Financial settlement negotiation

[Everybodywants]

After a very long winded back and forth my STBXH has requested to go back to mediation after it failed once already due to him failing to turn up.

He has now obtained legal advice and obviously been told it will cost him more to go through court so at his request and expense we are now entering into mediation about finances with the aim to settle on a lump sum amount to me and a clean break order.

Not that it's particularly relevant but I am the applicant in the no fault divorce and we were awarded the conditional order a while ago.

Approx numbers:

Marital home equity: 200k there's a mortgage on the property approx 50k outstanding

His pension CETV : 367K

My pension CETV : 18K

shares in his name : 6k

Cash he has coming imminently any day:
90k (from an inheritance and the reason I suspect he's suddenly sprung into action regarding sorting the divorce finally, he wants to do it before that hits his bank account) the inheritance happened after I'd moved out of the family home.

I have outstanding car finance of 2.5k taken out since I moved out and £500 on a credit card.

We have no children together but I have a child from a previous relationship who resides with me. I'd need a min 2 bed home this will cost a v min of 250k for a small terrace doer uper for us.

My mortgage capacity is £115-120k.

His mortgage capacity is £180-190k

He has no dependents or ties to a particular area.

The marriage was 7 years total.

What do you think I should be opening negotiations with? His priority will be his pension and his inheritance cash, my absolute need is to secure a house for me and child, I'm willing to forego any pension at all for a larger lump sum but would anyone like to talk the maths through with me?

Well I k know it doesn’t work like this but as you’ve no children together and it’s not that long a marriage what are your overall contributions each? Was it is house / your house, who put in deposits and paid mortgage etc

you’ve not sacrificed your career to support raising his children so..,,,

What does your solicitor think you would get in court? Start with that and then you will know what % negotiating room you have in relation to your needs. Ultimately even if he saves 10% that’s still a fair amount of money. How much is the house worth now? It seems you have the upper hand now and hopefully you will get what you need as you both feel is fair 🤞

Since his inheritance was post split, it's a short-ish marriage, there's no children (of the marriage) and you should both be able to house yourselves - I think he's got a strong argument for excluding the inheritance.

I'll add that you trying to include it is likely to sour things and could force a costly court battle. I also think it would be morally iffy to go after it.

If your priority is house and his is pension, I would expect you to be able to do a deal that suits you both. That said - he will need some equity (for a deposit) and you'd do well to protect your financial future.

WRT to you mortgage raising capacity - have you checked affordability. With higher interest rates a lot of people are finding that the multiples don't stack up with what they could actually repay and banks are tightening lending.

All that said - based on the figures you've given I'd look at the following.

68% equity to you = £136k (less your debts = £133k) + £120k mortgage = house you need.

32% to him = £64k + £190k mortgage = equiv house (this is toppy for him and his LTV is poor so he'd have higher interest, to square that circle I'd let him keep the shares.

In return you take a much lower proportion of his pension, so that the numbers even out over all.

So you've have £136k equity, he's had £64k.

Total pension values across both is £385k

So you get £156k of total pensions savings and he gets £220k. (NB pensions worth slightly less than equity in reality - so you may need to swing it a bit further his way.)

(this only works if both defined contribution pots, and if you're both similar ages so have similar time to save for retirement. If he was 50 and you were 35 he'd need more pension).

You both walk away with half the pot, you both afford equivalent houses, you both have a decent start on pensions. You need to prioritise pension saving thereafter because you've taken less, but equally he has a heftier mortgage. Meets both your priorities.

Something like that.

How much of his is pension pot been accumulated post marriage ? That’s the portion you should be considering imo

That's true. He could make a move to only include pension post-cohabitation (not just marriage, living together counts) and pre-split. Which would be a fairly reasonable step.

I still think you're look at figures like above tho. A swing in equity towards you vs a swing in pension towards him. Leaving you both housed and with a starting point for retirement.

Thanks all. I don't have a sol representing me as don't have any £. I've had legal advice from two different ones who all said I'd get min 50 of everything as My needs are higher. I'm not fussed about his inheritance however can someone explain to me would this be expected to form his house deposit or would it stay as cash savings?

What financial contributions did you each bring to the marriage in terms of house deposit and savings?

Inheritance is tricky. If there wasn't enough equity and mortgage capability to house everyone - it could be included. Even if not shared it could be seen to diminish his needs and thus settlement.

But with a shortish marriage, where the two of you had no children, and the inheritance came about post split, and you can both house yourselves from what's available - I think he's got a good case for keeping it ring fenced and separate from negotiations.

It's the type of thing where if you push to include it, he could decide to take things to court, and spend the lot on lawyers. You'd both be worse off overall, but IME inheritances are emotional things and if you try and bring it into negotiations it could do more harm than good. If it went to court? Could go either way. Depends on the judge on the day and the nitty gritty of financial particulars.

Worth noting that saying you're not fussed about his inheritance but then saying it should be his deposit (and taking more equity yourself as a result) is exactly the same as including it regardless of the language. You're adding it to his side and asking for more elsewhere in return.

Being prudent I would say you will get 50% of the house equity. None of the inheritance and 50% of the pension accrued whilst together.

A bit more depending on his relationship with the child and if he or she could be seen as a child of the marriage.

He could argue you only need a flat or that you can rent.

I'm already stuck renting and so far have spent 21k in rent whilst he faffs about ignoring the divorce. All of my savings went into the house when we moved in together so I have no buffer.

Yes he was my child's step father for 7 years.

Even flats in the area wouldn't be much cheaper than a 2 bed run down terrace which is what I'd be looking at.

If we end up in court what costs would there be to me as a litigant in person? He is representated finally after ignoring me for a very long time (the inheritance has 100% kick started this). Thanks for advice so far

Similar amounts regarding to the original dep/savings that went in to the marital home deposit was originally paid by him but I spent more on improvements over the years. My entire savings went into the house.

If I were you - I would avoid court if possible. It's not just about the cost for you (minimal if you self-represent) but also about what he spends.

For instance - in the scenario I laid out earlier, where you have about 68% of house equity, plus an adjusted chunk of his post-cohabitation pension, leaving you both housed and about 50/50 overall. There you're not touching his inheritance - which seems to meet both your needs.

Say you go to court because you want more equity because of his inheritance -

He could easily (EASILY) blow the whole inheritance on fees, plus his shares. At which point you'd end up back where you started but his needs would be greater.

Or a judge could decide that 50/50 equity and 50/50 pension is fairer, and then you might not be able to buy at all.

A judge could decide that since it's a short-ish marriage you only get back what you put in, leaving you much worse off.

A judge could give you more.

It's a bit of a lottery, but you're not going to get a settlement that gives you all the equity and leaves him no cash.

Mediation is a far better strategy here. You know what you want (equity), you think you know what he wants (pension) and so you can negotiate.

I'd start of with something that gives you 60/40 overall (maybe 70% house, plus a chunk of pension accrued post-cohab that takes you to 60% of the pot) and let him negotiate from there. Your bargaining chips are his pension and shares, his is equity. Find something reasonable in the middle.

If you go in with something too crazy, his solicitor will tell him he's better off moving to have his inheritance excluded, moving to have pre-marriage pension excluded, and looking to view the marriage as short. Then he'll end up spending pots on lawyers and you'll be worse off overall.

So how much was his pension pre marriage ? Why do you think you’re owed a share of that ?

My will is written in a way that if the inheritor is going through divorce the bequest is withheld until they are not married. This was suggested by my solicitor.

Don't know the numbers of what the pension was worth pre moving in as don't have that documentation. The contributions will be higher in these most recent years due to salary increasing to what he earns now.

A child of the marriage would be a child who would look upon both married people as their parents. They have effectively raised the child together. There is continued co parenting after the split. Usually happens when the other bioparent is absent. It’s not being a step parent.

OP Spending more on the property during the marriage is not a reason for a bigger share. The only negotiating point is the pension. He will argue pre marital pension is excluded. And that the OP is adequately housed already.

OP have you looked at ways to improve your income?

There is no option for me to earn more money other than waiting as I progress with my increments up the payscale. I work full time shifts as a single parent there is absolutely no option whatsoever for a second job. I earn 29k progressing to 30k in 6 months.