he earns), and assuming he doesn't have the kids at all (even though he will) - this would work out to £2k per month.
(4) That she keeps her own pensions, and gets half of his.
(5) That he pays the private school fees for the children at private school, and university living costs to the children when they reach that age.

He has no idea whether this is fair. He is concerned that he is not offering his wife much better than 50:50 in terms of assets, but his offer to pay half the mortgage is "worth" around £60k over the next few years, although he would probably get some of that back due to capital being paid off the mortgage, and possible capital appreciation if house prices go up.

Very roughly, this would work out that he pays £4,000 towards his wife, mortgage on her house, and school fees, leaving him with £3,500 monthly (on an average year) for him. On a "bad" year (like 2020) he would have much less than this for himself.

Does the above sound reasonable? Does anyone have any suggestions to make it "fairer" for either of them?

Thank you!

Also, it’s odd that he has no savings on that level of income. Plus his pension pot isn’t great. Me and DH had a few grand in savings when our eldest went to uni with 1/3 of his income.

And they have a fairly low amount of equity.

@FullofCurryandparatha

but with whatever the child maintenance calculation says it the minimum maintenance

Why would you want your children to have the legal minimum you have to pay rather than what you can afford and what you think they should have?
It's such a bizarre mindset.

Minimum amount so that if his salary drops he can still afford to pay it, plus half the mortgage plus school and uni fees isn't really "the minimum he can get away with"

This sounds ridiculous, it's got to be a reverse thread. OP are you splitting from your husband and asking for this, and trying to gauge how reasonable it sounds?

@idontlikealdi

Yes, they are married.

@Soontobe60

I think the reason to pay half the mortgage is so that it is affordable for his wife to stay in the house, while the 40% equity was to make the settlement split fairer to her - otherwise her part of the mortgage payments would actually be helping him out too and he might even get out more than he puts in from the £750 in the long run.

@Rummikub

Without the higher level of maintenance, it's very unlikely that his wife could stay in such a large house. He would love to be able to make it such that she could stay in it forever so the kids would have somewhere more suitable to come back to even as adults, but to do that he'd probably have to pay the mortgage forever! He wants to be able to cut ties completely one day.

@AfterEightsBeforeEight

No! I'm not married! Nor do I want to be based on my brother's experience!

@Soontobe60

They have a low amount of equity due to a failed business venture a few years ago. They heavily remortgaged the house and used all their savings to launch a business. It failed, and they've only recently pulled themselves out of debt.

She the wife would earn 2k per month, receive 2k per month, pay £750 mortgage, half of any house maintenance, her utility and food bills etc and have the DC approximately 5 nights a week.
It’s a very generous offer, my worry is that the H will go back on the arrangement in a couple of years time.

He should consider making it when the kids have finished full-time education including university.

Bit of a heavy weight to put on the youngest- move out for the first time and the family home goes. Lot of pressure and change all at once.

I did pastoral care at a university and lots of the kids dropping out during their first year where in circumstances like this.

Tbf, not quite many as the ones whose parents stayed together for the sake of the kids, and split off as soon as they trundled off, then told the kids when they came back to visit/ “Welcome home, Merry Christmas; we’re getting divorced” is a bit of a caricature, but not as much as you’d hope.

@WhiskyWhiskersdottir

That's a good point - I'll pass that on.

It's generous, perhaps too generous to be sustainable, if his circumstances change (meets a new partner or dip in the economy that impacts contractor rates etc)

If he has the kids 2-3 nights a week, his child maintenance payments would be nothing like £2k, calculated properly (I doubt they'd be £2k even if he never had the kids at all!).

Then he's paying half the costs for a house he won't live in, all of the school fees, and is giving her half of his pension and 60% of the equity.

I can see the logic to it, he's obviously trying to keep the kids in the house and not disrupt their lives too much, but is it sustainable for however many years it needs to be?

@Dissimilitude

I think he is worried about keeping it up too, but he's desperate not to have everyone else suffer, and the income disparity means that his wife would need a lot of support to maintain anything like the standard of living she and their children have been having.

Even with his proposals, his wife is still likely to only be able to afford something fairly modest when the kids all move out, child maintenance stops and she has to pay a mortgage on her own.

So he feels guilty for instigating the split (cheating?) / the previous dialed business and is now trying to make it up?

Wel she'll be more screwed of he can't afford to pay it suddenly. And there's no reason that once the eldest is in secondary she can't go full time. So even if he agrees until eldest is 21, that's a decade of full time work to save. The older ones will be 24 and 27 so she's unlikely to be housing them still. Plus half the house equity.

He needs to work out what's fair and not assume he can buy his way out of these feelings

[quote SweetestTidings]@Soontobe60

They have a low amount of equity due to a failed business venture a few years ago. They heavily remortgaged the house and used all their savings to launch a business. It failed, and they've only recently pulled themselves out of debt.[/quote]
That's concerning. What happens if this venture fails?

With the children at the ages they are he should be looking for a clean break. The guilt will fade but supporting his ex over and above what’s necessary, or strictly speaking fair, will soon wear thin.

@SleepingStandingUp

He does feel guilty about instigating the split (he hasn't cheated), and he feels responsible for the failed business - although she gave her blessing to it.

The income details I gave for his wife assumed full time hours (which she doesn't do at the moment).

@idontlikealdi

What he's doing now is just IT consultancy. Obviously work could dry up, but that has never happened before, and he is ridiculously well qualified and experienced (hence commanding those income levels).

The failed business was IT related, but it was a full-on business with investors, staff, sales pitches to customers etc. So much, much higher risk.

@DinoHat

How do you think a clean break could be achieved fairly on those numbers?

I mean in terms of his ongoing obligation to his ex. She doesn’t even really need spousal, she has a decent salary. If I were him I’d let her keep more equity to enable her to downsize and buy on her own.

Half his pension at retirement sounds too far off to estimate what will be fair there.
Anything could happen between now and then, he could become ill and unable to work anytime. His wife may gain other employment with a much better pension from her employer.
Could he find a way to top up her pension pot so it's equal to what's in his own right now.

I’d jump at that offer.

He sounds like he has began with putting the children at the heart of his decisions. A very good thing to do.
Maintaining stability etc.
Was this thread to see if it’s fair to her or him?

IMO I think it’s fair as it’s the children that benefit

He benefits long term - paying part of the mortgage is investing in The equity of the house.

@DinoHat

I don't quite follow what you mean. Do you mean that they should sell the house now and divide the equity (there is only £75k ish, and stamp duty, estate agents fees and other moving costs would have to come out of that)? With a salary of £30k, I don't suppose she'd be able to get a house worth more than £200k at most, which where they live would either get you 3 bedrooms in a rough bit, or 2 in a nice bit.

Or do you mean that she should get more than the proposed 60% of equity when the children move out? And if so, that wouldn't really be possible unless he pays the £750 monthly to make her mortgage costs affordable.

@Figrollface

I think the idea is that she would get 50% of his pension pot as it stands now transferred to her now (I think a court can order that?). Not that it would be 50% of whatever it is worth in the future.

If she's bringing home 1k after tax and he pays the official lower limit which is £1500 she's got 2.59k a month with just CB no other benefits, minus mortgage so 1.84k for food and bills. So 1k for car, petrol and spends. Maybe I'm poor but that seems reasonable if he's paying all school fees. If she goes full time she'll be potentially adding 1k extra.

He's looking at 6k bring home on a bad year, paying her 3.5 so 2.5 - mortgage plus mortgage on a second home so will have around 1k BEFORE bills so say £500 spends more more of he works harder.

I think he needs to cut CM to 1500 and reconsider the pension split. She doesn't need all of hers and half of his, why does she need more pension than him?