Is this a reasonable settlement figure?

[Twinklestar80]

Myself and my stbx have been together 12yrs, married for 8 with two young children (18months and 5yrs) and I started divorce proceedings about 6 weeks ago as we just don’t work anymore. He earns in excess of £200k per year while I stopped working 5yrs ago to concentrate on the children (I was earning £32k) He’s always been extremely financial controlling and I have access to a very limited amount of money each month and have to ask constantly for the joint account (£1k) to be topped up. We’ve just had our first mediation session and he’s revealed that he’s got £65k in UK bank accounts, £75k worth of stocks in the UK, £200k pension and in excess of $1.6m in US (they’re American) stocks and assets (accrued from a family settlement 40yrs ago but in his sole name). We also have about £340k in deposit and equity in the house. During the session I reiterated that i would like a perm home for the children as mortgage free as possible (3bed in SE London) as even when I’m back to working full time when my littlest goes to school, I’ll only be able to get circa £120k mortgage. He’s told me that I’m being totally unreasonable asking him to access him US assets and that he’ll get charged at least 40-50% capital gains tax which will mean that he’d be wiped out if he gives me a large sum of money for a house. He’s said the best he can offer is half the UK savings (£30k) plus half the equity in the house (£174k) and he will try to take a second mortgage out in his name for a house for me and the kids. I’m super reluctant to do this as it’s just another way for him to retain control over us and to have a long term financial interest in any decisions I make regarding the house. I obviously don’t want to bankrupt him but do I take what he’s says at face value? Should I be asking for an independent accountant to verify his capital gains tax claims? My sole focus is ensuring my kids have a permanent and stable home.

I’ve got a solicitor who I can speak to but she’s said she can’t help with capital gains tax issues and that I need to speak to an accountant.

Sadly, he wouldn’t allow a live-in nanny even if I’d have insisted on going back to work. He would get super angry if I bought our daughter a £100 scooter for her birthday. Only around 1% of people in the UK earn in excess of £200k with the average around £34k so for the vast majority of us, being out of the workforce in a fast moving sector is a sacrifice. I actually can’t wait to get back to work and moving my career forward but when you live with a ‘partner’ who will not commit to taking the kids to school, get up with them and travels with work a lot, it’s super hard.

Sadly, he wouldn’t allow a live-in nanny even if I’d have insisted on going back to work. He would get super angry if I bought our daughter a £100 scooter for her birthday. Only around 1% of people in the UK earn in excess of £200k with the average around £34k so for the vast majority of us, being out of the workforce in a fast moving sector is a sacrifice. I actually can’t wait to get back to work and moving my career forward but when you live with a ‘partner’ who will not commit to taking the kids to school, get up with them and travels with work a lot, it’s super hard.

You need legal advice and he sounds useless.

Only if you put zero value on the children of the marriage and caring for them. Only if you put zero value on the shopping, cooking, cleaning, being on call 24hrs.

If he took on 50% of the on-call and caring responsibilities of the family, he'd either have to buy care that in, or reduce his work and thus have significantly less - therefore it has value, therefore morally she is absolutely entitled to sufficient share to look after their shared children to a standard mid-way between the two of them (ie. she'll probably provide 90% of the care, and he should provide 90% of the money)

Well luckily the law sees it differently to you.

You'd need a live-in nanny, and a backup nanny in order to replace the services provided by the OP

Plus a personal assistant and cleaner (assuming you're OK with eating out/ready meals)

How much of that 200k do you think he'd have left if he did that? Even if you said he was only responsible for half of the bill, he wouldn't have any change left from 50k. After tax of course, so at 200k/year, that's more like 70k.

So when you unwind those sums, after tax he's brought 120k into the household (rough - we don't know if that salary is pre or post pension contributions), 50% of the caring costs takes that down to 70k. OP has provided 50% of the caring costs personally, so has contributed 50k of value - so they're 20k apart - really not such a big difference now is it? Especially since I didn't include costs like a car for the nanny, or that he presumably has commuting and business attire costs that OP doesn't etc.

Sounds like he inherited most of the money in the US, and he’s offering half of the shared assets in the UK?

Which seems reasonable.

It think whatever the situation you’re going to struggle to buy a house in SE London OP. Could you move elsewhere, where the capital you have will buy a better house, and the wages you think you can earn will stretch further?

Pension is a shared asset, as are the stocks - he's shorting her significantly - especially if he doesn't intend to have 50% care of the children.

I would push for the house (easier to keep the existing one than get another, especially for the kids - unless you hate that idea OP) - as the equity is basically equal to half the pension/stocks/savings. But I'd get an agreement in principle for a mortgage and if I couldn't get one to cover, then I'd push for a little more cash as well, in order to get you under whatever the mortgage you can get is.

And that's entirely ignoring the fact that he has significant US assets, as they've been accumulated over 40 years - but which mean he's perfectly capable of re-housing himself given his assets and job.

He has inherited it in the US. It’s also just came out that he’s got another account over there with $2.7m in it. I always said, right from the start that I need a home for the children and child maintenance. I told him that I wasn’t interested in the US money. Having spoken to three different family solicitors, they’ve all said that if ‘needs’ aren’t met by the UK assets then there is a likely chance of the US assets being taking into account if it reaches court. I don’t want to go to court. But I’ve spent 12yrs being financially, verbally and emotional abused and I now need to take some power back for the children’s future. Legally he needs to declare any assets with his name on. I’ve tried to explain this to him but he doesn’t believe me. Hopefully he’ll find a solicitor who will give him a reality check.

Could I move out of SE London? I could theoretically but that would likely not benefit the children. They are settled in the area, go to school and nursery here, I have my parents and sister living close by so a good support system. Also, he’d not let that happen as then he’ll have to travel to see the kids and that would be a major inconvenience.

I’d keep the house but it’s a massive 5 bedroom which we were due to spend £200k on for a much needed reno before we split and so while it’s livable now, all the plumbing is bad, the kitchen is falling apart and the bills are astronomical. It would be a money pit. I love the house but I don’t think it will ever really feel like mine because of all the memories plus I only really need a small 3 bedroom with a small garden.

You absolutely should expect a house for you and the children to live in. He can rent, or move some
of his US assets for a deposit. Don’t let the keyboard warriors guilt you into settling for less than you and the children deserve. Why should you struggle while he swans off into the sunset with all
the money.

@Mumof3confused no she dudnt

they were married 7 years before chikdren and the wealth was amassed pre chikdren /or inherited it appears. So op hasn’t really sacrificed anything to
amass this wealth, op was earning 32k during that time

There’s nothing wrong with that at all btw , it’s good earnings, but to say she has sacrificed a successful career by not working for just 5 years is disingenuous and far from accurate.

and the nonsense around needing nanny’s, cleaners, gardeners etc is laughable.

I know lots of 200k plus earners and none of them have any of these ( myself included)
anyway, op will walk away with a very good settlement for sure that will surpass any ability to acquire those without marrying. So far from being disadvantaged by marriage has benefitted massively,

the lawyers can argue what’s fair and op will come out well provided for

Please, for the sake of your children, only take advice from a reputable, qualified solicitor. Don't agree to anything, don't sign anything until you've got representation in place. You may need a forensic accountant too, your solicitor will advise.
Don't get into a bargaining situation from the off. Wait until all the marital assets' value has been determined. Then you can start trading.
Large sums of money at stake here, and your financial future - definitely worth playing the long game for this.

@millymollymoomoo I haven’t said that she sacrificed her career but she has enabled his - his work involves a significant amount of travel, by the sounds of it.

She’s not looking to access the inherited wealth but of course she would like a secure home for her and the children. This is not unreasonable. It seems you think op deserves to be left struggling because she isn’t a high earner like you.

Pension is shared asset.

disposal of the US assets will cause US tax issues but that’s his problem.

you can absolutely share his pension - the court issue a pension sharing order and it’ll be split and part will become yours.

beg borrow or steal the Money for a decent solicitor it’ll be worth it.

He‘s claiming that he’ll be taxed up to 50% if he cashes the stocks/shares in and it will ‘wipe him out’. It’s actually his 75 year old mother that has managed their investment accounts for the last 40yrs and I don’t think she’s giving him the full picture. He was also willing to take £200k of her money for the renos we were meant to have, rather than cash in his assets.

For years, I was led to believe that the deposits for our homes came from his money but it turns out, it came from his 75yr old mother. That now explains why he kept telling me that his family basically bought our home for us. If I’d know this, there would be no way I would have agreed to accept the money. But this behaviour very much sums up how he thought of our finances, even after marriage - it was none of my business. I feel so stupid that I didn’t push for my opinion to be heard about finances earlier on. My mindset was that I should just accept the ways things were because he allowed me to stay at home with the kids.

I’m a UK tax specialist, I know a bit about US tax but not loads, and most of it is on the corporate side. But, what I do know is that there is a treaty between the UK and the US that is designed to make sure that people who are taxable in both the US and the UK shouldn’t suffer double taxation: they should be taxed only in either the UK or the US. I also know that tax rates on capital gains are 24% in the UK and the top federal tax rate on gains is 20% in the US (and he should only pay in one jurisdiction), ie nowhere near 50%. Deductions are also available.

This is tricky stuff: the US tax system is frankly bonkers, the UK:US double taxation treaty is particularly thorny, and £2k is very cheap for this level of advice. Please make sure that you’re using someone reputable, at least check that they have a decent tax qualification - searchable list here. https://pilot-portal.tax.org.uk/utilities/ciot/find-a-member

An alternative is for your lawyer to ask him to produce tax advice from a reputable adviser evidencing the tax implications of divesting assets as part of financial settlement negotiations. Don’t settle for less than you’re entitled to.

Good luck!

God it's no wonder people don't want to get married anymore

A guy like this who was already financially abusing you is never going to be either fair or honest. Get a very good lawyers on the case and get the forensics on it fast as the more time that lapses the more time he had to hide and dispose of assets. Get form E completed asap, he needs to request a pension CETV, and assume he will lie on it the form and it will need investigating. I would expect a court to agree to a generous global maintenance order for 5 years, to get you back in workforce once children are both in school. On top of 70/30 split of all assets in your favour minimum if you take the US assets off the table. You might agree not to touch them, but they will still count towards meeting his needs.

Thanks so much for your advice and the link. I’m struggling to get specific advice as they’re not allowed (understandably) to discuss accounts with people who don’t have their names on them. Would the 20% tax rate also apply to capital gains tax?

Just to add, the purpose of asking him to produce tax advice isn’t to just rely on what he says, but if his adviser does the leg work it’ll be cheaper for you to get someone good to check it.

Just to add on the tax side if the investments are US mutual funds or other funds which are ‘non-reporting funds’ then if the gains are taxed on him then the tax rate can be income tax rates rather than capital gains tax rates, I.e. 45%.

I work in US/UK tax and you need a specialist to advise and especially to review how the investments are held to determine tax consequences of sale. If his mother is managing the investments then they may be held in trust which adds further complexity and needs careful consideration. The US and UK tax positions also may not align - for example depending on the history as the investments have passed from his father and how they are held now, there could be different valuations for the US and UK cost basis used in the capital gain computations. If the investments are held in trust the US/UK tax treaty will also work differently to personally held investments.

It will be in everyone’s best interests to get tax matters advised on early on in the divorce process. We have acted as expert witness in divorce cases where the tax questions are asked last and it then becomes more expensive to advise on the questions asked by the court rather than be proactive in advising first on the best way to mitigate taxes and end up with a settlement of £X and £Y for each party.

Just a quick update for those interested! Just had our second mediation session and I ended up a blubbering mess 😢 Rather than talking about childcare arrangements, stbxh focused on financial settlement. He disclosed a further £1.1million in assets in the US but is still claiming that the only financial arrangements he can ‘offer’ is a Mescher order, a second mortgage or me renting. He made a point of saying that in order to agree to a settlement, I would need to explain how I intent to pay the bills. Told me that the £400 universal credit that I would get and £800-1100 he would ‘give’ me for as CM wouldn’t cover them and that I would have to go out and get a job now. I agreed that I do need to get a job and it is defo my aim within the year but right now, my priority is maintaining stability and routine for the children. Sadly, I don’t think mediation is going to work for us as I feel very overwhelmed, bullied and unable to properly represent myself and the interests of the children in this format and need some form of legal advocacy to help this move forward. Thanks for listening if you’re still here.

How awful for you. Was the mediator helpful at all? I don’t think there is any point going back if he can’t be reasonable and insists on bullying you, sounds very controlling. Can you afford a solicitor?