Fair Offer

I will be divorcing my wife early next year. Everything is amicable at the moment and although it is early days I'd like to try and keep it that way for the sake of the children and also because I think it will mean the divorce will be a smoother process. However, there are some potential bumps on the road. My wife is not very ambitious in her career and she is not very savvy financially and my concern is that she will try and stay dependent on me when she can (and I use the word can rather than should carefully here!) become independent sooner rather than later. Whilst I am willing to support a transition to independence, I'm apprehensive about long term dependence because I think this will make it harder for both of us (but admittedly mainly me) to move on with our lives. My concern is that this might necessitate a difficult conversation with my wife where for example I have to say "if you want that lifestyle, then you need to do job A. You cannot have that lifestyle if you do job B."

As my wife has neither a financial nor legal head on her it seems to largely be down to me to work out an initial settlement. We're thinking of using one solicitor to draw up the consent order but first I want to create a settlement that is fair and I would be grateful for some input into what I have worked out and how realistic I am being.

Basic Info
We're both in our late thirties. I earn around £80-90k with bonuses. My wife worked ad hoc, did a degree full time and recently started work as a teaching assistant in a school earning around £13k a year. Three boys, one just started secondary school and two at primary school.

Children
We've worked out that we generally provided childcare at a ratio of about 60:40 so we would continue on that basis (her the primary carer) with half holidays each.

Housing
We currently live in a semi-detached 4 bedroom house worth around £400k and with an outstanding mortgage of around £260k. Equity will be about £130k after cost of sales.

I think my wife would like to stay in the house but I don't think that is realistic. The house needs a lot of maintenance, she won't be able to take my name off the mortgage which would prevent me buying another property, she won't be able to afford the mortgage on her own even with all her sources of income (she would need so much spousal maintenance to pay the mortgage that I would be left with only 30% of my net income to live on which would not be enough to meet my own housing needs) and perhaps most crucially there are other suitable properties very close by and within school catchment that cost 25-35% less the main differences being terraced, smaller driveway and smaller garden.

My suggestion is based on my opinion that a Mesher Order on the current property would be in no one's interests. In the short term it would mean I would have to burn thousands of pounds in rent whilst my wife struggled to pay a huge mortgage and upkeep on a house that is hard to maintain and in the long term she would have no prospect of getting a mortgage either to buy me out or buy one of these smaller homes and would end up renting.

I am proposing that the FMH is sold and she will receive the first £110k in equity. I have spoken to a mortgage broker who has said her mortgage capacity would be £160k based on earnings, benefits and maintenance. This could rise to £200k if I paid additional voluntary child maintenance (secured through a Christmas Order). The mortgage cost would be around £900-1,000 depending on interest rates. This would be enough for her to secure a 3 bedroom house within school catchment in a decent area with no future charges in my interest. I would receive enough to put a deposit on suitable accommodation of my own.

I appreciate judges are unpredictable but would they be more likely to support a Mesher Order or my proposal given their competing obligations to prioritise the needs of the children and to effect a clean break?

Income
My calculation is that my wife will have a monthly net income of about £2.8k and after the mortgage this will be £1.9k. This would be a combination of her own income (£1k); child maintenance from me (£900 or a little over); child benefit (£200) and universal credit (about £700). As a teaching assistant with a good degree, I think it is reasonable to expect that she at the very least becomes a higher teaching assistant earning £20k and really ought to qualify as a teacher by the time the boys are all secondary school age. Teachers can train on the job now and there are shortages nationally. Her income is unlikely to change much as universal credit will be lost but she ought to be able to still be on a similar income as the child maintenance falls as the children become adults if she builds this career.

My own income after child maintenance will be around £3.9k and a further £600 a month will be spent on my commute. This means I will be about £500 a month better off than my wife (although see the caveat in the next paragraph). I think this is fair as my wife is not entitled to a share of my future income except in so far as her needs require it (and her income of £2.8k meets those needs) and as she would have received around 75% of the equity in the house, it would take many years for me to draw level on this income differential. My mortgage costs will also be higher.

The caveats. First, I would pay her child maintenance in excess of the minimum by around £300 a month to boost her mortgage capacity, secured through Christmas orders for four years. So actually her income will be higher than mine for the first four years on top of the greater share of assets. I will also assume responsibility for a loan paying £300 a month for the next three years and a tax liability costing £200 a month for the first year.

The Christmas Order means she would not lose the money £ for £ as she would with spousal maintenance. However, in return I would ask for an immediate clean break on spousal maintenance.

My only concern is my wife's reluctance to maximise her earning capacity. Would my suggested career path for her be considered more a "can" or a "should" given her age and childcare responsibilities? Also, would what I'm proposing be roughly in the right ball park for my income level? The solicitors I have spoken to have generally taken the view of "yes, spousal maintenance, but not for very long."

Pension
I think the pension is a bit of a grey area. It's currently worth £160k but the market is volatile at the moment so it is hard to predict what it will be worth by the time the consent order is sealed. Starting at 50:50 but I think my share should be slightly higher to offset the equity (but also remembering that partly the greater capital is offsetting a claim for maintenance). I was thinking around a 70:30 split in my favour would be fair?

Conclusion
Based on the above and other assets being negligible (e.g. both keep our cars, split the furniture based on who needs it) would my proposals that to all intent and purpose produce a clean break but with safeguards for her such as the Christmas Orders be seen as reasonable and fair? Is the asset split within the normal range for a divorce based on our respective incomes and needs?

Well, you have a point in trying to agree terms of settlement between you. If you can do that then not only does it save you both money but it is less stressful. If you can get her to agree to your proposals then fine.

My reservations would be these:-

1. There are three dependent children so I am not sure that a three bedroom terraced house would actually meet her needs and those of the children.

2. The amount of equity in the FMH is not huge. It is by no means obvious that both your respective needs and those of the children could adequately be met by selling up and dividing the proceeds.

3. You earn c. £85K, your wife earns £13K and this is a long marriage with three dependent children. 'Clean break' does not scream from the page on these facts.

That is not to say that you can't try to get what you are proposing but I don't think it can be guaranteed and it will be an uphill struggle unless it is also what your wife wants.

Thanks for your response David. I had a few follow up questions if you don't mind.

Firstly, in respect of housing. My concern is that the current house is so expensive both to pay the mortgage and to maintain that she would need substantial sums of additional maintenance from me. She would need me to pay just over half of my income to her in maintenance in order to afford the house (that would be £950 in child maintenance, £700 to bridge the universal credit gap and another £900 to cover enough of the mortgage). That would only cover the mortgage; she would rely on me to pay maintenance on the home as well. It doesn't seem realistic to me as I would not be able to adequately house the children when they were with me?

My understanding was that the courts tried to house both parties and that first they would look at bedrooms? Why would a three bedroom terraced house not be considered adequate given that my wife would have one room, my eldest his own room and the youngest would share?

Also, I must admit I'm a little confused why a court would be happier to see three children spend 60% of their time in a big house but another 40% of their time cramped into a studio flat (which would be all I could afford after the maintenance), when there were options for greater equality between the parents?

2) I've done my homework by speaking to a mortgage broker and can demonstrate how two three bedroom properties could be purchased within school catchment. This has included factoring in moving costs, costs of sales and mortgage capacities. Would this make any difference?

3) We've been married for 11 years and cohabiting for 13 so I think medium rather than long would more appropriately describe our relationship but presumably this doesn't make any difference when there are children?

4) Solicitors I've spoken to have generally suggested spousal maintenance but only for a very short period (typically they have said 1-2 years maximum and probably circa £250 a month so might as well capitalise it). I asked about nominal maintenance in the last meeting and they said unlikely. Various reasons given. One is that my wife never had a career so nothing to compensate and she has no right to my future income; her needs for more of the capital extinguish any realistic claim of spousal maintenance; expected to work and maximise her income; my ability to pay after costs of commuting, loans etc. Per the above, they certainly said she wouldn't stand a chance of getting anywhere near half my income even in the short term hence my confusion around the housing.

I should probably clarify that when I say "clean break" that could mean "deferred clean break." Though because child maintenance is more lucrative for her as it has no impact on benefits, I thought it would be quite a reasonable negotiation tactic to offer Christmas Orders for a few years in return for a clean break on spousal maintenance. I very much doubt mine is a long term or joint lives case given we're both still in our 30s and she can work?

5) And sorry, one final question. Was my original suggestion miles off or close in terms of the split but requiring some refinement? (Obviously a Mesher Order would be a big difference because I would have to demand a much higher share of the home equity in such a scenario to compensate for being frozen out of the housing market the next 12 years).

Sorry, I should have added. The kind of terraced houses I am talking about are essentially the same size as our semi-detached one which is not huge. The key differences would be:

- One less box room, but the youngest two already share anyway;
- No garage;
- Slightly smaller garden;
- Zoned parking rather than a front driveway;
- On a new build estate rather than a street.

I may be wrong, but I would have thought they would be reasonable compromises to be expected to make, especially if it was in the weaker financial party's own long term financial interests? A lot of solicitors seem to recommend downsizing in preference to a Mesher Order to avoid the long term consequences?

I don't think I want to enter into a debate. I have told you what my reservations would be and those reservations might well be shared by a court.

Sorry David, I wasn't looking for a debate, I'm just struggling to get my head around "the rules" and I guess the honest answer is that the devil is in the detail, including who the judge is! I've had conflicting advice; some solicitors seem to think transfer with charge back but she would have to downsize and take the mortgage on her own; others share your reservations. So from the discussions here and with others I've drawn the conclusion that what I'm offering is fair and in both my interests and hers (because it avoids having to sell in the future) and because of the severe and detrimental impact it would have on my own ability to retire as a homeowner it would need to go all the way to a final hearing if she needs to keep me on the mortgage.

As for the "clean break" I think we're probably talking at cross purposes and that is my layman's speak for which I apologise. "Clean break" to me means a Section 28 Bar on any maintenance (i.e. a deferred clean break) and generally the solicitors I've spoken to say 2-3 years. I actually suggested substantive until my children were all over 11 and nominal to 18 to one and they said no need to be so generous and a deferred clean break when youngest was 11 was realistic. There was however a general view from all of them that my wife was not maximising her earning capacity and should do so and I perhaps share your scepticism.

Anyway, I think you seem a pretty solid choice of solicitor and I'll be in touch.

There is no reason why you shouldn't try to achieve what you are proposing and if your wife agrees that would be that. The problem is that if your wife doesn't agree I don't think such an outcome can be guaranteed for the reasons I have explained. On a good day you might get it from a court but on any normal day I don't think you could count on it.

Oh I'm certainly not looking for a guarantee in the lottery that is family court! What I'm trying to do is find a reasonable offer that makes court a dubious gamble. So possible but unlikely in court is exactly what I was aiming for!

Whether she wants to risk £20k for a good but not guaranteed chance of having slightly bigger bedrooms and £1 a year maintenance for a decade (and less chance of being a homeowner at the end of it herself) or so can then be her choice.

One other question if I may. If she did get a Mesher Order, would I be within my rights to insist the mortgage is an interest only one to keep costs down so I can afford suitable accommodation for myself? This would be handy as it would really put her off a Mesher if it was much less likely her capital split would be enough to buy at the end of it.

The previous post looked a bit scheming. It's more that I want any solicitor she speaks to to say "well, he's being fair but maybe you will want use of the FMH/nominal maintenance/other not particularly enticing difference. I think if she thinks I'm being reasonable it will keep things amicable.

>>If she did get a Mesher Order, would I be within my rights to insist the mortgage is an interest only one to keep costs down so I can afford suitable accommodation for myself? <<

No.

Okay that is a little concerning. She can be financially reckless and I am in a job that I would lose if the house was repossessed. My concern is I would end up having to pay the full mortgage when she doesn't and be unable to put a roof over my own head.

Presumably these orders have trigger clauses that force them to end if the resident parent doesn't pay the mortgage on time? Also, presumably the court will at least ensure I can afford to at least rent a 2 bedroom flat to have the children before insisting on me helping out with a repayment mortgage?

Courts don't have power to change the terms of a mortgage. If there is a Mesher order it will be subject to the existing mortgage. And if your wife gets to stay in the house subject to a Mesher order then you would be expected to pay enough in child and spousal maintenance to enable her to pay the outgoings required to stay in that property. She would undertake to pay the mortgage from her income - including child and spousal maintenance (if any) - and she would have to indemnify you against all liability under the mortgage. That is how Mesher orders usually work.

Oh okay. I suspect I can see where this would go if she pursued this then. The cost of the mortgage is likely to be £1.7k after the next fix. Completely unaffordable.

I would only pay spousal maintenance after my reasonable needs. So that would be after a £600 commute essential for work, £1k on rent (1 or 2 bedroom flat and actually even a shared house is about £800 around here) £500 paying off the loan on her car and £950 of child maintenance. Not to mention the costs of working from home, utilities etc. I'd already have very little left to live on so at best she could probably get about £700 SM (and it would be SM rather than CM because it wouldn't be in my interests to help her if she was insisting on a Mesher Order). That would just reduce her UC from £700 to nothing and her monthly income would still be £2.8k.

So basically the question she would have to answer if she wanted a Mesher Order would be does she want to spend well over half her income on the mortgage for it and then have to hand over about 30-50% of the property to me in just over a decade. I guess a transfer to her might be possible but she would still face a huge mortgage and also a best endeavours clause (and presumably also a hard deadline clause if she cohabits or children turn 18 etc) to remove me from the mortgage. She would also face the reality that failure to pay would mean I could lose my job and her significant sums in maintenance (I work in finance and those indemnities are fine insofar as not having to pay are concerned but if your name is on the debt and the house gets repossessed you can still lose your job).

On top of that, going to court would expose her to a whole host of questions about why a woman who had spent 4 years doing a degree and only has the children 60% of the time (reflective of the split for the last 4 years) is not maximising her earning capacity, something I would be a little more lenient on out of court.

I think it's unlikely to go to court particularly because of that reason but also because I doubt a Mesher Order on the FMH will appeal to her.

>>I doubt a Mesher Order on the FMH will appeal to her.

It often doesn't. All the same, speculating about it is not likely to yield a definitive answer. There is no substitute for talking to her.

Thanks David, it's been really helpful to talk through these issues with you and you're absolutely right about talking with my STBXW too. I think looking at it in a solitary way ends up with quite a one sided view and I need to get her perspective on things, which I tried to do there (so whilst acknowledging your advice on what a court might think, looking in detail it might be an outcome neither of us want and a good reason - besides the expense - to avoid court if we can). We're slightly fortunate too in that she will have a flood of available money coming in to her soon (from getting a job, claiming universal credit (hopefully only in the short term whilst she establishes her career) and no longer having to pay the higher tax charge on child benefit) so we're in a better situation than a lot of divorcing couples which makes things a lot easier. Whilst my income after loans and commuting brings in £4k to live off we're actually looking at how we go forward on more like £6-6.5k in the foreseeable future.

I'm also quite optimistic about being able to "buy" a clean break not immediately but deferred until youngest is 11.... I will come back and let you know how it all goes because I think the one thing all these forums could benefit from is more real outcomes as examples (obviously with the caveat that every divorce is different!)

>>I think the one thing all these forums could benefit from is more real outcomes as examples

I think 'real' outcomes can be misleading. That is because every case is different. Spouses are of different ages, marriages are of different lengths, there may or may not be children of various ages and everyone's financial circumstances will be different. That is why it is rarely helpful to compare the outcome in X's divorce with the outcome in Y's.

What you can do is give examples of different outcomes where all the facts are the same save for one. For instances, identical circumstances where X has been married for 30 years and Y has been married for one year. There are principles which become clearer if you make that sort of comparison.

Yes, I understand. I think the trouble though is that for more modest cases like mine where the assets could be halved by going through an acrimonious court route, some kind of measure of the likely outcomes for people of a similar age and income would be beneficial.

Take the topic of spousal maintenance for example. Of all the people I know in jobs of a similar seniority at work who are divorced, I don't know anyone who pays it. When I plug the same facts as mine in all over the internet, I get the same response every time, I get told I won't pay it except for maybe a very short transition period. Normally the reasons I'm given are that I don't earn enough or that my wife will be expected to maximise her earning capacity over a reasonable period of time which is substantially more than she plans to earn. However, at the same time, I can see plenty of examples of people earning less than me who do pay it and pay it to spouses who seem to be able to get away with working far less than they can.

For the sake of negotiations, it would be very helpful to get an idea then of what kind of quantum and term of spousal maintenance is typical for someone on my income (£85k) to pay to someone who can reasonably be expected to have an earning capacity of £30k within the next 3 years but who also performs 60% of the childcare for three children the youngest of whom is 6. I find solicitors will always be coy about it because of the court's wide discretion although some that I have spoken to have said they would expect the term to be 3 years maximum and no nominal after that. Quantum though no one will advise and whilst I understand it is based on "reasonable needs" this isn't particularly clear in a needs case where everyone's standard of living is going to have to fall. It would at least be useful to know what the worst case has been as ordered by a court on this salary.

>>It would at least be useful to know what the worst case has been as ordered by a court on this salary.

That is easy. It would, for example, be a case where the children are already in fee paying education. Courts are very reluctant to disturb settled arrangements like that (possibly influenced by the fact that many judges have attended fee paying schools). Where that applies the paying spouse might be left with very little. Similarly there are cases where a court takes the view that one spouse has been dishonest about his (it is usually found against husbands rather than wives) and so should pay on the basis that he has a greater income than has been declared.

Does this help? No. Really your question is does anyone know what the outcome has been in cases identical to mine? Like I said, identical cases are as rare as hen's teeth.

In this case your income is about eight times that of your wife and there are three dependent children, two of whom are still in primary school. You are only talking about paying 'voluntary' child maintenance. If that remains your stance (as opposed to paying approximately 25% of your income to your (ex) wife as child maintenance) then this is definitely a spousal maintenance case and I would expect that liability to last at least until the last child ceases to be dependent. Although you say your wife has an earning capacity of £X a court will take the figures as they find them at the time of decision and not speculate on what your wife may or may not earn in the future. They will probably say that you can come back to the court in the future to vary the order if you should find that your (ex) wife has, say, doubled her earnings.

Please note that this might well be different if the children were living with your wife and you were paying about 25% of your net income as child support (which is usually what happens and may well still happen here if your wife does not agree with your proposals for the children) but since that is not what you are proposing it seems to me that this is a spousal maintenance case to last at least until the children cease to be dependent.

Oh I think we've been talking at cross purposes a little here. Child maintenance based on my gross salary would be £1250ish if she had them 7 nights a week. On a 5/2 split and with my normal 8% of gross pension contributions it's more like £970 which I'll be paying; it's not all going to be voluntary. It sounds like if anything I could offer less additional child maintenance. I was planning on topping her up to £1,400 a month until youngest was 11 and she could work full time. Think I will limit it to £1,100 total and leave room for negotiation. I find it interesting how doing more with the kids means having to pay spousal maintenance, but a price worth paying and my wife will probably be quite motivated to take it as child maintenance anyway (the sort of sums of spousal we're talking about will all reduce her UC).

She could challenge the childcare split but 1) she won't because she has been very clear to me she likes the split because she wants time to herself and 2) she wouldn't have a leg to stand on because she's been a full time student for the last two years and I kept a diary of the childcare split (before I knew how keen she was for me to do at least 40%!) and my understanding is a court will look to maintain the status quo.

One final question I do have is around earning capacity. If I can avoid spousal maintenance (and I guess it might be possible to capitalise such a small amount, of negotiate more time to get me off the mortgage on the FMH or something) it will be a moot point anyway but surely in this day and age courts don't just look at earnings but also earning capacities? If I jacked in my job and became a shop assistant earning £15k I imagine I would get pretty short shrift in a court, so surely a woman who just spent 4 years getting a degree and has only done about 40% of the childcare for the last 2 of those years will be expected to do more with her degree than earn £12k a year?

>>surely a woman who just spent 4 years getting a degree and has only done about 40% of the childcare for the last 2 of those years will be expected to do more with her degree than earn £12k a year?

Depends what that degree was and the purpose of it. A degree in Fine Art would be worth diddly squat in earning capacity, A degree in computer programming would be rather different.

Good point. Well, her degree is probably somewhere in between. I won't be as brave as you in picking out a subject for ridicule However, I think she would have a hard time explaining to a court why she could only earn £12k in the 25-30 hours a week with her degree. Even assistants in the profession she has qualified for can reasonably expect to earn around £35k after a couple of years and these jobs do exist part time and with flexible hours in abundance so in the improbable situation that this ever ended up in court, I think she would have a very hard time arguing that she can't earn at least £25k (and more than that when youngest goes to secondary school). To add to her difficulties, she has already been working outside of term times commanding a wage of £16 per hour. I guess she could argue well I will just lose universal credit for earning more but then there seems to be an attitude that I should pay rather than the state if it's benefits so I don't think her argument would be valid unless she agrees to take the benefits rather than demand money from me?

Sorry, I have question after question here. I notice when you talk about salaries, you look at things gross rather than net, saying for example I earn 8 times more than my wife. Once you take the London weighting off my salary (which is entirely lost to commuting) I'm down to about £70k and locally I could only command a salary of more like £60k (actually, that's optimistic. Job opportunities are few and far between outside of cities with stock exchanges). And if you consider her earning capacity rather than what she plans to earn, that's £25k.

£70k net is about £4k a month and £25k is about £1,650. She's also entitled to about £200 in child benefit. Once she's had the child maintenance of about £1k, I'm on £3k and she's on £2.85k a month. The numbers really aren't much different if she refuses to maximise her earning capacity either; she would get UC and be on about £2.7k a month net. So the difference between us net is that I receive about 1.05 to 1.1 times what she does, which in a situation with shared childcare makes spousal maintenance less likely (or at least reduces it to a negligible amount that can be capitalised). Of course, a court would rather I pay than the state so the UC argument is not the strongest (but then, I don't think she'd spend £20k to fight me in court for spousal maintenance that was of no benefit to her whatsoever either, especially if I was waving £10k at her to make the problem go away!) but assuming a decent case can be put forward on her earning capacity, would I be right in thinking these income differentials (as opposed to the more emotive "8 times salary" that only works when dealing with gross) are not really spousal maintenance (of the substantive kind) territory?

And sorry, one final final question because I've already taken a lot of very valuable advice for free here. Would I be better off getting CMS to assess me on the basis that the children spend no nights with me, get the whole thing signed off, consent order with no SM etc, children 40% of their time with me etc and then leave the CMS for a bit and then go back to have it changed later on when she can't come back for SM?

You are correct that it is net income that matters rather than gross. I was simply making the point that you earn much more than your wife.

I am not going to answer the question contained in your last paragraph.

Sorry David, I keep forgetting that there are some questions solicitors really can't answer! I'm just keen to have a CM over SM solution if at all possible because SM seems to be the more inflexible in the event of a change in financial circumstances such as a job loss or salary increases not keeping up with inflation. I don't particularly want the costs of varying an order if I lost my job for example.

I'm also quite keen to find solutions where the consequences of bad conduct by one party (e.g. if my STBXW refuses to maximise her earning capacity) are borne by that party. Whilst things remain civil and divorce being a mutual decision, my STBXW is not taking responsibility for her situation. It does not seem entirely fair for example that her decision not to maximise her earning capacity would result in me rather than her meeting housing needs through renting indefinitely. At the moment, it feels like if I do everything right by continuing to work and earn a good income, I will actually contribute to a worse outcome for myself because I will make the retention of the FMH for a long period of time for her sole use possible whilst she will be rewarded for her bad conduct by being allowed to remain dependent on me. As she will be entirely dependent on maintenance from me to retain the FMH there will be a perfect correlation between me showing good conduct and shooting myself in the foot, which is not great for motivation!

Anyway, you've furnished me with enough information to know I'm not completely powerless in negotiations and I guess if gentle persuasion doesn't make her realise she needs to maximise her earnings, then mediation probably will.