Fair financial settlement

[LDA123]

Need some advice as to whether this sounds fair.

Only assets and house equity and pensions.

Husband was working full time but has quit to set up a business. Was a high income earner.

Wife was working part-time but now working 30 hours per week.

4 young children, wife primary caregiver. Husband has 2 nights per fortnight.

Husband pays statutory child maintenance based on prior year P60 (when had a job). Although now unemployed, got a big payoff and it earning money from business.

Solution:

Wife doesn’t get any redundancy pay. Husband continues to pay SCM. Sell house and split equity/pension 60/40 to wife.

Wife will get majority of equity to buy new family home. Husband will get majority of pension.

Seem reasonable? Am I missing anything?

If anyone has been there, your input would be much appreciated.

How friendly is the divorce ?

Is husband likely to manipulate figures with help from accountant so that CM drops after a year ? Getting CM from a self employed person can be very difficult.

Is redundancy pay all ploughed into the new business or in savings ?

Not friendly at all.

Yes, this is a possibility. The only saving grace is the payout was in the next financial year so will be included in next years P60 plus business earnings.

The redundancy will be invested in business and used for living costs.

I am fairly sure but not positive that redundancy is treated as income not capital. But she needs to check this.

Is the CM amount court mandated? I've read on here that after a year, he can apply for a reconsideration on the basis of less income this year. The CMS would also lower payments if his income decreased (think it's 20%? 25%)
I would check if redundancy is income or not.

Doesn't sound fair to me, she has majority childcare so 60/40 on the house in her favour is normal, she also sacrificed her earning potential for children nd in support of his career, so Id say 60/40 on pensions in her favour as well. And all other assets, money in the bank & redundancy payment split equally. And he needs to continue paying CMS unless he wants to go to court and have his business accounts reviewed regularly by HMRC and the CMS.

Go to links above for ADVICE NOW.
dwnload their guides and inform yourself of the “ fair settlement “ rules that apply to your circumstances. That’ll begin to help you understand what financial settlement you would likely get .
until you’ve both completed form E and D81 any discussion is hypothetical. Get this done asap and before you agree to anything even verbally. Again ADVICE NOW and the very Good government divorce web site will explain these forms to you

I'd say SCM from someone who was/is a high earner is shit for a start as we all know it's not enough

He won’t complete form E and I’m not sure I can make him. I can’t afford a lawyer at this stage
although have had some one-off advice sessions.

I read the redundancy pay can be “ring-fenced” as he doesn’t have another job and is using it to live. Received after separation.

Was a higher earner but not now unfortunately. Will be the first year of trading for the new business.

Hi, unfortunately for him, he doesn't have a choice regarding the Form E..it's a requirement of the court.
If he chooses to ignore your request for completion of Form E, you need to raise that with the courts.
There's a wealth of info online on the process..hope this helps.

I’m trying to avoid going via courts if possible due to complete lack of funds. We are trying to sort out ourselves as much as possible.

I do get that, but it's entirely plausible to act as litigate in person, and ask the courts to have your costs paid by him...I honestly think in these circumstances you will need to go to court.

But surely going to court costs thousands and thousands? He is currently unemployed and I am barely scraping by each month. No savings and no spare money to save.

It really doesn't have to cost thousands at all. You can litigate in person. And defer all costs to him, ultimately how he pays for that, will not be your problem. I urge you to research as much as you can..

No, this sounds wrong to me. The whole "she sacrificed a career" argument is extremely unlikely to get traction in a court. The compensation principle is incredibly rare (because it is very hard to prove where a career might have gone and normally most weaker financial parties in divorces with big income disparities didn't have much of a career in the first place) and normally divorce is based only on needs, taking into account the earning capacity of both parties. Another trap you're falling into is applying divorce laws for the super rich on an ordinary family where the primary earner is unlikely to be much better off than the lower earner once child maintenance, tax and benefits are taken into account.

What will actually matter is where the children live. This would justify the OP getting more of the home equity. However, this will be traded off against pension, especially if the parties are younger and there is time for the weaker party to build their earning capacity and save their own. Given both parties are on lower incomes, 50/50 could be possible although it really depends on the courts view on what the husbands earning capacity is.

I don’t really understand why he would be expected to pay all my costs? In the current situation, I am the only one with a job. Surely the courts wouldn’t make him pay for my costs in that situation? Also, expecting him to pay all my costs is not exactly going to keep relations friendly…. Not that they really are at the moment but still! I can’t see that sitting well with him at all. Yes he has redundancy savings but he has to pay his rent, SCM etc. I don’t know the business earnings.

And I guess, technically it could be my problem. He is paying SCM based on prior year earnings when he was working. He is now unemployed and earnings 25% less than what he did previously. It means he can apply for a reduction in his monthly repayments. I’m happy to keep the status quo as we would really struggle if it was reduced any further.

I think you have identified the primary complication with this separation and divorce. But it is a complication or both of you.

Redundancy is a payment made to compensate for loss of a job and income. But, the entitlement to redundancy accrues over time and therefore in the course of your marriage. Giving you a claim on it and potentially a say on his decision to invest in a new business and to not get a job he can live off.

Protecting this asset might be something you should get a lawyer involved with. Even if just to make it clear he cannot spunk it on his new business and not add it to the pot.

If the payout is the main marital asset then you could apply to get frozen. Whether this is worthwhile depends on how material the payout is.

If he is getting £100k and your other assets are £50k then it is.

If he is getting £25k and your assets are worth £500k then you can probably take it into account on paper without having to secure it.

Investment in a well written letter from a solicitor could be enough to bring him into negotiation and mediation. Your leverage is that you could put a big spoke in his wheel if you apply to freeze the payout.

@LemonTT Largely agree, expect the OP wouldn't have a say in whether or not he gets a job.

She might stop him investing all of the redundancy money in his business (and only his share); she might get a split of assets in divorce based on his old earning capacity. However, the one thing she cannot do is compel him to work.

Do you think it’s likely could get a split of assets based on old earning capacity? Could this happen? Chances are, he is never going to go back to his old life. The new business has nothing at all to do with his normal profession (which he wasn’t very happy in).

I guess the risk is he spends all the redundancy money on business and then not enough to pay SCM. I’d hope he would be sensible but I guess you never know.

@LDA123 In all honesty I don't know. People change careers for good reason. Some divorces have been based on old earning capacity, some on new. If you wanted to base it on old, sounds like it would go to court which neither of you can afford. Then you have the risk of losing, which you need to weigh up.

I honestly don’t want to go to court. As long as it seems fair to both sides, and the kids are ok, I’m happy.

Based on the information you've given I don't think you are a million miles away from a realistic settlement but a couple of hours with a solicitor might be money well spent.