Divorce law totally flawed

[Thelawisanass]

Married 6yrs, together 19. 17 yo son; 18 in 3/12. Ages 60 & 64
Comfortably off, but unable to agree financial split but want to avoid lawyers.
Financial disclosure Form E shows:
A: Pension value £154k = £5.8k pa, Cash & assets £740k, Total £894k

B: Pension value £819k = £41k pa, Cash & Assets £487k, Total £1306k

What would be a fair financial split?

Thanks for your thoughts.

Surely depends on how the children are to be supported - one still in school? 2 at uni ?

What happens to the huge pension B if they die?

I'd expect to need a pension report to help achieve a split that provides equal income in retirement, and equal division of other capital, on that information.

With over £2m to split, to avoid solicitors and try and get an agreement will probably cost way more. Getting some advice about what might be suitable will be a cheap easy step to at least start your discussions/mediation.

equalising pensions and equalising assets seems the obvious starting point.

As others say knowing limitations of the pensions may affect some of that split but with an almost 18 year old you are both in an ok position seemingly whether together or apart

What’s the relevance of the ‘divorce law totally flawed’ title?

My understanding is that you can't really claim for pension accumulated before marriage, or at least not as easily, so if one is trying to get 50/50 of the whole amount of the biggest pot, it might not be so straight forward.

I’d say B gives A £200k cash and call it quits.

Go to a financial mediator or get your pensions looked at by an actuary

you can't really claim for pension accumulated before marriage, or at least not as easily

That is very much not the case.

Why do you want to avoid lawyers? Getting a lawyer does not mean fighting each other or going to court. A lawyer will be able to give you tailored advice, alert you to possibilities and pitfalls you might not have thought of and make sure that the agreement is finalised legally. For those with small, uncomplicated assets it might not be worth it but with £2M+ at stake you'd be mad not to at least see a lawyer for an assessment of the situation and advice on how to negotiate from here.

Also you need a solicitor/ lawyer to draft the financial contract

@Thelawisanass

Married 6yrs, together 19. 17 yo son; 18 in 3/12. Ages 60 & 64 Comfortably off, but unable to agree financial split but want to avoid lawyers. Financial disclosure Form E shows: A: Pension value £154k = £5.8k pa, Cash & assets £740k, Total £894k

B: Pension value £819k = £41k pa, Cash & Assets £487k, Total £1306k

What would be a fair financial split?

Thanks for your thoughts.

It is too hard to define "fair". Do either party have much/any future earning potential?

Person A is in the best position in the short to medium term, they can buy a bigger property mortgage free, £5.8k pension, plus state pension, plus a few more years to accumulate from earning and put money aside.

Person B should be better in the long term, if they live long enough. They will have to use a mortgage to buy a similar sized property to A, which would require them to have work and accumulate more in the long run.

@LaurieFairyCake

What happens to the huge pension B if they die?

That would depend what they had done with the pension. If it is in the pension pot then it forms part of the estate, distributed as per their will, if they have bought an annuity then it is gone, but anyone who buys an annuity at the moment is a total idiot.

It may well be a defined benefit scheme

I assume you are A and you want some of your husband's pension pot. Get a lawyer.

@Iwonder08

I assume you are A and you want some of your husband's pension pot. Get a lawyer.

But be prepared that if you want more pension you will have to give up more cash/assets. Actual assets are weighted more heavily than pensions or potential future earnings.

Those pensions might not be comparable. If any are defined benefits then that's a different kettle of fish.

Generally I think the advice is if pensions are worth more than £100k or if any are defined benefit, then a pension expert is a sensible move. It will cost to get a report but means you can use it to help you work out what is fair.

Even if you want to keep things amicable, I think with assets that size it would be sensible to get legal advice on what might be an appropriate settlement. A lot depends on who's housing the children (even if university etc is beckoning), are you sharing care, etc?

For a short marriage of 6 years you might both have to leave with what you came with

From age 60 onwards, pensions are increasingly like cash, in that you can draw down 25% tax free and then the rest can be drawn down at your volition.

A fair split, at first glance, would be equal pension and equal liquid assets.

There may be tax issues depending on current earnings, as pension drawdowns are treated as taxable income (very unfair, but that is how it works).

There is enough there that you should both seek independent legal advice and then discuss having taken it. On the other hand, legal fees can easily eat 2-3% of £2mio (and even more if either of you are really unreasonable) unless you are fairly determined to negotiate amicably with one another.

Ignore the comments on length of marriage, your 19 year cohabitation and 17 year old child will effectively extend that to a long marriage.

But you need a lawyer and probably a pensions actuary to look at the pension situation and come up with parity.

It’s not a short marriage. As they are now married and lived together prior with no breaks (assuming this) their ‘marriage’ started the first day of cohabitation in law.

@LaurieFairyCake

Surely depends on how the children are to be supported - one still in school? 2 at uni ?

We agree fair for both to support our child through university

Thanks for comments
As several have mentioned equalising pensions (through actuaries) and equalising assets for parity seems fair option - B did offer this originally.
B has worked for whole of relationship, put all income, and now retirement pension income into joint a/c, plus some >£150k inheritance and savings.
A has worked for 2 years during this time, has kept all earnings, plus income from rental property in own accounts.
Unfortunately law says inheritance can be ring-fenced unless other party can prove need for more equal share of joint assets. A has large amount of inheritance, likely 'legal' solution is:
A and B share both pensions - seems fair
A gets to ring-fence inheritance but rest of assets split 50/50, so A effectively ends up with ~£250k more than B - that's where the title of thread comes from!
A thinks this is fine, but B says is unfair; is B missing something - does A have a point?
We have both had initial legal advice but wanted to sort amicably, without a big legal bill.

@Iwonder08

I assume you are A and you want some of your husband's pension pot. Get a lawyer.

No, I'm B and A wants (and is probably legally entitled to) 50% of my pension, without giving up any of their current 'cash' - as a large amount of this is inheritance, which can be ring-fenced, I will end up with some £250k less cash than A. With that sort of cash A can have a far better lifestyle for the rest of their life, despite not having worked for most of our relationship. I'm 64 and can still work to improve my lifestyle, but don't feel I should have to having accrued the vast majority of our joint assets.

Perhaps it would be more fair to give B the £150K inheritance first, then split the remaining assets, leaving A keeping their inheritance separately.

So A end's up a bit better off, but not as much so as under what is now proposed?

How long ago did these inheritances arise?