Ex wants my mum's gift of 20k included in equity split

[DangleDonkey]

Hi all,

Partner and I (not married / 1 child) split in November last year and are selling our house. It was a wreck when we got it and we spent a lot of money on doing it up.

A rough summary is:
287.5k - bought the house for this in 2022
Made up of 80k deposit from previous property and 207k mortgage.

Spent 40k on the renovation plus stuff for the house (this extends from a rewire and carpets to storage costs and rent for where we lived during the renovation to a dishwasher and cushions and nice things for the house). We don't have an itemised list for this and it'd be almost impossible to do that nearly 3 years on).

20k of the above was from our previous house sale which we kept back, 20k was a gift from my mum. My mum sees this as inheritance that is more useful to give to us now (my sister also got 20k, which went into her ISA), rather than when she dies. My mum is 71 and in good health - I understand a gift of this size can have inheritance tax applied if she were to pass within 7 years of the gift.

When our sale goes through and we've paid our fees and 198k ish of mortgage, I'd like to take out that 20k as mine then split the rest of the equity as 79/ 21, which is stated in our deed of trust (with my share as 79%).

Ex is sore about this split, despite signing the deed of trust at the time. He does seem to understand that it's legally binding though as he signed it freely and it does accurately represent the share of the deposit we each put in.

He wants this 20k from my mum to be included in the equity split, ie he would get 21% of it.

Is this inevitable and I just need to accept it as we never had a document drawn up to ringfence that money as mine?

Or as we're not married and there's bank statements showing the gift, and my mum would attest it was for me not for us, can it be separated out?

Thank you in advance

When he moved in with me at my last house, I started counting his contributions to the mortgage as accruing equity, outside my initial deposit. So he never had to save for a house deposit, hasn't saved a penny these last 7 years we've been together, and even if it goes my way, comes out with 30k.

He’s correct OP because that 20k was spent on the house and so it forms part of the equity split. You’d be double counting if you wanted 79% + the 20k, legal advice would be that it is included and split in like with the rest.

Has he paid towards the mortgage/contributed to the hiusebild
finances?

But you also signed of your own free will to split equity as 71/21% and chose to use your mum's 20k gift to do up the house, thus increasing the equity for you both. You could have insisted he contributed a percentage to the renovation too and it would have been equal but you didn't.

He might be feeling sore about the split but I don't think he's wrong in expecting the entire equity to be split in accordance with your deed of trust. You could have also had it amended to reduce his share by whatever % your 20k cash injection would have been.

Whether he has paid towards the mortgage or whatnot seems irrelevant. What's relevant is your deed of trust.

I think if you have a legal document showing the split of equiry, that's what he's entitled to regardless if how the equity came about, but it sounds like he did a lot of the work to create the equity too, so it "feels" right to me anyway.

As PP said, you're not talking about enough money to be worth the fight anyway.

And in terms of long term co-parenting - how does he expect this to impact that?

I know someone who was the partner (not married) to a wealthy man for nearly 30 years. They had 3 children together and she was a SAHM. Can you guess how much she walked away with? HINT: It rhymes with ‘hero’

Legally, you’ve got the deed of trust that makes it quite clear what the equity split is.

I can see how you’d feel like the money from
your mum went into house equity, but in reality from what you’ve described it’s gone into ongoing living costs. Some of which was into increasing the value of the house, some was into maintenance (which generally isn’t an equity gaining activity) and some was basically domestic consumables or possessions. Things like soft furnishings don’t add up to equity. So while some of that £20k will be ‘there’, some won’t. Given the deed of trust splits so heavily in your favour - £4k of what you perceive as being in the house going to him probably still lands you out about right as not all Of the £20k went to equity.

Write it off and just thank your lucky stars you weren't married and he's not skipping off with 50% of the lot.

£4k to see the back of him faster is peanuts if you consider what a wedding and a divorce would have cost.

Or suggest it goes in savings for DD so neither of you 'gets' it but it's not going into his back pocket and part of the inheritance passes on a generation to his daughter.

If this ends up going to court and you lose a purchase in the meantime m, your going to have less money than you do by giving him the 21%

I don’t think the 20K should be included in the equity split but if he’s only getting 21% then you are arguing over 4K, is it really worth the aggro? (Yes, I know 4K is a lot of money, but not in relation to property prices).

Has he been contributing more than 21 percent of mortgage and bills? If yes then i would say you are on to a good deal and you should just let him have the 4K.

You didn’t ring fence your mum’s money and you put it into a joint asset which was defined as 21/79 portions. He’s right, you’re wrong whatever the morality of it…

I do think he's right. If you had just taken the 20K and put it in a savings account for you then that would clearly be just for you still, but because you invested it in a joint asset and didn't adjust the 79/21 percentages accordingly at the time it will just be included in the overall split.

How were you splitting the mortgage payments?

Say it was a loan and if he pushes it to court (which I doubt) pay it back to mum and she can give it to you later on. bit of paper with loan agreement can alone backdated. It’s a bit dicey as it was out in to a joint asset.

You are not married anyway and he has no right to it. What a nasty grabbing shit he is.

Did he only pay 21% of the mortgage payments over the last 3 years to reflect his 21% share?
If he paid 50% of the mortgage then a fairer way of doing it would be you take out your deposit money he takes out his deposit money and the remainder gets split in half.
Your mums 20k in part appears to have been spent on various non recuperable expenses such as rent, storage fees, fixtures/fittings etc and therefore no longer exists as such.
I think if he did pay 50% mortgage you're probably not onto a bad thing with the deed of trust split.

I think legally the 20K will be included in the equity split. I can see why it doesn't seem fair but it is also difficult to be certain that that 20K increased the equity by 20K. If some was spent on decorating, furniture etc, it may not have contributed to the increase in equity. What if the act of spending that 20K only increased the realised house price by 10K (or 5K). Then it is unfair to take the whole 20K out as it is taking it out of both equity shares. Or it might have contributed more. Maybe it was the labour that contributed more. I think it is impossible to tell.

I hope you’ve got that in writing! Use it against him and say that any costs as a result of a delay will be claimed from him during proceedings.

Just agree to the split (not enough money to argue about) and ask that you get more of the furniture to make up for your contribution.

OP will need to seek legal advice on this, However legally I'd say the ex has a good case to include the gift of £20k as it was going towards a house which was going to be jointly owned.

Using emotive words such as ‘literal life savings’ etc, is completely irrelevant. Did your DM tell you the money she was gifting was totally for you? If you have kept that money in your own account then absolutely it’s all yours as you're not married. But it was spent on the house, which was jointly owned in unequal amounts. The money has gone.
I think it forms part of the equity now.

Are you saying that your deed of trust splits ALL net proceeds of the sale in the proportions of your deposit amounts being 79/21?

If so then you have done exceptionally well out of the "cheap" lawyer and it would be fair to back down on the £20k even if you felt it was a gift.

More the norm when a couple would be that after the mortgage is settled, the amounts of your deposits are returned to you first, then 50/50 split of the balance. Your partner has been very foolish to agree to the deposit split applying to the uplift in value too - but all to your benefit. You are also forgetting the value uplift from the extra £20k spend on the house and that you are already getting a far bigger slice of that. You have done exceedingly well on that front and your partner has been seriously let down by the solicitor acting for him on it. I would just take that win.

I get that it may feel harsh for what you received as a gift to now be part of the house equity but you put it into a joint asset.

What about the £20k that was put in from the previous house sale - is a 21% return on that for your partner fair? Or should he really be getting more of a fairer split on that if he had contributed to that house and its mortgage etc. it's not fair to argue it both ways.

Kindly, and being someone that deals with these a lot, it doesn't sound like unreasonable requests at all

It is totally irrelevant if they are married or not - they jointly own the property, he is a co-owner of it, he is not stealing anything

Has he only been contributing 21% of the mortgage since the renovation? If not, I agree with @onwards2025 tbh. I get why it smarts, but i’d suck it up and move on.

My understanding of how a deed of trust works is that it defines how house proceeds would have been split once the mortgage is paid off, according to the original deposits, but it doesn't take into account funds added after.

If married and putting an 'inheritance' into the house, this would be taken into account before splitting the equity 50/50, if unmarried I believe you have the right to have it discounted before the equity split if it arrived after the declaration of trust was signed.

Reality is it would cost both of you more than £4k to fight over the money, so it depends who is willing to back down. In these kind of cases costs often aren't awarded to the winning party and you could each end up with £20k (or more) of costs if it goes to court.

Personally I'd take a £4k hit now, get your onward purchase through and breathe a sigh of relief you weren't daft enough to marry when you had the larger asset going into the relationship.