Maintenance, Meshers & Universal Credit

[FutureExH]

Unfortunately it looks like I'm headed for divorce for reasons I won't go into here. I'm hoping I can get some advice on the financials because I want to work out a settlement that is fair to both of us and provide stability for our DCs, 3 girls of primary school age (youngest is 5).

For background, I'm the only earner in the family (around £70-75k a year) and built my career before we married. DW has never had any career ambition and tended to take lower paid admin roles before the children came along and since 2011 has been a SAHM. Agreement was that she would retrain when youngest went to school and go back to work after a couple of years. I know I'm going to get less of the assets and pay child maintenance and happy to do so. (Just to say I think divorce seems fair in England, it's right and proper SAHMs are given time to adapt and I don't need advice from people who are going to whinge about it)! I do want to be fair to myself as well as my DW though.

Child maintenance looks straight forward. £700 a month. Looks like I can let my wife take child benefit and I can pay the higher tax charge too without affecting her benefits.

Problem though. I think a Mesher Order might be a good idea not for the next 13 years but until youngest DD goes to secondary school, when the eldest is 18, my DW can work full time and when we have enough equity to both buy something decent. But looks like the expectation these days is that the house transfers to DW and for the bank to approve it she has to prove she can pay the mortgage that is around £1.3k a month. Through benefits and maintenance she would only be left with about £500 a month for everything which is not enough.

Anyway, I thought a bit of spousal maintenance for the next 7 years would sort that out and happy to pay it because we'll both get a decent lump sum when the house sells and could agree 60/40 split in her favour. Apparently not though because every £1 in spousal I give her, £1 will be taken away in UC. I would have to give her around £850 spousal a month before she was even £1 better off and I can't afford that on top of my own rent and essentials. To get what she needed to pay the mortgage she would need 75% of my net income.

Do I have other options? Capitalising spousal won't help because house and pension are our only assets and having capital would stop her UC anyway. She can't work yet because she is retraining and no point dragging that out part time. Could I just pay her more child maintenance? Or would the bank accept a Mesher where I pay some of the mortgage directly not as spousal but for my own piece of the property?

Things to think about...
Why keep the house? Is it really important for the kids? Would it be better for you two to be in equal size properties so not such a big disparity in lifestyles for the kids to move between.
For us our kids have sen and for the youngest the primary carer would have a much easier job with more space.

Can you remortgage now? Change the whole thing to interest only to make affordable for your exwife? If you have enough equity.

Could you get some cash out when remortgaging and buy a house using that as a deposit?
We did this. Used a mortgage broker. My ex has kept his name on the family home mortgage but his recent house purchase wasn't treated as a second home. The new mortgage company didn't treat the existing mortgage as a mortgage but classed it as a charge.

You can give more in your privately arranged child maintenance and UC won't class it as income.

Staying in the family home isn't always the best solution. I have and I'm regretting it now in every way in terms of bills etc - except for the benefit of my kid obviously.

It may be possible to keep paying part of the mortgage and not call that 'spousal maintenance', but it's a fairly tricky area. Maybe one for a CAB benefits advisor??

Why a mesher order specifically? One option to discuss with a lawyer, you could change property ownership to tenants in common with a defined % share of ownership each and pay the mortgage and property maintenance in proportion to those %. The only issue then would be needing some sort of binding agreement re when house will be sold.

The catch with the above is that it's harder to force a sale of property held as tenants in common. This split may be more than 50% to EW I'd think unless you're also including pensions to some extent. Though hard to say as one is present value and the other is a split of future value. You really need to see a lawyer.

As for increased CM from what I've read on here you can go back to court and change it after a year, so no I wouldn't expect a bank to lend on this basis. The bank will not want the person paying the majority of the mortgage to not also be on the title.

That sounds like a good way of doing it. Owning a piece each with separate mortgages and I would expect the split to be 60/40 in her favour based on my calculations. Maybe 65/35 at a push but I would probably stand my ground on 60/40 as I'm already doing things I don't have to do to accommodate her wishes rather than her needs and I'm probably being more generous on the income side than I need to be.

I wonder if it would be possible to put the house in a trust so that when the sale date comes, the trustee forces the sale and as beneficiaries only me and my DW would have no control until we receive the proceeds?

Nothing to add. Just commenting to say you sound responsible and civilised, which is refreshing. Too many divorces get needlessly combative. Too many SAHPs get hung out to dry.

Well, to be fair, I think the reason I'm civilised is that my DW is grown up enough to accept that it costs more to run two households than one and she agrees she will have to go back to work as soon as possible and maybe for more hours than we had planned if we were a couple. I think it makes sense because the income disparity between an ex-couple is going to be smaller when the children grow up if both work at 80% capacity rather than one at 100% and one at 50% after divorce too which surely helps the former SAHP?

I think the worst disputes seem to arise in couples where there is either one high earner who doesn't value the work done by a SAHP and doesn't accept that they are going to get less than half of the assets and pay child maintenance or where there is a SAHP who refuses to take responsibility for themselves and expects to get all the assets and be maintained without working until the children reach 18. These people who only think about themselves never get what they want, which is why I think divorce in England is fair.

If my DW suddenly said she wanted all the current assets, none of the debts, for me to pay all of the mortgage and that she didn't plan to work for 13 years because I was the financial stronger party I would obviously be less civilised about it!

I think the worst disputes seem to arise in couples where there is either one high earner who doesn't value the work done by a SAHP and doesn't accept that they are going to get less than half of the assets and pay child maintenance or where there is a SAHP who refuses to take responsibility for themselves and expects to get all the assets and be maintained without working until the children reach 18. These people who only think about themselves never get what they want, which is why I think divorce in England is fair.

Quite so. It’s endemic on here.

Unfortunately I guess when people get divorced they either want revenge or they have a strong sense of entitlement. The only people who will really get any satisfaction out of that is an unscrupulous solicitor (although to be fair to solicitors, most of them seem to be trying to stop their clients being unreasonable because of the vanishingly slim possibility of a biased judge).

I do have quite strong views on this. Unless there has been an ugly custody case or a SAHP being unreasonable about contact, I don't understand high earners who get upset about contributing to their children's principal residence. Surely they want their children to live somewhere nice?

It's the same for SAHPs though. If they don't find work when they're able to, they're setting a terrible example to their children and themselves refusing to do everything they ought to for their children.

Well you’re right but it can be difficult to be rational if for example your ex wife had an affair and left, if they were causing problems re access to children etc
Also it can be hard paying for ex house etc if they move in a new boyfriend quickly etc

So while you’re right, I think you’re being a little bit utopian in your views!

Of course children should be at the forefront but navigating what that means can be troublesome

You should look into other options really carefully, because Mescher Orders are usually a nightmare and are not common or popular with judges these days.

Having said that, if you are not fixed on getting a consent order through the courts you can agree any separation of your finances between you that you like. You do not have to get a consent order at any specific point in time, but most people do it before the decree absolute because it protects the rights of the weaker financial party that way.

You sound very amicable, so I'd recommend that you find a resolution approved solicitor who does mediation, and sit down together to discuss options, the legal pitfalls of those options, and the get a separation agreement written up for you.

Good luck.

@millymollymoomoo

I'm not going into detail, but it was an affair by DW that started the decline. We've never really recovered from that but I think in all other respects there's nothing to be gained being acrimonious. My hope is play fair and the clean break will come more quickly.

I do understand where you're coming from but I get the strong impression that anyone who tries to play the system will only hurt themselves so I don't see the point. That said, I would never agree to a Mesher Order without a cohabiting trigger event, I would burn through every penny of the assets on that principle! Grown men can pay their own way in life, not live off me. Would there be many courts that would award a Mesher without one if requested?

It’s difficult to prove cohabitation.
Often they move in, in all but name
Ie ‘ stay over , but not named etc
I’ve seen lots of women look at ways to avoid the trigger events

Not saying don’t do it, just make sure you have your eyes open and dont end up being a mug either

@HosannainExcelSheets

I think a consent order will be important. Whilst things are amicable at the moment, without wanting to sound nasty my DW has never been career minded and whilst I'm happy to provide a reasonable income whilst the children are still young to ensure that there are two decent homes for them to go to I'm less enthusiastic about being a fallback option for an ex-spouse who didn't feel like building the career she was more than capable of. I'm also concerned that if I agree an informal Mesher agreement now without a consent order I could find myself facing a Martin order later. Like I said, I want to be fair but not a pushover.

Zero chance of getting 'his and hers' separate mortgages on the same property. Zero.

As above
Where are you planning on living for the next 5 years? Don’t know what part of the country you are In but housing ( rent) could be a lot
Your ability to get a mortgage will be impacted by keeping your name on the mortgage of FMH

Why can’t your ex work now? She would most likely be entitled to an element of top op through tax credits etc

How much equity is in the house ? Could that be sold and released and she use it to buy something else ( will need a job)

How will she afford to buy out your share in 5 years?

As far as I understand it you can't get working tax credits if you are a new applicant, it's universal credit now. Spousal maintenance is classed as an unearned income and therefore comes of universal credit pound for pound. She will get UC of around £800ish, CM of £900ish and CB that works out at £200ish a month.

She can't work because she is retraining full time for the next two years. I want that to happen because it increases her earning capacity and will put us on a more even footing. When she has qualified she will be able to work part time for around £1.2k net a month and that should grow fairly quickly over the decade. Initially she will still get £900 CM, £450ish of UC and £200 CB and will be in a much better position to take a mortgage on her own.

Taking into account every said here though, I don't think it is realistic to stay in the FMH. There are properties around £70k cheaper than this one with the same number of bedrooms in catchment. It would still be unaffordable for her until she increased her earnings though.

That's the problem isn't it? If it's unaffordable and she has the children most of the time then there is no way out of a Mesher anyway, is there?

Tbh 70k cheaper doesn’t sound worth selling for
By the time you consider selling g costs and stamp duty it probably won’t be worth it

@millymollymoomoo

Exactly, that's the problem. It makes more sense to wait until there is enough equity and enough income for her to take on one of these cheaper properties and for me to buy somewhere, although my limit would be until youngest DD was in secondary school.

How likely is a court going to be to force a Mesher Order that lasts until youngest DD is 18 if that is still 13 years away and the age gap between the youngest and the eldest means she won't need such a large property 8 years from now?

I don't think you will have to pay the high rate tax back on the child benefit if you're not together. It would be based on her tax status alone I think?

@OhamIreally

I think you're right on that actually, my mistake.

I'm not going to complain about that, but I'm finding this an absolute minefield. It's almost as if the Government's recent activity has been designed to make it harder for middle class divorcees to come to a fair settlement. Not that long ago, we could have divorced, worked out DW's benefits plus CM plus CB plus SM of about £250 a month and we'd have roughly the same incomes, she'd get about a 60/40 split of assets in light of having the DCs more and that would work.

Now if we tried that she'd lose £250 of her benefits so I'd have to pay something like £1,100 to "bridge the gap." No court is going to force me to do that after assessing my own needs because on top of CM it would barely leave enough for rent and commute let alone anything else.

I guess people fudge it? Stick another £250 on top of the CM? Or I could agree to cover things like school trips, school lunches, school uniforms etc?

How are you calculating the CM?
What would be the ratio of time either such parent?

If the house was sold, you'd both get some money. It isn't a right, or a necessity, to own a house. Renting is perfectly acceptable as a solution. The capital would be counted for UC purposes, so your STBXW would not qualify for UC initially, but once she had used the capital, taking it below £16k, she would then qualify for UC.

If the house sale gave a decent capital, then it might last her long enough to finish her training and then she would be able to afford to rent/buy in her own right. If it didn't, then she could fall back on the UC system.

Why not just bundle to SM with the CM? CM is not taken into account for UC and there's no limit on it. Apols if there's a reason already stated for this, I've NRTFT 😬

@Cleverpolly3

I'm being deliberately generous and assuming no nights with me, though the split is more likely to be 5-2 per week and a little more as holidays will be split evenly.

@Lougle

Having a house might not be a right, but I would prefer my children to be somewhere stable and I'm happy for my DW having somewhere to live when they're grown up as a byproduct of that.

@Outhere

SM into CM makes sense but there's going to be a trust element as CM is not that hard to have changed. Also, turns out a lot of banks will only consider up to £10k CM a year towards mortgage so I'm already exceeding that. I'm an honest bloke but divorce can make people think the worst of each other.