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Topic:
Shortfall on Endowment/Property share query. (12 Posts)
Started By:
Date:
11 September, 2017 06:15PM
Shortfall on Endowment/Property share query.
Outland47 - 11 September, 2017 06:15PM
Hello all.

I am new here. I am going through the financial settlement part of the divorce and would like to know the following.

I am at the family home with my two daughters as the Wife left home. The Mother does not see her children.

I would like more than 50% of the property when the youngest turns 18.

We have an endowment that will have a shortfall on maturity.

Please can someone tell me that if I wish for more than 70% (just for arguments sake that is) of the sale of the property, do I therefore have to pay more (or 70% in this case) on the shortfall of the endowment?

Basically any fees will be split the same way as the agreed split/share of the property please?



Also, I know each case is unique but is there an average property share please? 50/50, 65/35 etc etc?

Kind regards and taking time our for this. winking smiley
Re: Shortfall on Endowment/Property share query.
HatMan - 11 September, 2017 08:04PM
Two separate issues here I think...the endowment shortfall is just that - money that doesn't exist so I don't see how that is relevant to the issue - that's like saying I hoped there would be more savings !

Anyway ignoring the non existent money all you cab do is deal with what is real - ie the value of the house and the value of other assets including aforementioned endowment policy - the whole lot will be added together and a settlement split agreed...the start point for that will be 50/50 unless one party shows cause that it shouldn't be so.eg housing need and ability to fund.
Re: Shortfall on Endowment/Property share query.
Outland47 - 11 September, 2017 10:02PM
Thank you HatMan, but I am still confused.... sorry.

Basically the question is if I get more of a share of the property's price, will I have to pay that much more on the Endowment shortfall payment please?

Thanks, in advance.
Re: Shortfall on Endowment/Property share query.
Andyk - 12 September, 2017 05:08AM
In simple terms take the value of the property, minus selling fees, minus outstanding mortgage, minus current value of the endowment and that gives you your starting figure for the split. Say it comes out at £100k, you get £70k, she gets £30k so you remortgage for £30k, pay her off.

It's up to you if you keep the endowment running or cash it in, I would say keep it, get her name off it as policyholder and then you have the benefit of the value when it matures and if she happens to pop her clogged before then, then bingo, you get the death value pay out.

Of course the above all depends on ifnshe is willing to accept that value. You also need to consider other things such as debts, savings, pensions etc. One of you may give up, for example some of your pension to get a higher percentage of the value of the house.

If you can, don't agree anything that triggers when your youngest is 18, her 30% now valued at £30k might well be considerably more in years to come and you then might struggle to pay her off.
Re: Shortfall on Endowment/Property share query.
HatMan - 12 September, 2017 06:06AM
I disagree - I think that the endowment will be treated as a current asset and should be ADDED to the pot not subtracted, it is irrelevant that it was originally a vehicle for paying the mortgage.

So let's say house is worth £200K and Endowment is worth £100K - Assets are a total of £300K

Less mortgage of £150K and fees of £10K - That leaves £140K to be split.

Look at it this way - If the mortgage had originally been a repayment mortgage that sum would be in the value of the property - it is totally ridiculous to take the value of the endowment off the asset pot.
Re: Shortfall on Endowment/Property share query.
Andyk - 12 September, 2017 08:30AM
Sorry - yes I agree with Hatman, the Endowment should be added to the value not subtracted, I had that in my head but included it in the deductions. That will teach me to respond to something so early !!!!
Re: Shortfall on Endowment/Property share query.
Outland47 - 12 September, 2017 10:09AM
Thank you for your indepth replies.

You are saying it is an asset even though there will be more than likely a shortfall of about £15-20k?

Thanks,
Re: Shortfall on Endowment/Property share query.
HatMan - 12 September, 2017 10:13AM
Absolutely - the shortfall is completely irrelevant, you have assets and they will be split.

The shortfall is a red herring - just forget about that!! - it's like saying you bought shares and expected them to be worth more - they ain't...get over that !!

You just need to concentrate on the money that exists and then work on how it gets split.
Re: Shortfall on Endowment/Property share query.
Outland47 - 12 September, 2017 10:37AM
Sorry but I am still confused. This is all so new to me plus our first court hearing is tomorrow.

I still need to know if the share is a bigger % for me, will it mean that I will have to pay a bigger % of the shortfall of the Endowment please?

Sorry for my dumbness, but this is all really going right over my head. Apologies. sad smiley
Re: Shortfall on Endowment/Property share query.
Andyk - 12 September, 2017 12:29PM
The thing is that you don't know what the shortfall is going to be, especially if it is years away, it might not even make a shortfall. As Hatman said, it is an asset because it has a value. You are going to have to do some shuffling of your finances with the divorce so factor this in. As I said in my previous posting, if you are going to end up buying your wife out of her "30%" share and remortgage then see about converting some of the mortgage to repayment so that when the endowment matures it is being used to cover less of the mortgage.
Re: Shortfall on Endowment/Property share query.
HatMan - 12 September, 2017 02:37PM
Forget the bloody shortfall!!!! - There isn't one as far as the divorce is concerned - all that matter is what the house is worth, what the endowment is currently worth and what the mortgage is.

Add the first and second together and subtract the third - that is what your estate is worth.....the future is unknown and irrelevant to the current situation it really couldn't be any simpler - no one cares about the shortfall, all that matters is how much money there currently is available to split between you.
Re: Shortfall on Endowment/Property share query.
davidterry - 12 September, 2017 02:58PM
>>Forget the bloody shortfall!!!! - There isn't one as far as the divorce is concerned - all that matter is what the house is worth, what the endowment is currently worth and what the mortgage is.

It may perhaps be worth mentioning here that there are in fact two assets - one is the equity in the property and the other is the current value of the endowment policy. I mention this because typically one spouse will want to keep the endowment policy (not least because cashing it in early is often very bad value). Therefore the policy will be assigned to one spouse and he/she will count the current value of it towards his/her share. Then the equity in the property will be divided in such a way as to take into account the value one spouse is receiving by having the endowment assigned into his/her name. It is then, of course, often used as security against a later mortgage.
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