Finally separating our finances - is this fair?

[BetsyHolme]

My husband and I separated back in January due to his mental health. We have been in the family home all year. Now, things are finally moving in the right direction, and he is looking for a house.

A little bit of background:
We have been married for 12 years and together for 19, and we have two kids aged 9 and 7. We would like to work out financials between us to avoid animosity. The kids will be 50/50, and I won't challenge him on this as he's a brilliant dad.

He has always worked, albeit not with a big salary, until the past year, when he was unemployed and spending inheritance cash or accruing credit card debt to cover household costs. He is capable of earning a full-time salary in his mid-40s.

I worked full-time until our eldest was born, then didn't work for 5 years, and now I work part-time, 25 hours a week. I earn about 1.5k a month, and I will be entitled to a small amount of universal credit to top up my income to around 2kish once im independent.

Financials:

We have a family home that will be sold in the next few months. This leaves us with equity of approximately 280k—300k.

He is selling his mother's house, and from this sale, he should receive in the region 525 550k.

He has approx 50k in credit card debt (I think)

I have about 15k of debt (including recent car finance I had to take out when my car blew up 😣)

He has been advised that he may be able to ringfence his inheritance from the marital assets, subject to both parties' needs being met. To be honest, I do not want to go after any of the inheritance; I do not view this as mine.

He plans to buy a three-bed house in cash upon completing the sale of his mum's house. I will buy a house with the equity of our family home and with the help of a small mortgage (I can borrow up to about 80k)

Thank you if you have gotten this far!! We are about to start putting down some figures, and I really would like to know what other people think is fair based on my circumstances.

I suspect his idea will be that I stay away from his inheritance, take a majority share of the equity in the family home, and use this as a large deposit on a house, topped up by a small mortgage.

I do have a feeling that he wants a share of the family home equity to pay off his debts; total debts around the 70k mark would take the equity down to approximately 220k. Then, with legal fees and stamp duty, it could be 200k, giving me a budget of around 280k to buy a home. It's not impossible, but certainly not as nice as the one he's buying for 375k.

Pensions are negligible, so I'm not bothered by that.

I want to go in confidently with an objectively fair figure.

Does anyone have any thoughts?

If we need to involve solicitors, then I suppose we will, but the intention is to try and solve the problem ourselves, certainly in this first chat.

So my question is, what do you think is fair? What would you ask for in my position? What is the minimum you would accept?

Thanks so much in advance for any thoughts xx

Unfortunately, it's a tricky one again. I currently earn 20k in part-time hours, while he earned 37k full-time when he was working. Due to his career and qualifications, he has more earning potential in the long term than I do. Still, ultimately, if we both worked to our maximum capabilities in terms of hours and career moves at this point, it wouldn't be massively different. I could also claim some universal credit.

Does he get PIP for his mental health condition?

I know what you are saying, @Silvers11, im going to think about that. I had one short session with a solicitor right at the beginning, and she was so rubbish. Basically, they just told me the worst-case scenario was 50/50 on marital assets alone, and the best-case scenario was 50/50 on everything. I got more info from Google! I don't want to end up paying someone to tell us what we already know, and then we are back to square one but with some acrimony chucked in.

I don't think he would ever propose paying off his debts and splitting the family home 50/50, but I'm sure he would realise this was wildly unfair. At this point, it's about what percentage of the equity I ask for, 60/70/80/90 or even 100%. I dont want his inheritance, I dont want his pension but what is reasonable to actually walk away from this marriage with. Should I take on a bigger mortgage and ask for less equity, or should I hold out and be as mortgage-free as I can be?

Because it's inheritance, it poses really moral questions more than anything else. I know I can't strive for the exact standard of living that he will have because that's just not my money, but the sums are the sums—I need a house! Then, is it outrageous to ask for all the equity in the family home, given what we have both built over the course of the marriage?

100% of the equity would mean I could get a lovely house and have a very manageable mortgage payment. Although money would be tight, if well managed, I could be comfortable. 80% of the equity would get me an okay house, and I could be okay with the money I have. Then, there are all the variables in between. I suppose I'm just trying to reconcile what kind of lifestyle is reasonable to ask for—not to compare with his necessarily but just for me.

I think its maybe less what im entitled to because legally, its coming down to the difference between 60-100% of the equity (in my mind anyway) but more what 'should' I ask for?

If any of that ramble makes sense! 😅

This is just one fact amongst many. Impossible to know without the kind of detail you won't want to go through on a forum anyway.

I would be reluctant to predict an outcome where you get 100% of the marital assets because of his inheritance though.

No, I wouldnt say he has a mental health condition as such, just struggling with losing his mum.

Well, why don't you do some sums. Figure out what you'd be earning if he'd stayed at home when kids were born/little, and extrapolate in your career. See where he would be now if he'd taken that time off (like you did) and remained PT at best. Then, look at the housing market and see what you'd get with a 50/50 split of marital assets. Then decide if that's okay for the kids to live in 50% of the time. If you're both happy with that, make it happen. If not, you're going to have to ask for more than a 50% split, given he's got something to give.

And don't kid yourself. You're being all nice and kind by not getting legal advice: he just needs to spend a little time with a solicitor himself (likely seeing as he has no income and a nice inheritance to protect) and he'll be ahead of you. I'm not sure you have the luxury of not looking ahead to this getting difficult. He doesn't need to know you've consulted a solicitor. I'm sure there's plenty gone on in his recent past that you don't know about.

But if you are asking him to take less equity because of the inheritance, you are effectively making a claim on the inheritance. Pound for pound, any extra equity you get is coming from the inheritance.

That hasn't escaped me @StormingNorman, not at all. But if the 'marital assets' were split down the middle, I would be homeless, and he would be almost a millionaire, so I have to be a little more pragmatic.

I dont want 50% of his inheritance.

The aim in a divorce as far as the court is concerned is a position of equality for both.

Sorry to split hairs but it's actually an equal start to independent living. Which means something slightly different to a position of equality.

It is quite an important distinction though because courts don't always include inheritances in settlements unless they have on a needs basis and also if one of the couple could work more and doesn't then they won't award them more to leave the couple in a position of equality. They will assume the person not earning at capacity is happy to live on less.

I dont expect equality, I really dont.

I understand that he will have more and I will have less, I understand that he will be mortgage free and I wont.

If i get 100% of the equity and we keep our own debts I get 285k and he gets 500k.

If i get 90% of the equity and we keep our own debts I get 255k and he gets 530k.

If i get 80% equity and we keep our own debts I get 225k and he gets 560k.

Etc etc

A lovely house in this area is about 380k
A nice house in this area is about 350k
An ok house in this area is about 300k

I can raise about 80-90k mortgage alone, and that would make the mortgage repayments manageable.

Obviously, these are all estimates and subject to variation but these are the figures im looking at and wondering what is fair.

And your pensions? Have either of you got one? Those will be taken into consideration too..

What will probably happen is he keeps his inheritance but it's still put in the whole pot to a degree.

ex kept his but in reality he had to give me half of it to make it so we both had similar outcomes. I'm getting more than half the house and 3/4 of his pension but he has more of some other assets and will be getting all of his other pension.

use a solicitor.

This is why when I divorced my parents removed me from the will, just in case they passed away before or just after settlement (they left it all to my brother instructing him to hold mine in trust). They are both still alive fortunately but one of the "quirks" of financial remedies that I really don't approve of is the way that a spouse who receives an inheritance can be forced to share it in a needs case but won't get to share in the other spouse's inheritance if if comes later on.

I didn't explain that well. He kept his inheritance but he had to give me a lump sum because of his other assets. It just so happened I think he had to use some of that inheritance as the only liquid cash he had.

This is a great article from a solicitor on matrimonial and non-matrimonial assets and inheritance. The examples at the end are a really good guide. I think you would get 100% of the equity and some of the inheritance so that you both get a fair share and can have a house each to live in to support the kids.

Get proper legal advice and see what happens.

https://parissmith.co.uk/blog/inheritance-and-divorce-do-i-have-to-share-it/

regarding the inheritance .. his mother is your children’s grandmother, surely she wouldn’t be unhappy with that money being acknowledged in the discussions, both new houses would ultimately go to your children, unless you or ex have more children.

Is it possible that your STBX is avoiding work and running up debts to shaft you over the split? Especially as you are not really looking out for yourself here and he wants you to work it out yourselves?

a really good resource is wikivorce. https://divorce.wikivorce.com/divorce-calculator/divorce-calculator.html

also, be prepared for him to turn really horrible when you show that you think that walking away with the bare minimum isn’t fair or in the best interests of the children.

Get a new solicitor.

No, I understood. You got more of the marital assets because he got an inheritance. I think this is also unfair, hence my parents and I planned carefully to avoid this outcome and I would encourage other people going through divorce to do the same.

Morally, the inheritance should be discounted. It’s your husband’s inheritance, not yours.

No. That's not the case. Nor is it unfair.

Morals don't come into it.

They weren't separated when OP's MIL died, they've spent some inheritance on household bills, therefore legally it's all in the pot.

I really disagree with this idea that inheritance should be ringfenced, it's divisive and encourages people to be grabby.

I'm sure OP supported her DH as much as she could in his grief, she certainly paid most of the household bills while he couldn't work. But now they're divorcing he thinks he should keep it all. Nah, son.

Its unfortunate the family home is already up for sale as if there had been a longer period between him buying his new place and the family home selling you could roadtest whether he will really do 50:50. Its easy to promise this but the reality of starting a new fulltime job and a new bachelor life can mean that doesnt hold. I worry you will end up doing far more than 50:50 and have all the constraints on your income that brings.

Maybe not in your case but as a general rule, it is how it works, e.g. Critchell vs Critchell. Pretty appalling in my opinion but it's because divorce finances are based on a long outdated statute.

It's a bit up in the air because his mum's house hasn't sold yet, nor has yours, so you don't know what the sums are. His other assets, like the remainder of the £50k, should be included too. As well as any other savings.

I think you do need to consider how the debts were built up.