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After some advice. A couple in their mid 50's are to divorce. They have been married for 30 years and their children have left home. He does a regular job and she works for the NHS but is hoping to retire next year after 37 years service. They have a house worth £350K and the mortgage is paid off. There are no outstanding loans.He has savings of £350k but no pension of any worth. She has £50K in savings but a good NHS pension pot (£250K)that is expected to pay out £12K per year when she retires next year.The question is what will the split be?. Is her £250K pension pot considered to be worth the equivalent of £250K of his savings?
Many factors to consider and each case is different but in my divorce I decided not to split my pension and my ex wife got equity worth the same as my pension pot.
Are you saying then that if it is agreed that the wife keeps all her pension pot of £250K the husband can keep £250k more of the savings?
Total assets, including pension pots, divided by two?
How those assets are split is up to them/the court.
How much would a £12k/year annuity cost?
I've no idea about how divorce settlements work - but that's what I think I'd be thinking of in terms of "fairness".
So, could it work like this She gets to keep her pension. He gets the house.She gets £250K savings . He gets £150K savings? Is it this simple?
Who is older? Makes a big f difference.
He is 55, she is 54.
Looks like close to £1M of assets. Probably worth getting some professional advice ..
So, could it work like this She gets to keep her pension. He gets the house.She gets £250K savings . He gets £150K savings? Is it this simple?
It'll depend on what each party wants and what they both can agree on but that sounds reasonabley fair and amicable.
Some legal advice is probably sensible but avoiding getting heated and actually needing lawyers and the courts would save a lot of money
Pension pot does NOT equal cash in pocket.
You'll need a cash transfer equivalent value for the pension.
Then speak to an advisor as to the worth of that pot.
The age IS significant in the decision.. but it's not as straight forward as pension=savings because I know... I've been there!
DrP
Probably worth getting some professional advice
Which will probably cost them 25% each. (Or something)
Is it an amicable separation? If so surely they could agree on something. Once you bring solicitors in each party suffers.
I was lucky.
25% ? So 250k to get professional advice? I’m in the wrong job… 🙄
The Cash equivalent value of the NHS pension will be a lot higher than £250k, probably closer to £450k. The scheme gives a lower value for the in scheme "value" of the pot
The 20x valuation of the annual pension is the Inland Revenue evaluation. A closer valuation for an equivalent annuity is 30x (what you will pay if you keep your savings). Better to retain a claim in the pension and then divide all other assets in half. There is a scheme that allows just this. I have no idea whether one can swap a defined benefit NHS pension to a lump sum and IANAFA.
I was in a similar position. Wife was carried into court and claimed that she couldn't walk therefore couldn't work and wanted 100%. Judge told her to go outside and rethink her position and ended up getting 50% which I believe is normal when no kids are involved.
No idea why the judge did that, I can only assume she saw her walking across the car park.
25% ? So 250k to get professional advice? I’m in the wrong job…
I did say, ‘or something’. 😜
I had to give 50% of my (not huge) preserved pensions. The house was split 70/30 in her favour (House was worth around £270,000 at the time) and I got to keep the savings of around £20,000. Oh, and my motorbike. Her solicitor was fully expecting to get the house in full. I expected 50/50 for everything so didn't bother with a solicitor! She has refused to sell the house - it's been nearly 7 years ...
I had to give 50% of my (not huge) preserved pensions. The house was split 70/30 in her favour (House was worth around £270,000 at the time) and I got to keep the savings of around £20,000. Oh, and my motorbike. Her solicitor was fully expecting to get the house in full. I expected 50/50 for everything so didn’t bother with a solicitor! She has refused to sell the house – it’s been nearly 7 years …
I kept my (not huge either) pension and walked away with a paltry amount from the house. I also kept my motorbikes.
He will get ****ed over... its how it works.
Scotland or England? Different rules apply.
Watching with interest as I'm in a very similar position.
Very slightly younger, fully expecting to get royally f****d over but could no longer live like that
There are many different answers to this and it depends on what the couple want. Someone I knew was in a similar position. They wanted the house, their spouses wanted to keep their pension. From a purely financial position my friend was in the worse position but any other settlement would have meant selling the house and they did not want to do that.
If the couple involved here are happy to divvy up the assets on the basis of who wants what then great, they should do that.
However of one or other party wants to maximise their position then, particularly with a final salary (well average salary now) pension in the mix, they are going to have to take professional advice.
That advice, whilst not free, will not be 25% of their pot. More like 2-5% but they can get quotes up front.
I really cannot recommend enough that your friend seeks professional advice for this. A good solicitor will make the whole process a lot fairer and easier. It will not make it less stressful for them, either of them, but that is the nature of divorce.
On pensions & savings... When I went through my divorce, my ex had no savings, minimal pension and about 18% equity in the house. I had a small inheritance, a share of a house that was being rented out a pension with a relatively small CETV and some savings. When it came to the financial part of the agreement, she asked for half of everything. We'd only been married seven years. I ended up being able to settle on 225k as a lump sum, which meant I could keep the house (but re-mortgaged) but which cleared out every other bit of cash I had apart from the pension.
Watching with interest as I’m in a very similar position.
Very slightly younger, fully expecting to get royally f****d over but could no longer live like that
You are my mate and I claim my £5.
Just about to get into the details of this myself now. 10years younger and kids still at home.
When is best to buy a new bike? Have it as debt now or outright afterwards? 😀
Long marriage. No apparent reason to depart from an equal division of assets. You can enter into a pension sharing order if there's no obvious way to divide the assets in order to achieve equality.
Sorry to read this, contrarian viewpoint, I know a few divorced people living separate lives still retaining their mutual assets. Must be some sort of gentlemans agreement in place.
Strangely enough, I know a few couples who have their own individual houses.
Maybe the 2 observations are related.
No kids involved in mine but unreasonable behaviour (a Louise). I had advice and a letter from someone I really couldn't afford (I knew them to speak to) she wanted everything and got nothing, not a penny. But we were able to show that not only had she not contributed to running the house for years but also I effectively kept her afloat and I ended up £16k in debt. To be fair the bewigged chap who acted for me completely outgunned her back street solicitor and it took him less than 30minutes.
So either keep it friendly or walk gently but carry a big stick.
When is best to buy a new bike? Have it as debt now or outright afterwards?
I am not a lawyer, but surely now. Say it costs £5k cash now, the cash pot is £5k less so you're getting £2.5k less. But when the time comes to split your assets it's only worth 3k (it's used) so to keep it you only have to hand over an additional £1.5k. ergo a £1000 discount??..
Is she looking for a boyfriend?
.He has savings of £350k but no pension of any worth. She has £50K in savings but a good NHS pension pot (£250K)that is expected to pay out £12K per year when she retires next year.The question is what will the split be?. Is her £250K pension pot considered to be worth the equivalent of £250K of his savings?
THEY have savings of £300k.
The 20x valuation of the annual pension is the Inland Revenue evaluation. A closer valuation for an equivalent annuity is 30x (what you will pay if you keep your savings).
Her pension is £12k pa, there is no real pot as she's got a Final Salary Pension - and work on 40x for a non-final salary pension.
When I went through my divorce, my ex had no savings, minimal pension and about 18% equity in the house.
18% - where did that number come from?
THEY have savings of £300k.
350+50 = 300 ?
The 20x valuation of the annual pension is the Inland Revenue evaluation. A closer valuation for an equivalent annuity is 30x (what you will pay if you keep your savings).
Last year my final salary pension had a CETV of 38x the estimated annual pension at the same time. Having said that, index linked annuities, at age 55, male, non smoker, are about 2400 per 100k pot- or 500k to return 12k annually (level annuity will obviously payout more initially, but that's be stupid to do at your ages). Suggesting that the pension alone isn't much short of half of all your assets. You'll probably have to split the pension just to enable you both to have a home.
350+50 = 300 ?
i think he/she was saying that with his 350 and her 50, the 2 x 50's cancel each other out so 300's left as their joint savings.
thats how i understood it anyway.....
350+50 = 300 ?
Sorry, mis-typed. THEY have £400k.
Sorry, mis-typed. THEY have £400k.
thats how i understood it anyway…..
looks like i understood it wrong then 😀
Having just concluded my own divorce, I can tell you exactly what my solicitor told me and that is that in your case, with a marriage that long, everything will be considered marital and will be split equally between the two of you.
That incldes pensions. You will need to get a pensions consultancy to review your pension provisions and then give a discrete valuation of the total pot's worth. That amount will then be on your balance sheets.
You basically add it all up and simply divide in two. The only times this doesn't happen is when there are other needs for each party to be met, but since your kids have left home and are not dependent on you (and assuming your partner has no special needs to take account of), it will be 50/50.
You can split the assets any way you like, so one can keep their pension and the other the house equity if you wish, just so long as all the parts add up to half. In the case of pensions, there would need to be a an actual transfer of funds from your partner to you if you decide to do it this way.
"It’ll depend on what each party wants and what they both can agree on but that sounds reasonabley fair and amicable."
It may or may not be fair, but how the hell can we tell if it's "amicable"
It may or may not be fair, but how the hell can we tell if it’s “amicable”
A lawyer tells me it’s fair if you both feel like you got shafted at the end 🙃
It may or may not be fair, but how the hell can we tell if it’s “amicable”
If they agree on that deal between them without it being forced on them by the courts then it's amicable
Tell 'your friend' to get some proper paid for legal advice.
Given the sums involved and the age of 'your friend' it would be the height of stupidity and folly to take any notice of comments from randoms on a chat forum.
No two cases are the same - every individual going through a divorce has their own wishes and expectations - and are often influenced by voices of others who aren't directly involved.
That's one good reason to use a solicitor.
Another is that they will provide impartial advice and will work to protect the best interests of their client.
That costs money.
If 'your friend' doesn't appointment a solicitor soon that will be irresponsible, reckless and stupid but - hey, it's their money and their future.
Frankconway is correct. Believe me, it's the only way.
And then listen to your solicitor, that's really important. It's so easy to try and do the 'right' thing, which in my case meant almost giving away lots of money for zero benefit and no goodwill. The law says 50% for a reason.
A couple of 50 something friends are on this road at the moment, and one of them has hit the point where trying to do the right thing amicably has hit a brick wall as his ex has finally realised shit gets real.
This prompted an intriguing discussion with MrsMC who set out what she felt a fair split would be if we were to divorce. After initially expressing my shock and disappointment that she had even begun to think about this, I had to concede that my "ideal theoretical split" would be on the same terms.
I'm not sure if this was a good or a bad thing....
Got friend going through now. Told me everything’s gets put in a big pot. House, savings, pensions. To calculate pensions each party contact pension co and asks for the cash equivalent value. You then split the pot as per your argument. Other things to take into account are ongoing claims vs final settlement.
Personal items inc bikes are not included under £1k or thereabouts, you'll need to check.
No 1 rule of bikes: Whatever the price, tell your partner it was about £500 😂
Now I have a question out of interest. Hypothetically, what would happen if you married 5 times over a lifetime, having a kid with each wife and divorcing them all. Alongside this you only earned the uk average salary. Would you get £0 to live on after paying fees?
A good starting point is making sure you both have a good understanding on the value of DB pensions. As discussed above, potential valuations can be anything between 20x and 50x the annual pension.
Other assets are easier to value. However, with the house for example, an agreement needs to be made on at what point the valuation is made. Which is more pertinent in a rising or falling market. This will tend to depend on who is living there and who is contributing to the mortgage and bills.
Whilst I broadly agree that getting solicitors involved early is a good idea, their job will me much easier/cheaper if this is done in a non-confrontational way for as long as possible i.e. look at it as legal education. Whilst you also both work on your financial education.
Having just concluded my own divorce, I can tell you exactly what my solicitor told me and that is that in your case, with a marriage that long, everything will be considered marital and will be split equally between the two of you.
My mate is just going through this and is in the exact same position. Solicitor said he should split 50/50 without going to court but if he wants to fight it it will cost him £70k and the judge will still split it 50/50. He did actually make his ex sign a marriage contract saying what she would be entitled to but that's not worth the paper it's written on apparently.
He's having to pay an actuary a few grand to sort his pension stuff out plus of course his and her solicitors fees as he's taken the wrap for the divorce as the 'no fault' rule isn't in play yet.
also, i'll chip in with another bit of advice (or, well, a personal view).
This process is horrible and stressful. When you are going through it, it's NOT a nice place to be. You may want to get out of it ASAP.
You'll have family members and friends saying "fight her for this... challenge her for that".. it's well intended 'advice', but... it's VERY HARD when you are in the midst of it.
From a personal point of view, I let a lot of things 'slide' (lies she told to get a bigger payout etc) because I simply wanted done with it. I wasn't a pussy or rolling over- i made the concious decision that I'd rather be a bit poorer but happy and stress free 9and divorced/done with it all), than fight tooth and nail for every last penny I felt i was owed. People may think you're daft, or say you should keep fighting. But fighting is tiring. And life is meant to be fun and happy.
Good luck.
Life is tough,but so are you(/your friend)
DrP
I had to concede that my “ideal theoretical split” would be on the same terms.
I’m not sure if this was a good or a bad thing….
MCD - that's probably quite a good test for if you are "happily married"! As soon as someone feels pissed off or wants out then they will want disproportionately more or just to get away as quickly as possible.
MCD – that’s probably quite a good test for if you are “happily married”! As soon as someone feels pissed off or wants out then they will want disproportionately more or just to get away as quickly as possible.
Probably a fair comment. Maybe less "happily married" and more "Cold War Standoff" 🤣
He did actually make his ex sign a marriage contract saying what she would be entitled to but that’s not worth the paper it’s written on apparently.
"make"
Interesting choice of word...
and he wonders why it ended in divorce 🤣“make”Interesting choice of word…
and he wonders why it ended in divorce
I'm wondering how someone who thinks he is so clever as to get an agreement didn't know they can't be relied on in the UK....
DrP your experience mirrors my feelings on it all. Hopefully I can get through the process relatively painlessly...
Is there a good idiots guide available for all this?
There's lots of guides avaibalbe I guess... from the official legal side of things, to a more supportive 'broski' type side of things..
TBH, have a vent here, ask advice here... I did, and found it pretty useful!
DrP
He’s having to pay an actuary a few grand to sort his pension stuff out plus of course his and her solicitors fees as he’s taken the wrap for the divorce as the ‘no fault’ rule isn’t in play yet.
He doesn’t have to pay her fees at all; if he is then he’s doing it voluntarily. Same goes for the actuarial valuation. Of course more importantly ‘HE’ isn’t paying for anything period; ‘THEY’ are paying for it all from their share of the total pot. If a marriage has been for longer than say 12 years, all assets are marital and thus shared.
My ex and I took credit cards out with zero percent on new spend and paid our fees on those until the family home was sold. It cost me about £17,000 all in.
In the first meeting I suggested 50/50; her lawyer (who was in the room at the same time as mine as we went down the collaborative route) said she should take it. Mine said I might well be entitled to more and I should consider exploring that. I reiterated that for the sake ease and saving money I would still table 50/50 but my ex insisted on trying to keep her pension out of the equation.
In the end we settled 52/48 in my favour. 🤦♂️
Lots of good advice here, and the best is from those that have got through it (DrP and judetheobscure for example but thanks to everyone for chipping in). I'm 20 months separated and only just edging closer to a financial settlement.
(Edited as I probably should get a different username to do this. )
it seems like a lot of the settlements haven't gone 50:50 from the annecdotal evidence. Out of interest, other than supporting a kid, whats been the factors that have swung it away from an even split? Obviously people can lie during the proceedings, but I'm not sure what saying "I bought this expensive car with my inheritance before we got married" does (regardless of truth) if the assets are equally owned due to marriage
@5lab if one person says they brought assets into the marriage and it can be shown/argued they have not 'intermingled' then that can be an argument for not splitting equally. There may be other reasons. IANAL... Just a recipient of solicitors letters.
Out of interest, other than supporting a kid, whats been the factors that have swung it away from an even split?
As above, if there is a very substantial difference in what was brough to the marriage in the first place then there may be a case to adjust things there, but the difference has to be significant; £100k isn't considered significant in a marraige of 14 years for example and the longer the marriage has been in place, the less likely you are to successfully make that case.
But there are valid reasons why it might not be 50/50 and the key here is the way the family courts rule on financial settlements. Their guiding principle is worded as 'the needs of both parties must be sufficiently met'; if one party were for example 60 and with very little pension savings and and the other were say 40 but with substantial pension savings, then the older party would likely get a more generous settlement to compensate for the fact that they simply cannot earn the pension they need to sustain them. This is why my split was slighyly in my favour - I am slightly older than my ex.
The one overwhelming piece of advice I would reiterate time and time again however is this:
Do your best to be the very best ex they could possibly hope for (even if no one ever hopes to have a good ex!) and if there are kids involved, then this times a thousand.
It's very easy to give way to malice, spite and hate but in the end those negative emotions will chew you up and make you very unhappy.
I'm very fotunate that having adopted this approach myself (and with two young children that spend exactly equal time with myself and my ex) my ex also responded in kind. It took a while but she did eventually and we are co-parenting now better than we ever did as a couple!
Obviously seek professional advice.
When I got divorced I kept my pension and my ex wife got the equivalent in equity of the marital home. Ours was a fairly amicable divorce.
That suited her better at the time, she was free to take the cash from the property once sold.
Do your best to be the very best ex they could possibly hope for (even if no one ever hopes to have a good ex!) and if there are kids involved, then this times a thousand.
It’s very easy to give way to malice, spite and hate but in the end those negative emotions will chew you up and make you very unhappy.
I’m very fortunate that having adopted this approach myself (and with two young children that spend exactly equal time with myself and my ex) my ex also responded in kind. It took a while but she did eventually and we are co-parenting now better than we ever did as a couple!
perfectly put.
so in my case the financial split side of things was going to be pretty much 50:50 for the 'whole pot', which consisted of pensions (both of us, but mine was higher) and the house value.
I'm pretty young, so wanted to split BOTH aspects (pension and house) 50:50.. i needed the 'cash in hand' from the house so rehome me and my kids (have them 50:50)..
I earn well, and she actually earns a fortune too (as a limited company that's just her...)... but she swindled the figures to that the limited company was racking up HUNDREDS OF THOUSANDS in it's bank account, and she was paying herself a few quid... thus making HER look poor on paper...
She then argued she'd need MORE of the house equity as "i'm so poor boo hoo hoo...can only afford a small mortgage etc"
I just shook my head, couldn't be bothered with it all, and agreed. I DID keep more of my pension, but as stated I'd have liked more actual real money NOW...
As soon as that was all agreed she miraculously was able to take the hundreds of thousands from the house equity, and utilise a magic, yet undisclosed pot of money (see limited company guff above!), and be able to afford a big house (actually, she bought out the family home..something she blank claimed she couldn't afford to do...until she could)..
Anyway.. I know what went on, as does everyone else..
BUt.. i got a 'fair shair' of the total in the end, and I'm now with a lovely partner... I'd infinately rather be poor (OK, i'm not, but I was financially screwed) and be rid of the horrible Ex....!!!!
DrP
He did actually make his ex sign a marriage contract saying what she would be entitled to but that’s not worth the paper it’s written on apparently.
“make”
Interesting choice of word…
He didn't really want to get married but that was the quid pro quo they agreed on. Not that the settlement would have made a difference if they were married or not.
and he wonders why it ended in divorce 🤣
after nearly 30 years, seems a common thing.
Now I have a question out of interest. Hypothetically, what would happen if you married 5 times over a lifetime, having a kid with each wife and divorcing them all. Alongside this you only earned the uk average salary. Would you get £0 to live on after paying fees?
Gamblers and fools all too often lose everything.
Are you Boris Johnson and asking 'for a friend'?