Any financial guidance on my situation?

[baublesoftreetown]

I understand mumsnet cannot give me legal advice, but perhaps an indication of what I could be expected to lose/pay would help.

-My wife and I married 10 years ago.

-We bought our first house together 7 years ago. I contributed only £5k to the deposit. She contributed £300k (she received a large inheritance at the time we bought).

-We were already married when she received the £300k inheritance and when we bought the house.

-We have both paid equal amounts on the mortgage repayments and we have no children.

-I started a LTD company during Covid, which has done very well. I understand she will be entitled to 50/50 of the business assets (approx £80k total). This fine.
The business is turning over in excess of £400k this year. The accounts have not been finalised yet though. (Last accounts showed £150k turnover for 2021) This is all my hard work. It is a risky business, which very well could not exist in 5 years time. She is not a share holder.

We have mutually decided to divorce, but have no idea where we stand in terms of splitting money.

If I want half of the equity in the house, she says she will demand 50% of what my business is "worth". (She claims it is worth £500k... I think this is a pie in the sky. It surely is not worth this. Especially with the financial crisis).

We will be seeking legal advice, but I am hoping to go in without blinkers. In your experience, what would you think is the likely outcome.

You get 100% of your business.

She gets her initial £300k deposit and any other equity you split 50/50.

That would be the fairest split in my mind. Why would you get her inheritance?

My business only had £80k in assets.

No idea from a legal perspective, but if I was her I'd be telling you to bugger off if you asked for half my inheritance. Why should you get her dead loved one's money.

Likewise I wouldn't expect her to get anything from your business.

My exh and I shared a house almost paid off and business with turnover of £90k. This was 16 years ago. Business got valued at 5 times annual turnover at point of court hearing. Exh had to take out loan to pay me my half value of business as I had worked full time and supported our family while he started business off. My exh business was valued at £450k. They don't just value last year's turnover but also future likely turnover for 5 years. Inheritance is often not counted in a divorce as you may in the future get an inheritance too. Your business is showing improved turnover this year from last year showing it is healthy. Pension was pooled and shared 50:50. You need to see solicitor as you will find business not valued as just turnover.

Your finances are intertwined and all Go into the ppt including inheritance which was used on family home and the business

get a business valuation
turnover does not equal profit - you’ll need to look at assets and it’s worth if ‘you’ were not there

the usual mantra here will be what’s hers is hers what’s yours is hers
get legal advice

How much total equity is in the house and how much will you each need to buy a nice new place to live?

Before the court can decide what to do with any excess it would first of all need to see you both housed.

I’d ask your solicitor about the most likely result if it were to go to court and then factor in the cost of going to court. Will you be better of financially if you compromise now?

My Ex wouldn’t accept anything but 50:50 and insisted on going to court - he even had a barrister to represent him! This cost each of us ££££s in legal fees and left him with a much smaller % of our joint assets than he would have had if he’d been willing to negotiate. I’d have accepted much less to have it over and done with sooner.

No lawyer here, but dc recently got divorced.

You will be better off coming to an amicable financial agreement before seeing a lawyer, but it depends on what you are prepared to give up and what your stbxw wants.

The inheritance (and the company) will most likely be part of the marital assets because it happened during the marriage. Was her £300k ringfenced when the house was bought? Morally though, you know that your share of the house should be £300k less than hers. For negotiation purposes, can you think of your share of mortgage payments over the years as a rent substitute and write it off?

If you can afford to rent a new place for yourself, you might be better off with accepting just your £5k deposit back if it allows you to retain 100% of your company, particularly if in the next 5 years your company is projected to generate more money/profit than the lost value of a 50% share in current house equity.
So really straight swop of keeping company for giving up house.

Alternatively, you could ask for 50% of the increased house equity, but this would still leave you open to STBXW asking for a % of your company's value.

As a shareholder in a Ltd company previously set up by DH and me, I think company ownership is useful/tax friendly, and potentially could be worth more than the house, but then again, I don't know the house's value.

Your business is not just it's assets mate.

If you go 50:50 they will review your business value, and from what you described that's going to be valued as quite a lot and could leave her taking a share of it.

Just like she didn't earn your business, you didn't earn her inheritance. If you go after her inheritance, she has ever right to go after your business. You don't decide that value, there are rules and valuation processes in place to do that.

Things like equity left in the house after this etc. can be shared. However be careful your business could be valued quite high ...

I echo other people here, agree to take what is yours and give her hers. Otherwise you could end up with her taking some ownership of your business.

You don’t say in your OP whether you have children together or not? The reason I ask is that the needs of the children are normally given the greatest weight, when deciding how to split marital assets.

If you don’t have children together, then, as others have said, it will come down to a needs basis and an assessment of the financial position you both find yourselves in now, and what you both need to re-house in a manner which is fair to both sides. This might end up meaning a departure from a 50:50 split. Capital and current and future earnings (and earning capacity) will all be considered (including pensions).

Unless you have some sort of prior agreement in place (I.E. a pre-nump.) regarding the inheritance, then, this would be treated as a marital asset too - regardless of where it originated. However, she may be able to argue (if it went to court) this represents a “special contribution” made during the marriage by her, which should be reflected in the financial agreement.

My best advice is to seek good quality legal advice, use their counsel wisely, and try to avoid court at all costs. Reaching an agreement by consent where each of you is legally represented is what I would recommend, based on my experience.