Pension vs House - i don't want to be stitched up

[whycantitbecalm]

Apologies if this has been answered a million times before but, we are at the stage where we are sorting out finances.

Background:

Married 19 yrs together 22
I am 42 he is 51
We have 3 teens: 13,15 & 16

I am a SAHM with a small lifestyle business turning over between 5-10k annually
I have no pension

He works full time earning 150k annually, with two pensions worth 100k & 650k

We own our home together, 100k left on mortgage, worth around 500k

My Question:

So his biggest worry is that i'll take his pensions. We are about to start mediation, i am concerned that he is going to come to me with an offer of "you keep the house and i'll keep my pensions" (he's a salesman and emotionally abusive and manipulative, hence the divorce)
Selling it to me as a good idea, and blindsiding me with security for our boys short term (who are staying with me)

Anyone have any clue how this should go, and what is a more reasonable settlement?
This is so confusing, and as a wife to someone who has always managed to prey on my naivety for over 20 yrs i can't let this happen again.

Kind advice welcome

So his biggest worry is that i'll take his pensions.

*

He should be worried.

Did you raise the boys the majority of the time?

Do you have a solicitor? You need one - they’ll explain the options to you.

I would get a decent lawyer.

If DH and I were to separate I would ask for half of everything as a starting point.

So half of the house and the pensions.

Understanding that this would mean selling the house and downsizing and relocating to a cheaper area.

I wouldn't consider not having a share of the pensions because they are the joint investment we made in our future.
He could work the way he did because I worked pt while raising the dc.

You need legal advice. I'd want the house equity and enough cash to pay the mortgage off. (I'm assuming that you like your current home) That way he has 500k pension and you have 500k house.

I'm also assuming that you'll get a full time job so you can afford bills on your current home

Go for half the pension and half the house, down size if necessary. The pension was bought with family money

You keeping the house (paid for) and him keeping the pensions seems equitable to me, perhaps even a little in your favour.

Pensions are generally valued a bit lower than £ for £ in settlements as they aren't guaranteed money and can't be accessed quickly.

First off, you need to get a full time job. Then you need to get a solicitor. You cannot blame your Dh for your lack of pension provision.
as he’s considerably older than you, I can see he may well get more of his pension because you’ve got another 30+ working years to build yours up.

There is £750k in pensions and £400k in house equity.
Total is £1.15 million. Your 50% should be £575k.

So you should take the house plus £175k from his pensions.

Are you sure he doesn’t have any savings accounts? Someone on £150k could very easily have lots (and I mean lots) stashed away.

Maybe you want the house paying off instead of pensions given your age and income, in which case you could ask for £175k cash instead of the pensions.

But check the savings accounts.

50:50 would mean £575 each out of a pot of £1.15m so you would need the house plus £175k from the pensions as a minimum.

However if your earning potential has been diminished by caring for your children this also needs to be taken into account so a fairer split may be 70:30 or 60:40 in your favour. Your DH can easiky make up his pensions on a salary of £150k, you on the otherhand may struggle.

This calculator may give you a basic idea of the split
divorce.wikivorce.com/divorce-calculator/divorce-calculator.html

You would be better asking for equity in house to be added to his pensions and sitting 50/50. Fwiw my exh wanted me to take house almost paid for and him keep business. Judge said no equity in house added to value of business as a going concern. I had equal shares in business and worked in business also. It worked massively in my favour and we pension shared too which meant I got about 1/3 of his pension to add to my own smaller pension. We sold house. He was forced to take put massive business load to buy me out. I used money to buy a different house and had a good lump sum left over. Prior to breakup I had been working as a teacher 2 days a week after divorce I went back to full time teaching. I initially offered exh 50/50 on house and business but he refused. Then judge decided we should pension share too. He should have taken my first offer. We were married 22 years and 3 children youngest was 8 when we divorced.

My solicitor told me not to accept the house instead of a share of his pension as that would have left me considerably worse of in the long term. Although it seems equal, don’t forget you have to live somewhere when you want to retire so your pension pat will only be a part of the value of the house.

I was able to get a mortgage for the small mortgage left on our family house based on my part time teachers salary so did keep the house in return for my ex have the bulk of our savings ( mainly shares in his company) and also for a lump sum from his pension to account for the 8 years I was a SAHM. This made a huge difference when I retired recently, in the 14 years since my divorce, a 50k sum had grown to £200k in a stakeholder pension. I don’t think I would have had that much if I had downsized unless I moved to a really small house!

I doubt with those sort of assets and the age difference that there is any good reason for you to get more than half to meet your needs. You getting the house and a small part of the pension and him the rest of the pension is one way of doing that, albeit with a caveat that he might need some of the equity to house himself.

If you can own a house outright and you are only 42, there is plenty of time for you to save a pension. Obviously this will be based on the assumption that you get a full time job paying at least minimum wage (or more if you are suitably qualified); it's irrelevant whether you have a "lifestyle business" or not, divorces are based on what you can earn now and in the foreseeable future, not what you do earn.

If you own a house outright and have no rent or mortgage to pay, it would be reasonable to assume that you can put around 40% of your income into a pension. On minimum wage that will be around £7k a year. Based on historical returns and assuming you work to retirement age of 68 on just minimum wage, that's a pension of around £400k when you retire.

So a 50/50 split would easily meet your needs and there are no grounds for deviating from equality here. Whether you instead take 50% of the house and 50% of the pension is your choice but it would be less tax efficient (putting £7k into a pension would push your income below the tax threshold, whereas paying a mortgage won't).

Half is the bare minimum. My daughter got 70% but the children were little and she was a sahm. You will need to increase your income though op and shouldn't be too difficult given the ages of the children.

Depends how many assets there were in the first place, the length of the marriage and the age of the parties. It's unusual for one party to get more than half the assets unless there is not enough for both parties to house themselves or not enough time to save a pension. Trust me, a 42 year old woman capable of full time work with a £500k house owned outright will not be seen as someone with the kind of needs that demand a settlement of more than 50/50. Especially given the likelihood of significant amounts of child maintenance for the foreseeable future.

Potentially there may be some transfer of assets in lieu of a couple of years of spousal maintenance but that will be about it.

You need to j set stand the tips of pension and it’s cetv
£2 in pension is not worth £1 of house as it’s not a liquid asset

you need to look for full time job and also have 20+ years to build your own pot - he is 20 years older so less time to rebuild although higher salary

what does your solicitor advise ?

Lots of good advice above. Another issue is what plans are there for the children, and what's your earning potential (given the swings and roundabouts of no recent work experience vs potentially 25 years left in the workplace).

But best advice ever - invest in legal advice. it's an investment, not a cost.

You need to understand what type of pension that should say !

you need to look for full time job and also have 20+ years to build your own pot - he is 20 years older so less time to rebuild although higher salary

He's 9 years older....and still has 17 years to continue to build his very high pension. OP won't be able to build anything like the amount he has - she'll be looking at NMW jobs for a few years at least.

Yeah lots of typos in my post !

Best option is to sell the house and downsize. Ideally you should buy somewhere mortgage free as you won't have a mortgage capacity on your current income and will no doubt take time to build up income to afford a mortgage. But don't trade off the house for pension as you will struggle to manage in retirement and you've lost the ability to build your own pension by staying home to care for the children.

He has a very high income and so will be able to get a reasonable mortgage. He has almost 20 years to pay this based on his income so really he only needs a deposit and purchase costs.

So maybe looking at you getting say £300k and him the rest from the house.

Then in terms of pensions, equal pensions or possibly a slight balance in his favour to offset the equity in the house. Again, you won't have the income he will to build up pension again and he will be able to pay into his after the divorce.

He is in a much better position than you to rebuild. You can't do that or not immediately.

Given the assets involved it is a case where each of your needs will be met. It isn't a sharing case so he will be left with less than half overall.

Make sure you get good legal advice and don't let him talk you into a bad deal. Good luck!

First of all as Milly advised find out what type of pensions and how they will be treated in the divorce. As someone advised pensions aren’t always treated on a like for like basis as house equity.

Then think about your financial future. Although you are younger than him you aren’t earning enough to save for your future. There is a reason why people value their pensions more than immediate cash.

You also need to reevaluate your income. Your children will be adults in 5 years time and you won’t be entitled to CMS or any benefits. I would say he probably plans to retire within 10 years and won’t be in any position to support the children on what is a good but not great pension.

This is all true but what the OP earns now is entirely irrelevant. She will be expected to mitigate her situation. With her youngest already 13 she will be expected to work full time and also claim benefits. Over the next 5 years she will also get substantial child maintenance. Her imputed net income by my calculations will be at least as good as someone on around £45k for the next 5 years.

At the end of that period she can reasonably be expected to downsize to her needs (a one bedroom flat) and invest the rest in a pension. She will also be able to save substantial amounts as unlike most 42 year olds she will have no mortgage or rent to pay.

Unfair divorce settlements do arise when the children's needs demand it but I don't see anything here that justifies a departure from equality. Maybe if the OP had a stellar career before marriage, but even then she'd have an even higher income imputed because she would be expected to retrain and go back into it.

Financial Settlement
To know what a fair split of assets is and to reach a financial settlement divorcing parties need to know what all the assets of the marriage are, and what each asset is worth.

Informed decisions about finances upon divorce can only be made once all the assets are "on the table" and both parties know what each asset is worth.

Full and frank disclosure is a legal requirement.

What does full and frank disclosure look like?
Look at a Form E. A long document in which each party sets out their assets, income, and financial needs. Each party fills in Form E, attaches the documentary evidence required, and sends it to the other party (Form E exchange).

You can see in Form E the assets that are taken into consideration upon divorce and financial settlement, for example property (the former marital home), pensions, stocks and shares etc. It also lists the documents needed that show the value of assets for example CETVs (cash equivalent transfer values of pensions - which can be requested from pension providers).

What re the assets worth?
To find out what some assets are worth an independent expert can be used. Property can be valued by an expert - estate agents. Pensions can be valued by CETV and / or a pension on divorce expert (PODE) report and so on.

A PODE report is where an actuary does an in depth report on the pensions to show what the capital value is, and what the income will be. They can include what a 50/50 split would produce (capital and income) - or a percentage of your choice. They can be instructed to include the age each party will take their pension etc. The actuary will walk you through the process, and get the instructions right before they start the report. The instructions to the actuary are joint and both parties agree to them.

It is important to decide what needs a valuation by an independent expert and factor in the costs of these.

Pensions can be very valuable – equivalent or more than the value of the former martial home in some cases. Divorcing parties might hold different types of pensions (not like-for-like, so difficult to compare without an expert). Circumstances might be complex for example an age difference or pensions in payment. One party may have stayed at home to look after children. A PODE report from an actuary is very useful and gives a clear picture of what money would be available to each party upon retirement.

Who gets what? (Section 25)
When deciding how to distribute a couple’s assets and income the court has to apply a checklist of factors set by statute. The relevant statute is section 25 of the Matrimonial Causes Act 1973. These factors will need to be applied in every case, regardless of whether you are engaged in court proceedings or negotiating your own settlement. These are often called the Section 25 factors, which the court will take into account when deciding how to distribute assets upon divorce or dissolution.

images.ctfassets.net/o8luwa28k6k2/2cpp2mEMwBJWJLuzTiTruB/b5397e7459154fad8927826a2c99acdd/section-25-expert-guide.pdf

The income, earning capacity, property, and other financial resource which each of the parties to the marriage has or is likely to have in the foreseeable future is taken into account.

First consideration is given to the welfare (while a minor) of any child of the family who has not yet attained the age of eighteen.

The needs of each divorcing party are taken into account and as I understand it 50 / 50 is the starting point – so unequal shares based on circumstances and needs is possible, for example 60 / 40.

Not getting full and frank disclosure?
Full and frank financial disclosure is required and usually provided when Form E is exchanged.
If after Form E exchange there is missing information / evidence 'Questionnaires' may be exchanged to retrieve it (a list of questions and a list of documents still needed is sent to the other party).
If still missing or if clarifications are required 'Deficiencies' are exchanged (another list of questions and a list of documents still needed is sent to the other party).
A solicitor’s letter can be sent to retrieve financial information evidence.
A Court Order can also be applied for to gain financial information / evidence / valuations that is missing / essential.

Advice and info
These offer a free advice session about pensions on divorce and separation www.moneyhelper.org.uk/en/family-and-care/divorce-and-separation/divorce-or-dissolution-how-we-can-help-with-your-pension
Free advice line (busy so keep trying) rightsofwomen.org.uk

Guides on divorce and financial settlement
www.advicenow.org.uk/divorce-and-separation
www.advicenow.org.uk/guides/how-apply-financial-order-without-help-lawyer

Pensions on divorce
www.sharingpensions.co.uk/penaudit3.htm
www.mediateuk.co.uk/the-ultimate-guide-to-pensions-on-divorce/
www.nuffieldfoundation.org/news/new-good-practice-guide-addresses-shortfall-in-understanding-of-how-to-treat-pensions-on-divorce

Valuation of pensions – pensions on divorce expert report
www.collinspensionactuaries.co.uk no relation – useful website
www.collinspensionactuaries.co.uk/pension-data-collection/ templates for information required

Legal advice
This link gives you an indication of hourly rate for solicitors
www.gov.uk/guidance/solicitors-guideline-hourly-rates

Some organisations offer free advice from solicitors and barristers rightsofwomen.org.uk/get-advice/ On their FAQs page…”Our Legal Officers and Volunteer legal advisors are all solicitors and barristers”.
Some family solicitors offer an in initial free consultation and some a fixed fee rather than hourly.

Some barristers can be directly instructed e.g., via Clerksroom Direct
Mumsnet suggest www.advicenow.org.uk/tags/separation-divorce-and-dissolution-civil-partnerships

Mediation
www.gov.uk/money-property-when-relationship-ends/mediation
resolution.org.uk/looking-for-help/splitting-up/your-process-options-for-divorce-and-dissolution/mediation-information-and-assessment-meetings-miams/

Family mediation is a process in which an independent, professionally trained mediator helps you work out arrangements for children and finances following separation. Some cases are not suitable for mediation (eg domestic abuse / bullying/coercive control etc).

In the first meeting, the mediator will assess whether the case is suitable for mediation. This is the MIAM.
MIAM stands for Mediation Information and Assessment Meeting.
It is a first meeting with a specially qualified family mediator to consider whether your issues can be resolved without going to court. The mediator will provide you with information about the options available for non-court resolution, including mediation, and discuss the advantages and disadvantages with you. The meeting is confidential.

Look after the old(er) woman you will become, financially. :)