financial settlement Financial settlement factors & considerations

[Peter B]

Financial settlement is complex and every case is different, below is a list of things to consider - as you can see it's not just about the equity in the house!

From what I've read the court will seek a fair settlement and therefore this doesn't always mean 50/50 ...

• Children (highest priority)
  • Do you have children under 18 and/or still in education
• How long have you been married?
• Earning Capacity
  • Do you have a similar earning capacity to your spouse?
  • Are you financially dependant on your spouse or partner
• Property
  • Do either of you own a property or properties?
• Savings
  • Do either of you have savings or investments?
• Pensions
  • Do either of you have a pension?
• Debts
  • Do either of you have any debts or liabilities?
• Investments
  • Do either of you have any interests in overseas assets?
• Businesses
  • Do either of you have an interest in a business?
• Do you have a pre or post nuptial agreement?

Please note this is not a complete list, there are others, this is a link to all of the official legal factors (UK)

• https://www.legislation.gov.uk/ukpga/1973/18/section/25

Also this is the best & clearest guide I've found so far (UK)

• https://www.mediateuk.co.uk/guide-to-financial-settlement-on-divorce/

 

[tanyashaw79]

Hello Peter, 

Thank you so much for this info. I was going to post and ask about the final financial hearing and what they take into consideration. As you know from the other post , I am having difficulties agreeing a fair settlement with my husband before our court hearing in October.

When myself and my husband attended the first financial hearing the judge implied that the only thing that we have to take into consideration is the house and that nothing else was worth discussing. I was really shocked at this. They said that fighting over £10k here or £10k wasn't worth it as they deal with parties who own millions. I was really disappointed to hear this. Yes, we don't have a lot but £10k is a hell of a lot of money for both of us. 

I wondered if anyone could help me on what they think the court may decide in our situation please? 

Children - Let's start with the most important thing, the children. We have 2 young sons who reside with me 60% of the time. 

We have been married for 7 years.

House - our house has a mortgage on it. Based at the current valuation we're looking at around £110k equity at present. 

Pensions - when we got these valued last year mine was around £8k more than his, but since then I'm working part time and my husband has been given a promotion and with it a hefty contribution from his employers each month. He would have overtaken mine by the court hearing in October but his current offer to me is including him taking £4k of my pension. He's trying to get me to accept his offer so he's since also told me that he's stopped paying into his pension (I'm not sure I believe him) so he claims the gap will be bigger come October. 

Earning capacity - he works full time and is on £32k per year. I work part time and am on £24k due to having the children more. They are still very young.

Savings - we both don't have any savings. 

Debts - we both have credit cards and loans. His totals approx £5.5k. Mine totals approx £20k. 

I moved out of the family home and he wouldn't allow me to take any of the furniture. I'd valve that all at around £10k. (Not sure they take that into consideration).

That's about it really. I did an online divorce calculator and it came back that I would be entitled to around 60%. I'm just trying to work out if it's worth me sticking out until the court hearing in October considering the antics he's currently playing with not paying the mortgage. It's so stressful. Part of me wants to just settle and get rid of him (but I know I'll never be fully rid) 😞

Thank you! 

 

[Peter B]

1 hour ago, tanyashaw79 said:

When myself and my husband attended the first financial hearing the judge implied that the only thing that we have to take into consideration is the house and that nothing else was worth discussing. I was really shocked at this. They said that fighting over £10k here or £10k wasn't worth it as they deal with parties who own millions. I was really disappointed to hear this. Yes, we don't have a lot but £10k is a hell of a lot of money for both of us. 

That is really surprising, my understanding is that the house is certainly not the only consideration which is precisely why all of the documents need to be gathered so you / your solicitor / the judge can make an informed decision and work out what is fair for you both.  Things like who the primary carer will be, whether your earning capacity can be increased, mortgage capacity, whether one of you is closer to retirement than the other, whether any maintenance needs to be paid & for how long, whether either of you are likely to relocate or remarry anytime soon etc.   As you say £10k may not be a lot of money for some people (e.g. a Judge) but it is a lot of money to others, which is also why people can often end up representing themselves in court, so save on £10k per hearing!

[Peter B]

A few more comments ...

Children - Let's start with the most important thing, the children. We have 2 young sons who reside with me 60% of the time. 

• Has this been agreed with him, is this just an agreement between you or do you have a formal child arrangements order.  If its not strict 50/50 then he will need to pay you child maintenance (https://www.gov.uk/calculate-child-maintenance)

We have been married for 7 years.

• I could be wrong but anything over 10 years may be considered a 'long marriage', this I think can have a bearing on the settlement but I'm not too sure.

House - our house has a mortgage on it. Based at the current valuation we're looking at around £110k equity at present. 

• I made the mistake of thinking 50% of the equity was effectively cash in my pocket, however a) it may not be 50% (could be more or less, depending on how it all balances out) and b) there are other costs which need to be paid out of this (legal fees, estate agent fees, moving costs, stamp duty on new house if buying etc.)

Pensions - when we got these valued last year mine was around £8k more than his, but since then I'm working part time and my husband has been given a promotion and with it a hefty contribution from his employers each month. He would have overtaken mine by the court hearing in October but his current offer to me is including him taking £4k of my pension. He's trying to get me to accept his offer so he's since also told me that he's stopped paying into his pension (I'm not sure I believe him) so he claims the gap will be bigger come October. 

• It may be they offset it and give you more house equity and him more pension, or vice-versa, i.e. they will try and balance across all assets after all liabilities - unless of course he earns significantly more than you in which case you could end up with 60/40 or even 70/30 across all assets (although not sure if that is still a thing these days, all depends on your specific case)
• Have you had a pension sharing report, they are quite expensive unfortunately but the court may want to see this - I guess they will advise on this

Earning capacity - he works full time and is on £32k per year. I work part time and am on £24k due to having the children more. They are still very young.

• ok I guess you're not a million miles away in what you both earn so hopefully you're able to both support yourselves without a huge amount of maintenance, perhaps this is why the judge made his / her comment about the house being the most important consideration.   You definitely don't want to burn 10s of 1000s on legal fees, hopefully he understands this as well.

Debts - we both have credit cards and loans. His totals approx £5.5k. Mine totals approx £20k. 

• I think they will consider all debts as effectively 1 shared pot which will be deducted from your combined assets before they are split - i.e. you wont have 15k less after 50/50 split.  I may be wrong but this would make sense to me - can anyone else confirm?

I moved out of the family home and he wouldn't allow me to take any of the furniture. I'd valve that all at around £10k. (Not sure they take that into consideration).

• I know they take into consideration items worth over £500.   On the Form E there is also a section where you state what you need to re-house yourself, items & cost - it may be you need more equity to buy furniture when he doesnt as he's already got it all.  The section is there for a reason just make sure you've filled it in but as with all the sections its important to fill it in accurately and not ask for an unreasonable amount otherwise this will be question and will delay things further resulting in more cost & stress to you!

That's about it really. I did an online divorce calculator and it came back that I would be entitled to around 60%. I'm just trying to work out if it's worth me sticking out until the court hearing in October considering the antics he's currently playing with not paying the mortgage. It's so stressful. Part of me wants to just settle and get rid of him (but I know I'll never be fully rid) 😞

• From everything you've said I would say 60% (minimum) sounds fair to me, would you be happy with this?
• I hope that him not paying the mortgage ends up only affecting him and not you or the children 🙏
• It is so stressful now but it will definitely get sorted out at some point, just try and picture your future self looking at you now and telling you not to worry or stress as this is *temporary* 🙏
• Settling quickly is one option just to get on with your life, but as others have said don't do anything rash which you will very likely regret later in life
• It sounds like you've done everything perfectly so far, just keep on doing what you're doing 🙏

[tanyashaw79]

13 hours ago, Peter B said:

A few more comments ...

Children - Let's start with the most important thing, the children. We have 2 young sons who reside with me 60% of the time. 

• Has this been agreed with him, is this just an agreement between you or do you have a formal child arrangements order.  If its not strict 50/50 then he will need to pay you child maintenance (https://www.gov.uk/calculate-child-maintenance)

We have been married for 7 years.

• I could be wrong but anything over 10 years may be considered a 'long marriage', this I think can have a bearing on the settlement but I'm not too sure.

House - our house has a mortgage on it. Based at the current valuation we're looking at around £110k equity at present. 

• I made the mistake of thinking 50% of the equity was effectively cash in my pocket, however a) it may not be 50% (could be more or less, depending on how it all balances out) and b) there are other costs which need to be paid out of this (legal fees, estate agent fees, moving costs, stamp duty on new house if buying etc.)

Pensions - when we got these valued last year mine was around £8k more than his, but since then I'm working part time and my husband has been given a promotion and with it a hefty contribution from his employers each month. He would have overtaken mine by the court hearing in October but his current offer to me is including him taking £4k of my pension. He's trying to get me to accept his offer so he's since also told me that he's stopped paying into his pension (I'm not sure I believe him) so he claims the gap will be bigger come October. 

• It may be they offset it and give you more house equity and him more pension, or vice-versa, i.e. they will try and balance across all assets after all liabilities - unless of course he earns significantly more than you in which case you could end up with 60/40 or even 70/30 across all assets (although not sure if that is still a thing these days, all depends on your specific case)
• Have you had a pension sharing report, they are quite expensive unfortunately but the court may want to see this - I guess they will advise on this

Earning capacity - he works full time and is on £32k per year. I work part time and am on £24k due to having the children more. They are still very young.

• ok I guess you're not a million miles away in what you both earn so hopefully you're able to both support yourselves without a huge amount of maintenance, perhaps this is why the judge made his / her comment about the house being the most important consideration.   You definitely don't want to burn 10s of 1000s on legal fees, hopefully he understands this as well.

Debts - we both have credit cards and loans. His totals approx £5.5k. Mine totals approx £20k. 

• I think they will consider all debts as effectively 1 shared pot which will be deducted from your combined assets before they are split - i.e. you wont have 15k less after 50/50 split.  I may be wrong but this would make sense to me - can anyone else confirm?

I moved out of the family home and he wouldn't allow me to take any of the furniture. I'd valve that all at around £10k. (Not sure they take that into consideration).

• I know they take into consideration items worth over £500.   On the Form E there is also a section where you state what you need to re-house yourself, items & cost - it may be you need more equity to buy furniture when he doesnt as he's already got it all.  The section is there for a reason just make sure you've filled it in but as with all the sections its important to fill it in accurately and not ask for an unreasonable amount otherwise this will be question and will delay things further resulting in more cost & stress to you!

That's about it really. I did an online divorce calculator and it came back that I would be entitled to around 60%. I'm just trying to work out if it's worth me sticking out until the court hearing in October considering the antics he's currently playing with not paying the mortgage. It's so stressful. Part of me wants to just settle and get rid of him (but I know I'll never be fully rid) 😞

• From everything you've said I would say 60% (minimum) sounds fair to me, would you be happy with this?
• I hope that him not paying the mortgage ends up only affecting him and not you or the children 🙏
• It is so stressful now but it will definitely get sorted out at some point, just try and picture your future self looking at you now and telling you not to worry or stress as this is *temporary* 🙏
• Settling quickly is one option just to get on with your life, but as others have said don't do anything rash which you will very likely regret later in life
• It sounds like you've done everything perfectly so far, just keep on doing what you're doing 🙏

Thank you so much for all this Peter. 

I'll go over the few questions you have...

Children -  the 60/40 this is an arrangement we've made between ourselves at the moment but it's sort of semi formal in the fact that we achieved it through mediation. We have a dispute resolution having coming up in a few weeks where I will be raising his behaviour as a major issue. It is so so difficult trying to co-parent with someone like him. He is going for 50/50 but I'm not sure how he will be able to pay to put our children into childcare for the extra day he will have them if he can't afford to pay the mortgage at the moment. I'm not saying that he doesn't want his children but I think the financial gain (in the fact that he won't have to give me any maintenance) is a major factor in him going for 50/50. I hope the court will see this. 

Marriage - what is the difference in a 'short ' or 'long' marriage. How does it affect settlement? 

House - we have taken all fees (early repayment fee, cost of sale) into the figures. His offer is literally offering me 50% of the equity that's left and him taking 50% (the difference in our pensions) off. His offer of course isn't taking anything else into it. Why would it? He's so sure I'll accept it, but more so now because he's stopped paying the mortgage and trying to force me to. 

Pensions - so if my pension is worth more than his it's not like they will say ok, 50/50 equity, 50/50 of the difference in our pensions. They will add everything up and make the division after everything has been taken into consideration? My solicitor said that we can apply for one pension sharing report a year and it's free so I should be ok to do that. Another thing is that the majority of my pension was accumulated before we got married because I then went on maternity leave and part time (I'm still part time now). Whereas his has been constant and risen drastically since his promotion last year. If he has indeed stopped his pension payments like he's stating he has (because he can't afford the mortgage) will the court not see what he's doing? 

Debts - yes, I understand. So we have approx. £25k in total between us so that will likely be split 50/50? 

60/40 is encouraging and makes me think that settling with him out of court is the poor option. Especially with his recent behavior regarding me applying for child maintenance and then refusing to pay the mortgage because of it (even though he's the only one residing there). 

His aim is to buy me out with money lent to him from his family so the issue of being blacklisted I don't think is phasing him. He won't need a mortgage or to rent but knows I will down the line. Another tactic he is trying to get me to accept his offer. I think my only option is to ask him to put the house on the market, get the proceeds and wait for the court to decide come October. 

Thank you so much for all your advice. When I've got him telling me that I should be accepting his fair and reasonable offer and then behaving like an imbecile, it's hard to believe him. I really appreciate your advice. 

[Peter B]

5 hours ago, tanyashaw79 said:

Children - It is so so difficult trying to co-parent with someone like him.

Yes I've felt this myself, its' so frustrating that through no fault of my own the court may decide shared parenting won't work and award me less time with my children - all because my ex is going out of her way to make things difficult and not communicate key appointments & events etc.   It's also frustrating as I can't get myself added to all communication directly from schools, doctors, dentists etc. as they are only allowed 1 parent or primary carer on the system! 

5 hours ago, tanyashaw79 said:

Children - I'm not saying that he doesn't want his children but I think the financial gain (in the fact that he won't have to give me any maintenance) is a major factor in him going for 50/50. I hope the court will see this. 

It's a real shame that the children can be used for financial gain, it doesn't feel like the legal system should allow this.  The problem is its impossible to prove someone's motives.   As you say though you would hope the court will see through this.

I will reply to your other points a bit later ...

[Peter B]

6 hours ago, tanyashaw79 said:

Marriage - what is the difference in a 'short ' or 'long' marriage. How does it affect settlement? 

I'm no expert however this is what I've discovered a while ago via the web, my own solicitor also briefly touched on some of these (my marriage is classed a long)

In UK divorces, the length of the marriage plays a significant role in how assets are divided during the settlement. Some differences between short & long marriages;

• Short Marriages (in general less than 5 years)
  • Focus on Contributions: Courts typically prioritize the financial contributions each spouse made during the marriage.
  • Equal Split of Marital Assets: Assets acquired jointly during the marriage (marital pot) are often divided equally (50/50).
  • Pre-marital Assets: Assets brought into the marriage by either party are likely returned to the original owner.
  • Clean Break: A clean break settlement is more achievable, meaning each spouse walks away financially independent.
• Long Marriages (in general more than 5 years)
  • Focus on Needs: The court considers both parties' needs for financial security, especially the potentially weaker-earning spouse.
  • Equal Split More Likely: There's a stronger chance of an equal or near-equal division of all assets, regardless of who brought them into the marriage.
  • Intermingling of Assets: Over time, assets might become intertwined, making it harder to distinguish pre-marital from marital property. Needs may be met by dividing all assets, not just marital ones.

Key Points to Remember:

• The 5-year mark is a general guideline, not a strict rule. The court considers the specific circumstances of each case.
• If children are involved, their needs become a crucial factor in the settlement, regardless of the marriage length.
• Pre-nuptial agreements can significantly influence the division of assets, especially in longer marriages.

Obviously it's important to get your own legal advice as everyone situation is different and there are always exceptions to certain 'rules'

Edited May 14, 2024 by Peter B

[Peter B]

6 hours ago, tanyashaw79 said:

House - we have taken all fees (early repayment fee, cost of sale) into the figures. His offer is literally offering me 50% of the equity that's left and him taking 50% (the difference in our pensions) off. His offer of course isn't taking anything else into it. Why would it? He's so sure I'll accept it, but more so now because he's stopped paying the mortgage and trying to force me to. 

Don't let him pressure you into accepting anything, I certainly wouldn't give in because of a threat, that is just making his own case weaker IMO.  I don't know whether you will end up with more than 50% however the court will weigh up everything based on multiple factors and try and reach a fair settlement (if you two can't agree between yourselves) - it's possible you end up with more equity if he has more pension (example only), the starting point is 50/50 and they divert from this where it's necessary (e.g. you physically don't have enough income to meet you new rent or mortgage payment, or provide for the children etc.) - any surplus money he has will then be split with you (I think, I don't know anything of this for a fact as my own divorce isn't yet finalised and we need to be careful about comparing each others' cases of course as our situations are different).

[Peter B]

6 hours ago, tanyashaw79 said:

Pensions - so if my pension is worth more than his it's not like they will say ok, 50/50 equity, 50/50 of the difference in our pensions. They will add everything up and make the division after everything has been taken into consideration? My solicitor said that we can apply for one pension sharing report a year and it's free so I should be ok to do that. Another thing is that the majority of my pension was accumulated before we got married because I then went on maternity leave and part time (I'm still part time now). Whereas his has been constant and risen drastically since his promotion last year. If he has indeed stopped his pension payments like he's stating he has (because he can't afford the mortgage) will the court not see what he's doing? 

I think age plays a part with pension as does current & future earning capacity (i.e. how much you will both be able to build up in your pot until retirement).  All I know is that all the finances as a whole will be taken into consideration, its quite complex which is why there is no online calculator for all this (apart from child maintenance which is separate).   Oh I wasn't aware you could apply for a free sharing report each year, that's good to know, thanks.   I'm still waiting for a pension report which is taking 6+ weeks to prepare (not sure why, also very costly) - I guess the report will lay out all the options to us as to how we split pots etc.   Will let you know what it provides when I receive it.

I think it may be possible to retain some of maybe all your pension contributions pre-marriage.  This doesn't really apply for me as most of the pots were built up post marriage.

I honestly don't know what the court will think about him stopping his pension payments, I believe this may be up to him what he does with his income especially after divorce.  I've been told it's none of my business what my ex spends her money on now.  That said the court will simple take into account his P60 and net income, if that's gone up as he's no longer paying into a pension then that is potentially more maintenance he can pay you (if you have a shortfall in paying your core bills). 

Please don't take any of this as gospel it's just my thoughts and findings as I work through this process myself.   It will be interesting to review these posts in a few years from now and see how things actually panned out.

[Peter B]

21 hours ago, tanyashaw79 said:

Earning capacity - he works full time and is on £32k per year. I work part time and am on £24k due to having the children more. They are still very young.

Savings - we both don't have any savings. 

Debts - we both have credit cards and loans. His totals approx £5.5k. Mine totals approx £20k. 

I moved out of the family home and he wouldn't allow me to take any of the furniture. I'd valve that all at around £10k. (Not sure they take that into consideration).

That's about it really. I did an online divorce calculator and it came back that I would be entitled to around 60%. I'm just trying to work out if it's worth me sticking out until the court hearing in October considering the antics he's currently playing with not paying the mortgage. It's so stressful. Part of me wants to just settle and get rid of him (but I know I'll never be fully rid) 😞

Are you either of you able to increase your income or have you reached the ceiling of what you can earn - either in your current company / role or re-training?  I assume your job has to work around the children with school drop-off / pick-up and attending various appointment etc.  does he (or can he) share this or does it all fall on you?

Any savings I did have are quickly disappearing through legal fees, sadly I can't see how anyone ends up with any substantial savings after divorce 😞  It's the children I feel for the most as this has a direct impact on them longer term.

The debts will be added together and effectively shared / taken out of the overall pot (is my assumption based on Form E discussions I've had), i.e. the debts are part of what was built up during the marriage.   Any debts built up since filing for divorce I would hope would only affect that person but I could be wrong.

60% sounds more reasonable to me given his larger salary and you having the children 60% of the time.  For the sake of 10% you could just move on with your life but only you can decide whether that is worth pushing for.   I was thinking about your situation yesterday evening and I think if it was me I would take a 10% hit if it meant I didn't get blacklisted, however that is giving into this threat which feels wrong.   The other thing is depending on how long this drags on for you may end up eventually spending a lot on legal fees.   For me the on-going stress just isn't worth it anymore, you can't put a price on health.