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Realistic split

Posted by BlueBelle 
Realistic split
December 05, 2020 04:55PM
Hi there,

Going through mediation and would be very interested in your thoughts on a fair outcome for my situation please.
Details are as follows:

Both age 47
Length of marriage 17 years (including 3 years separated)
3 children aged 11,10,10 (kids live with me 75% of the time)
Salaries me £25k (part time) him £46k
Family home equity approx £160k (after paying off mortgage of £70k)
Pensions - me none, him £430 final salary CEV (which he tried to hide)

I live in the family home with the children and he moved into a flat nearby which he rents.

I offered either a 80:20 split of equity in my favour and to not touch his pension or 70:30 plus a share of his pension (approx £90k for me to invest as a lump sum)
He offered 70:30 and no pension share and reckons if it went to court he could be awarded 40:60 in his favour.

Am I right in thinking that 70:30 would be a more realistic split plus a share of his pension as it would be classed as significant asset? Although the pension share would be useful I would prefer a higher share of the equity to use as a deposit on a new property. He also wants a deposit but presumably his borrowing capacity will be significantly higher than mine and his earnings potential has been unaffected throughout the marriage.

I look forward to hearing your opinion.

Thanks
Re: Realistic split
December 06, 2020 09:48AM
If you get any share of his pension, it will not be available to you to invest as a lump sum, it will have to be paid into a pension in your name. Unless you have ill health you won’t be able to touch it until you are 55, or it might be changed to 57 in the future, and even then based on current rules you won’t get all of it as a tax free lump sum, anything above 25% incurs quite a heavy tax penalty.

As David has said on here before, £100k pension share is not the same as £100 in a bank account
Re: Realistic split
December 06, 2020 10:14AM
Thanks for your comment. Sorry I didn’t phrase that very well. I meant that I would have a lump sum which would be transferred into a pension scheme in my name. I understand about not being able to touch it until taking out a tax free amount at 55/57 etc.
Re: Realistic split
December 06, 2020 05:09PM
I think you may be under a misapprehension as far as pensions are concerned. If, say, one spouse has a pension with a capital transfer value of £400K, the other has none and it would be appropriate to divide the capital transfer values equally that does NOT mean that £200K would be transferred in cash to the other spouse. It means that one pension company would transfer to another pension company nominated by the receiving spouse one half of the capital transfer value. The fund would continue to be held as a pension rather than as cash. After the transfer each spouse would have a pension with a capital transfer value of £200K in their sole name. There would be two pensions instead of one. This is not the same as receiving cash.

Of course, what each spouse does with their respective pension in the future is down to them. Very few people would choose to take out the whole of the £200K in cash in one go because of the hideous tax consequences. Indeed, all pension companies would insist upon professional advice being taken in circumstances like that and the professional advice is likely to be unanimous in recommending against. Pensions are very definitely an asset but they do have to be treated very differently from cash in a bank account.
Re: Realistic split
December 06, 2020 08:18PM
Thank you David for your very detailed explanation about the pension, that is very helpful. In your opinion do you believe that a 70:30 split of equity in my favour plus a share of the pension would be a reasonable settlement?
Re: Realistic split
December 07, 2020 04:36PM
Bearing in mind that there are three dependent children and that you earn much less than your husband I think if the house was sold you would certainly have a greater share of the equity than your husband (plus a pension share). And in that event possibly 70/30 might be appropriate IF that was what was needed in order to rehouse you and the children (and you could prove it), On the other hand, if what you are talking about is remaining in the matrimonial home with the children and having a 70% share of that I think it is unlikely because when eventually the house when the children cease to be dependent your housing needs at that point would be the same. 60/40 is probably more realistic in those circumstances. In any event 70/30 is on the high side. A court would take some convincing that was fair.
Re: Realistic split
December 07, 2020 04:59PM
Thank you David I appreciate your advice. Really helpful and lots for me to think about.
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