Realistic budget

[Captain1]

My ex and I are in mediation. Unfortunately my ex is transfixed on a figure (£550,000) rather than looking at the assets and dividing them up.

whatever I suggest she always comes back to “ I ‘NEED’ £550k cash in order to survive. She is 47 and earns around £40k a a year and we have no dependent children.

In order to promote her ‘need’ she’s done a budget that suggests that excluding housing her need is £2725 a month and she only takes home around £2300. Hence she needs the money to buy a house outright and £550k is the price.

heres her budget:

Utilities - £684
Car - £258 (vw up)
recreation - £569 ( including (£400 a month for holidays)
Food £658 ( including £300 for a dog and 4 cats)
Personal £556 (clothes,hair,massages, lottery etc)

I offered to split the house after sale and buy her out of the pension and add a bonus but she won’t budge. Am I being unreasonable?

She will get:
House - £370k
Pension £100k as cash (or £150k as pension sharing)*
bonus £50k (I earn more so my recovery will be faster)

*The pension will still leave her with £120k pension in her name.

For clarity I’ll be left with £220 cash and £410 pension.

Surely you just add up the value of all marital assets, pensions, savings, property, cars and divide by 2. Unless one of you has suspended or curtailed their career to look after children or to benefit the marriage in some way nothing else is relevant. Just a simple halving of assets.

Just noticed you didn't say you had no children. You said no dependent children. So your wife may have been held back in her career because she was looking after your children which changes thinks I think.

Ex has working a combination or full and part time for same company for 25 years. Children are 18,20,24.

Why do you get more and ex gets less?

Surely it should be a 50/50 split?

She wants pension as cash

I’m not sure if we can say what is right here. Because you have not provided assets and incomes.

but it looks like you are both being unreasonable about at least one issue or another. She is unreasonable in her expectation of the share of equity needed and you on the amount of pension you are retaining.

Even in mediation it is useful to get some legal input to understand and hear whether you are being reasonable. And to get an understanding of what extent you can flex your offer.

sorry I think I’ve explained it badly she is getting £100k in cash in lieu of £150k as pension.

she will have a total of £120k pension PLUS £150k cash and £370 House a total of £640k vs my £630k and in addition a portion my share will be tied up and taxable and I’ll need to borrow more money form the bank for a property so more charges on me.

but my post was really about her crazy budget , £2725 a month for basic living? ( excluding housing)

It’s usually 50 50 of total assets, but if your 3 kids are staying with her don’t you want to be more generous for their sake? As they may well still need housing nowadays even in their 20s. If I were you I really wouldn’t split hairs over giving your ex an extra 10, 20 or 30k. Try to see the bigger picture.

I don’t think her monthly budget matters too much, that will be for her to manage going forwards.

I don't think it's fair on her, sorry.

Are your children at university? If so, who will be responsible for supporting them financially?

The “children” are currently all with me. After we sell the house they will have the option of coming with me or her, as they are now adults if they go with her I will support them directly and if they choose to pay her rent or whatever that will be up to them and their mother to come to an arrangement.

Objectively, of course she could live on loads less than that per month, many of us support dependent kids on much much less. Massages are not an essential part of daily living. But this is a complete red herring, don’t let anger and emotion cloud what is really a business deal.

Your proposal gives her assets of £640, £10k more than you. How would her having £550 of this in cash disadvantage you, given you earn more? Or is her proposal that she should get a bigger share of the pot?

And what are the potential costs of perusing this further? Mediation eats into that pot, and court will take huge bites out of it.

Yes I agree but most people agree that cash is more valuable than a pension and hence giving cash in lieu of pension attracts a discount of around 50%. Hence in my view this is an extremely attractive offer to her.

i have effectively split everything 50/50 and then given her an extra £50k in cash.

Ignore the budget, it's not really relevant.

If you are prepared to support the kids independently of her then splitting the assets is sensible.

I'm not sure why you feel cash is better than pension. You have said that 100k cash is equivalent to 150k pension sharing. Could you explain why?

(I have recently got divorced and I'm not familiar with this)

I don't think that budget is "crazy". The monthly budget has to include elements for things which aren't actually spent every month, like costs of replacing household items or doing household maintenance, budget for Christmas, birthdays and holidays, car maintenance, insurance, etc. She's not just spending £2700 a month on food and clothes!

What's your income? Your respective "needs" also factor in your relative incomes and therefore your relative abilities to raise and pay for a mortgage.

Without knowing salaries, we are limited in knowing if this settlement is reasonable. If you earn 500k per year, the whole situation changes. If you earn 90k it’s really a 50:50 with that level of assets.

The decision by either of you to subside adult children shouldn’t be part of the discussion. Thats up to you as individuals.

if 50% of the equity provides enough for a suitable home, even with a small mortgage then the baseline settlement of 50:50 of equity is the most appropriate divide. Her income of 40 K per annum is sufficient to live off.

Again the pensions should be equalised.

You both need to agree that before you trade pension for equity. You need to get a report that tells you what the pension if worth in cash terms now. Or agree it.

The bottom line is she needs a 1-2 bed property. Her living costs can be met within an income of 2k per month. If she decides she wants a bigger property and a host of pets she needs to find the money to pay for that or forgo this like a lot of people. That’s the choice people make in life. You don’t have to be the one who convinces her of this or helps her come to terms with it.

Bottom line. If her share provides for her to buy a home suitable for her needs her living costs will be affordable. Offering the pension share as cash now gives her the choice to invest for the future or spend.

Of course all the changes if you have a huge salary.

If you can’t agree, you go to court. Do you both have solicitors?

Offsetting a pension for cash is quite complex. Essentially cash is more valuable as it’s tax free and accessible immediately. As such, it is normally applicable to discount a cash settlement against pension. figures for this are difficult to come by, but most actuaries agree, a 30-50% discount should be applicable depending on your tax position and age to retirement.

a good link to explain this is:
https://www.roythorne.co.uk/site/blog/family-law-blog/Pensions_offsetting

or for the more legal minded:

https://www.familylaw.co.uk/docs/pdf-files/Apples_or_pears_-_Pension_offsetting_on_divorce.pdf

I personally read her budget and thought WTF, holidays are not a need they are a luxury. You don't have a right to be kept in the exact same standard of living you have always had just because you are divorcing, and going from a joint income household to a single one is going to inevitably come with some lifestyle changes as there is going to be less income.
I would personally consult a solicitor for advice. There's a firm called www.fair-result.co.uk that will assess your marital pot free of charge and tell you what is a fair and equitable split of your assets and can give you advice on how best to negotiate with your ex in your mediation sessions (or do it on your behalf if you prefer).

I disagree with this, particularly since the OP is notably reticent about responding to enquiries regarding HIS income. The wife earns £40k. If he also earns £40k, or even £100k, a 50/50 split of assets might meet needs. If he earns £400k then it won't.

Dont understand why people say it’s unfair on her. She’s getting at least 50% of assets, has no dependent children, works full time and can support herself

op is taking the risk in insecure pension values, the time value of money to receive it and the tax on it later, none of which the ex has

In my divorce, children were over 18. So, the courts ignored them.

Split of assets is based on needs and what is available as opposed to wants and wishes. If there is enough to go round for both partners, great. If not, both will have to adjust their lifestyles accordingly.

That the OP has not specified his earnings rings a bell. If he is a very high earner, the courts may not consider his wife's expectations to be unreasonable.

yes I’m a higher earner (£160k) hence the offer is and extra £50k cash bonus to the 50:50 split.

After a long marriage, which presumably this is, and unless there is tons to go around, the idea is for both parties to be able to meet their needs as much as is possible in splitting the assets up.

As for her needs, that depends on what she is used to. If she normally has that kind of lifestyle, it doesn’t seem excessive.

I don’t think you can ignore the income disparity. If you split the assets 50/50, you will end up far wealthier than your wife.

Your wife could claim for spousal given your high earnings, but better to give her a larger share of the assets and a clean break.

Obviously, it is more complex because also depends on ages, future earning power etc. But, unless I am misreading, you are arguing over all of 30k, which will go in a flash in legal fees if it goes to court.

This is where you need expert advice. Your combined income was c200k which is a more than comfortable lifestyle.

Although most people don’t have incomes or wealth to get to lifestyle arguments there is a risk that you do. It is not as obvious as a v high salary but your wife can argue lifestyle need because this is presumably the way she lived for a v long time.