LIP tips

[LDA123]

Hi,
Waiting for the hearing date for court to help us with a financial order, mediation deemed unsuitable. Will be LIP.

His proposal:
50/50 split including pensions & equity. Sell family home and both rent.

My proposal:
50/50 split, higher equity / lower pension. Sell family home and I buy small place / he rents.

4 children 50/50 custody (new arrangement). Both our housing “needs” are the same.

A bit of history - I was working part-time and primary carer. Now working full time, no CM. Have a mortgage in place.

He was working full time in a professional role (higher earner) but has left work and set up own business with no income at moment. Substantial redundancy spent on business. No mortgage capacity. Has been unstable over last 18 months with MHI.

Equity £300,000 / Pension £200,000 (mainly his). Not enough to both buy if 50-50 equity.

I worry that what will happen if (a) we both end up renting and then his business fails or (b) he can’t cope with looking after the 4 kids half the time. Rent will be much higher than a mortgage so will be spending equity / not saving to rent.

If after a few years, his business is doing better/got a job, then hopefully would have own mortgage capacity.

Thoughts? It’s a tricky one I think.

LIP tips!

As in Litigation In Person!

As long as you don't need him on your mortgage then your proposal seems quite sensible (if you need him on your mortgage, then forget it to be honest). Maybe a 70/30 split on the equity and then bring things back to 50/50 with the pension. Bear in mind though that £1 of pension is not worth the same as £1 of equity and you might get what looks like less than half if you take more of the equity.

For example, £1 of pension might be considered the same as 80p of equity. So like for like might be £300k equity and £160k pension when revalued for offset. You take 70% of equity, £210k and he will take 30% which is £90k. Then he would take £130k of the pension at the revalued amount and then you will split the remaining revalued pension of £30k 50/50 (£15k each at revaluation).

This would then translate to you having £210k of equity and £18.75k of pension and he would take £90k in equity and £181.25k in pension.

I wouldn't expect any more than 70% home equity though, especially if he has no income. He will need some equity to house himself either as a deposit or rent.

No, I don’t need him on the mortgage. I’m seeking a clean break.

As we’re doing it ourselves, I’m not sure how they would discount the pension? We are just using CETV provided by mortgage companies. Is this something the court will insist on, a less than £1 pension for equity swap? Neither of us are asking for this.

They won't insist upon it but as you cannot agree on how the assets are split it will probably become an issue. A mediator will probably inform you of this fact if you try and resolve it there.

If you are splitting everything 50/50 it's fine but if you want to go with your proposal that includes offsetting then to do it properly you will probably need a pension report.

I wanted to do meditation but it was deemed unsuitable. We are NC. Court is our only option.

I'm sorry I'm not going to be of much help with some of the stuff you have said, but I am a fellow LIP so I know how to it feels to be doing it all yourself. I'm not sure the reasons you guys couldn't do mediation but for me we couldn't do it due to my ex not being very fair so we had to go to court. I couldn't afford a solicitor but luckily I used a really good source that helped me understand everything and know what to do next so I thought I'd leave it here in case the guides could help answer some of your questions. Hope it can be of help xxx
https://iamlip.com/
https://iamlip.com/home/

I was a LIP and it worked out v well for me in contrast to ex who spent a fortune on legal costs chasing an unrealistic outcome.

Information and organisation are key. You have to be super on top of it all and you need to try really hard to take the emotion out of it and stick to financials.

Careful with pensions - if he has a final salary scheme it will be worth more than the CETV. Also you do not want to leave yourself pension poor if you've had an earning gap. Our judge kept pensions separate from the equity/ assets, ie. These were worked out 50-50 based on equality of income at state retirement age. We had a pension report though so could rely on this for the calculations. I received a pso on some of his pensions as they were worth more than mine.

I would argue for 50-50 on pensions on the basis of a pension report as above. Then I would work out what equity you need to buy and try and push for that, ie a split in your favour. If you can take on the mortgage of the FMH that's also worth considering (ie delayed sale). I would do this on the basis that your earning potential is lower than his as you had time out for child rearing/ as primary carer. Equally you actually have a claim on the business as it is a marital asset so I would use this as a bargaining tool. Are there any other assets? Are you confident he has fully disclosed? A judge will be looking for him to maximise his earning potential and offer stability to the children who are the priority. This means steady income and non rented property. The kids will also vote with their feet on this when they are old enough and that 50:50 shared care becomes far less practical.

Good luck. It's a stressful, hard road but the freedom at the end is worth it!

Thanks momentumneeded, a great help. The pensions aren’t final, they’re defined contribution so am hoping to proceed without any further reports.

I’d love to argue for 50% of the pension - but mine and the kids housing needs right now trump my pension needs in the future. If I argue for 70% of equity (this will buy a 2 bedroom or very very small 3 bedroom if I’m lucky) it will mean pensions will have to be split 30k me £170k him. That’s to keep at 50/50 split. I’m
not sure if a judge would contemplate greater than 50/50 in view of the shared custody arrangements.

I have no idea about his disclosure (I know he got a £100k plus redundancy this year) as has refused to complete Form E. But now he will have to when the time comes.

I have no other assets (I’m living very much month to month with no savings) but I don’t know if he has savings or it’s all gone into the business. He is not really on board with paying for 50% of costs (school trips etc), school lunches on his days (currently debited from my parent pay account) and it’s a struggle to get him to reimburse me and I can’t afford to pay 100%. Hoping a judge will help us with this.

Unfortunately, I cannot afford to stay in family home as when we took out mortgage, he was earning £100k plus. I earn a fraction of this. My new mortgage will be for a much smaller amount. Accepted will be moving from a 5 bedroom detached to a 2/3 bedroom terraced.

I’m really pleased you had a good outcome with litigation in person, it gives me hope!

The only other asset is the family car bought from joint funds when married. Since the new 50/50 custody arrangement, he is keeping this 100% of the time. Me and the kids are walking/cycling/public transport as no longer have transport. I take it, it is fair to allocate funds in the divorce to enable us to buy a car? So say if family car worth £5k, we should be able to argue for £5k of extra equity to buy a car.

The law is unlikely to look in such fine detail and it will base its decisions on need (generously interpreted), not either party's concept of "fair."

So they will take into account that he has a £5k car and that will be an asset on his side of the 50/50 division. But they're not going to make sure you have a car too, they'll just make sure you have a fair split based on needs and you can choose whether to use some of it for a car or not.

Ok thanks!