Separation / Divorce - Property issues

[babushka]

After more than 30 years marriage, he told me that he wanted his freedom and independence! He has now moved out of our home (the move was his own decision). I have some questions regarding property issues on separation / divorce, and hope to get some broad views from forumites on these. I know it is complicated, but some preliminary views would help me a lot.

On friends' advice, two months ago I went to see a lawyer to ask questions about a legally binding financial agreement. It cost me almost $1,000 for 2 hours consultation. However, the question I now have did not come up at the time I saw the lawyer. I can share some general advices I received - based on my particular situation.

Since we were married for more than 20 years, the assets (mainly properties) will get split 50/50. He is earning a very high salary, however, I will not be able to get any financial support from his salary because we don't have children underaged and the court will say that I will be able to get a job (eventhough I am over 55 - both of us are over 55). However, I can argue for a slightly higher percentage than 50% in the split-up of assets, based on my age and that I have not worked for over 10 years. I maybe able to get some of his superannuation - based on the new laws. We currently have a self managed super fund with 20% my contributions and 80% his.

I am waiting for him to see his lawyer to draft the binding financial agreement which he has promised to do for a couple of months. Once he gives it to me, I will go back to the lawyer I saw for his opinion.

In terms of assets: we have a PPOR (I am living in, and he lives in a rented unit - his choice to move out), 3 investment properties all in a family trust, and a share portfolio. We have mortgages on all the properties and the share portfolio. We have agreed to sell (but not being done yet) one property which has been performing poorly for many years.

He has been pressuring me to sell the share portfolio and repay the loan attached to it, as well as sell the other 2 investment properties (these have performed very well since we bought them 4 years ago). HOWEVER, when I told a friend about this. She said I should not sell anything for now because whatever I do it will be for his benefits and not mine. She said if I sell the shares and the investment properties, besides the extra costs, there will not be any assets left to split in the settlement - other than the PPOR.

Question: I would like to know if any forumite agrees with my friend's view, that I should not agree to sell anything until the binding financial agreement is in place?

He kept changing his mind in terms of what he would give me. First, he said I could continue to live in the PPOR and he would get a job overseas and keep the investment properties. Now, he said the overseas job is a remote possibility. So, he suggested that I move overseas to live with my sister instead, and he would move back into the PPOR and give me my portion in cash to take overseas with me for living expenses (he can easily borrow money for this based on his high salary).

However, I am thinking differently: the PPOR is worth the same as the combined value of the two remaining investment properties. I don't want to live overseas - all my friend network is in Australia. I want to negotiate with him for me to keep the PPOR, and for him to keep the 2 investment properties. Yes, there are loans on these, but the rental income and his salary are more than adequate to cover the interest expense. The main advantage for him is the tax benefits from his high salary. To date, we have always been able to service all the loans from his salary alone.

Question: Does any forumite have a view on the above?

Thanks in advance!

 

[Bigtone]

After more than 30 years marriage, he told me that he wanted his freedom and independence! He has now moved out of our home (the move was his own decision). I have some questions regarding property issues on separation / divorce, and hope to get some broad views from forumites on these. I know it is complicated, but some preliminary views would help me a lot.

On friends' advice, two months ago I went to see a lawyer to ask questions about a legally binding financial agreement. It cost me almost $1,000 for 2 hours consultation. However, the question I now have did not come up at the time I saw the lawyer. I can share some general advices I received - based on my particular situation.

Since we were married for more than 20 years, the assets (mainly properties) will get split 50/50. He is earning a very high salary, however, I will not be able to get any financial support from his salary because we don't have children underaged and the court will say that I will be able to get a job (eventhough I am over 55 - both of us are over 55). However, I can argue for a slightly higher percentage than 50% in the split-up of assets, based on my age and that I have not worked for over 10 years. I maybe able to get some of his superannuation - based on the new laws. We currently have a self managed super fund with 20% my contributions and 80% his.

I am waiting for him to see his lawyer to draft the binding financial agreement which he has promised to do for a couple of months. Once he gives it to me, I will go back to the lawyer I saw for his opinion.

In terms of assets: we have a PPOR (I am living in, and he lives in a rented unit - his choice to move out), 3 investment properties all in a family trust, and a share portfolio. We have mortgages on all the properties and the share portfolio. We have agreed to sell (but not being done yet) one property which has been performing poorly for many years.

He has been pressuring me to sell the share portfolio and repay the loan attached to it, as well as sell the other 2 investment properties (these have performed very well since we bought them 4 years ago). HOWEVER, when I told a friend about this. She said I should not sell anything for now because whatever I do it will be for his benefits and not mine. She said if I sell the shares and the investment properties, besides the extra costs, there will not be any assets left to split in the settlement - other than the PPOR.

Question: I would like to know if any forumite agrees with my friend's view, that I should not agree to sell anything until the binding financial agreement is in place?

He kept changing his mind in terms of what he would give me. First, he said I could continue to live in the PPOR and he would get a job overseas and keep the investment properties. Now, he said the overseas job is a remote possibility. So, he suggested that I move overseas to live with my sister instead, and he would move back into the PPOR and give me my portion in cash to take overseas with me for living expenses (he can easily borrow money for this based on his high salary).

However, I am thinking differently: the PPOR is worth the same as the combined value of the two remaining investment properties. I don't want to live overseas - all my friend network is in Australia. I want to negotiate with him for me to keep the PPOR, and for him to keep the 2 investment properties. Yes, there are loans on these, but the rental income and his salary are more than adequate to cover the interest expense. The main advantage for him is the tax benefits from his high salary. To date, we have always been able to service all the loans from his salary alone.

Question: Does any forumite have a view on the above?

Thanks in advance!

don't sell anything until agreement in place

 

[Propertunity]

don't sell anything until agreement in place

Yep, this one.
Sorry to hear of your plight babushka.

 

[EarlyRetirement]

Yes, don't start selling the big assets until the property settlement is finalised.

Your other question is pretty hard to answer without knowing a lot more detail. At the end of the day, you need to work out the value of the matrimonial pool (assets - liabilities) and what your % entitlement is. If you both agree on a split (be it 50/50 or whatever else), you can then work out what your % means in dollar terms, and what items you both would like to retain as part of your entitlement. It is difficult when your husband is constantly changing his mind about what he wants to do.

You will also need to factor in sale costs/CGT/commission etc. for any property/shares that are going to be sold.

It's often just a matter of playing around with the items that are in the pool to work out what you can agree you both want to keep and how to deal with the other assets. Obviously, the more assets you sell, the lower the value of the property pool when you take into account CGT etc.

 

[Terryw]

You should also consider the taxation aspects. If you sell now there will be CGT - is it in your interest to have this payable now? if you receive property as part of the settlement then the CGT may be delayed until the sale may years later.

There is also the fact that the PPOR is CGT free. So getting your hands on this may be more valuable than getting the equivalent value of investment property.

The binding financial agreement shouldn't take too long to prepare so I suggest you wait for this. I also suggest you try to keep things friendly to reduce legal fees. I just spoke to a guy today who said his legal bill for his divorce was $90,000 and the wife has probably paid the same - which is a lot of money to waste.

 

[babushka]

Thanks everyone (bigtone, propertunity and EarlyRetirement) for your replies!!! All were very helpful and I appreciated them very much.

I now understand that my friend had a good point - why it is important not to sell assets before the binding financial agreement is in place. Except, I did agree with my ex to sell one investment property in NSW which has been under-performing for many years. We bought it 7 years ago (at the peak of the property cycle) and if we sell it now we will get no more than what we paid for it. Also, since it is in a family trust structure the land tax has been eaten away 30% of rental income each year because there is no threshold in NSW for trusts! I will not agree to selling anything else until a binding financial agreement is in place.

Terry, you are spot on! The most important aspects which were mentioned by Terry are the CGT implications. I did ask the lawyer this question, and he said if a property was transferred under a binding financial agreement then the CGT would be deferred until that property was sold by the beneficiary party. However, we both do have large capital losses from redeeming some very bad managed funds. I have not worked out the numbers on selling the investment properties yet, but since the loans are in his name all the capital gains will be his - meaning, he will certainly be paying tax on most of the capital gains. I will be left with the capital losses and no capital gains to offset. I hope to explain this to him so he'll understand why we should not be selling assets before a binding financial agreement.

Again, Terry is right in that we should keep things friendly because at the end of the day the lawyers are the ones who get rich out of this. An acquaintance told me that it took her 3 years to reach a settlement with her ex - after spent almost $75,000 on legal fees (and her ex probably spent that much and more). She almost gave up on the fight, but the lawyer kept urging her to fight on. In the end, they settled out of court - she got 48%, and her ex got 52%!

I don't know what my ex will decide. He has been very coy and secretive about the financial things. Since we are both financial literate, so both know everything about our assets & liabilities. My friends said to make sure he has no hidden assets, but I don't think he has. He had always been an honest person until 6 months ago when he started the lies.

 

[Terryw]

Babushka

Another idea is, if you still have access, to start copying important documents now and store them out of reach. Including copies of hard drives of computer (Have u seen that movie with Brad Pitt and George Clooney? - forget the title now). These may come in handy later if you need to trace assets or transactions etc.

Also you mentioned loans are in his name so he will get the CGT - this is not really correct. CGT will depend on the ownership - usually names on title.

Lawyers want to drag it out for one reason.... Since you have been married so long it probably will result in a roughly 50/50 split anyway, though you may be able to get some contributions towards maintenance.

 

[Amadio]

My friends said to make sure he has no hidden assets, but I don't think he has. .

Be careful about agreeing to a suggestion by a lawyer to do a search on assets. It will be mentioned very casually and the search will probably cost more than any "hidden" assets. Hidden assets have a way of unhiding themselves all on their own, without any lawyerly assistance, some time down the track.

Good luck with everything.

 

[joycenmat]

Even for marriages that are secure it is always good to have a what if and an avenue to take if so.

I also had a friend have her husband leave. He sorted out the divorce and he financial agreement then when that was over introduced his new partner!

Now we know why he changed so suddenly! Definately worth checking the computer history If you have access just to ensure there is no other parties involved. This may be a reason he wants a larger chunk so he can set up another life (so to speak) and this has also happened in my own family. Is not very nice but eventually everything settles down and things get better. NOw you are unemcumbered! Go have fun!

Good luck and do not listen to his advice at all. He is the other party with a financial interest. He is now in effect a salesman selling you ideas. Only listen to legal advice and definately keep the PPOR if there is good equity even if you work perm part time you may be able to use equity for an IP at a later date.

 

[wylie]

NOw you are unemcumbered! Go have fun!

Great advice. Get out amongst it and see who else is out there (if you want a "who else" that is).

Good luck and do not listen to his advice at all. He is the other party with a financial interest. He is now in effect a salesman selling you ideas. Only listen to legal advice and definately keep the PPOR if there is good equity even if you work perm part time you may be able to use equity for an IP at a later date.

Ever better advice. Make sure you get good legal advice and stick to your guns. Don't let him sweet talk you into anything. He is no doubt feathering HIS nest and couldn't give a rats about yours.

 

[handyandy]

I would advice keeping the PPOR (cgt free) which you seem to indicate is also debt free. The other properties are in a trust and if a discretionary trust could be very easy to move solely to him.

The other financial's (shares) would be very liquid and a simple sale and 50/50 split would suffice.

An acquittance was in same situation and also similarly aged and not worked for many years. They did a very similar split and she managed to get a job (office based) with no previous experience and is going from strength to strength. More so, she's having a ball with suitors at the door. So live doesn't stop.

Cheers

 

[babushka]

Thank you again to everyone who has posted replies to support me. I do appreciate all your suggestions as I try to sort things out clearly in my mind.

Terry: Yes, I have pdf'ed the important docs and emailed them to my sister for safe-keeping. I keep the desktop computer and he has taken our large laptop and I knew he has been copying files from the desktop to the laptop. I will do a back-up of the hard drive - at the moment he is in Europe and Asia having a 2 weeks holiday by himself!

Joyce and Wylie: Yes, there was a third party involved. He has denied there was anything sexual between them, only a close friendship! She is 20 years younger than he, and works in an overseas office of his company. This was the reason why he wanted an overseas job, and opened a bank account in his own name only! There have been a lot of personal corres between them since he met her over a year ago, and spent a weekend alone with her overseas in February. When he got back, he started making the plans for separation and said that I have been a horrible person to live with (after more than 30 years!) We had tried to reconcile 4 times in the last 6 months because he sweet talked me into it, but each time we failed because I kept discovering things between him and the woman. He refused to cut off all contacts with her, saying that in doing so he would be admitted to his guilt! Friends said I must let him go and never take him back. As both of you have said, they said - Go out and have a life, and don't let him bully me. His mother has taken his side, but his own sister and auntie (his mother's sister) have told me to be strong and stay as their family. I have kept myself busy with work for a non-profit organisation and playing golf - trying to overcome the emotional aspects of the end of a 30 years plus marriage.

Andy: Like others have said, I should try to keep the PPOR (CGT free). Friends (from 30s to 80s years old) said I should not move out of our home under any circumstance. He was the one who wanted a separation and moved out - not me. Now he wanted me to move overseas to live with my sister in Canada so he could have the PPOR. He even put the idea into his nephew to ask me if I would be moving overseas! So, I am staying put.

Thanks for your good advice about a job. Yes, after the financials are sorted out (hopefully in the next 6 months), I will be looking for a paid part-time job to have some income to buy myself an investment property!

 

[joycenmat]

He'll fall on his face and ruin a 30 year marriage over it its just a infatuation that is exciting while secret but not so fun when reality bites. TO be honest, read Toby Greens column in the Sunday Mail she is spot on.

Now being logical...SOmeone 20 years younger so she is about 30? Does she have kids? She might eventually and he has already gotten over kids so he now wants to enjoy life, she might pressure him, and he might hate that. Also he has a high income..sorry to say but for some women it makes men more attractive. And if she cant build her own wealth she will just latch onto his. I have seen this all the time. And it usually ends the same way. Except for that billionaire Kristy Hinze married. And they want kids he is nearly 70...They do say love is blind!

Let him go. Those sort of values you wouldnt want in a marriage anyway. Change is as good as a holiday anyway. Clean the house out, move the furniture and invite the girls over!

Now i am guessing the other lasy wants this over nad done with ASAP and will put pressure on him to do so. So that leaves a ball in your court. Stick to your guns..and if he cant get you to move etc then she will pressure him more. Give him an ultimatum. I want and list them. The pressure from the other lady may be that great that they might just give you what you want, aslo mention he can buy another house, a better one and then he might mention your idea to the new lady and she might also agree, therefore adding more pressure to him to give you PPOR and buy her one. (what a waste of cash..maybe she will marry him and leave him high and dry!)

Got to be smart about these things and take into account everything then pick out your options! HOpe that helps.

 

[babushka]

He'll fall on his face and ruin a 30 year marriage over it its just a infatuation that is exciting while secret but not so fun when reality bites. TO be honest, read Toby Greens column in the Sunday Mail she is spot on.

Now being logical...SOmeone 20 years younger so she is about 30? Does she have kids? She might eventually and he has already gotten over kids so he now wants to enjoy life, she might pressure him, and he might hate that. Also he has a high income..sorry to say but for some women it makes men more attractive. And if she cant build her own wealth she will just latch onto his. I have seen this all the time. And it usually ends the same way. Except for that billionaire Kristy Hinze married. And they want kids he is nearly 70...They do say love is blind!

Let him go. Those sort of values you wouldnt want in a marriage anyway. Change is as good as a holiday anyway. Clean the house out, move the furniture and invite the girls over!

Now i am guessing the other lasy wants this over nad done with ASAP and will put pressure on him to do so. So that leaves a ball in your court. Stick to your guns..and if he cant get you to move etc then she will pressure him more. Give him an ultimatum. I want and list them. The pressure from the other lady may be that great that they might just give you what you want, aslo mention he can buy another house, a better one and then he might mention your idea to the new lady and she might also agree, therefore adding more pressure to him to give you PPOR and buy her one. (what a waste of cash..maybe she will marry him and leave him high and dry!)

Got to be smart about these things and take into account everything then pick out your options! HOpe that helps.

Joyce: You sounded exactly like some of my friends! They all say let him go, he is not worth my love. He is having a mid-life crisis (but he has vigorously denied it). He is infatuating with a younger woman because she flatters his egos, particularly he has power and status in the company and earns lots of money! Some friends told me that I should tell him that she has a dark motive in being friendly to him. They said they have seen it all before, that his infatuation will last a year or so, she will clean him out and find a younger man or her husband will suddenly appear. He will be a broken man in every way. But when I told him what friends said, he just laughed it off and said my friends poisoned my mind. He is 57 and she is 37 - separated from her husband (and in the process of divorcing him) with 2 teenaged daughters! Her boss told me she has a record of a serial flirter with married men in the office and a number of their wives have confronted her with very harsh words in the past. Her boss tried to talk to her, but without any success. She refused to stop contacting my ex.

Friends could see what a different person he has become, so they told me to see a lawyer asap and get the financial agreement in place. I was devastated and wanted him to mend our marriage, so I told friends the last thing I wanted to do was to worry about the financial aspects. But, they said I must do the financial agreement first, and after it is done I can lock myself in my house and cry as much as I want!

 

[lizzie]

a few of us have been there and done that.

the best advice i can give you is not to talk or listen to him at all, about anything. shut the door and do everything thru either a mediator or lawyer.

as touched upon, his only interest now it to get as much money, and most adventagous position, out of the deal as he can - and bugger to you.

they try it all on - sweet talk, guilt, anger, threaten, sarcasm, derogitory comments, bad mouthing around town - it all happens if you don't roll over and cave in to their demands. don't listen to it, don't get involved in it, don't take it personally, don't believe a word they say and don't retailiate.

let the mediator or lawyer do your talking. and get it all in writing. a verbal agreement isn't worth the paper it's written on.

 

[skater]

Babushka, I feel for you. Although I have not been there myself, I feel that this is the most worrying of all.

opened a bank account in his own name only! There have been a lot of personal corres between them since he met her over a year ago, and spent a weekend alone with her overseas in February.

Opening a bank account in his name only, long before you became aware of the situation. Is it overseas? Can he hide stuff there?

I agree with the others, he is now just looking after himself. You need to protect your own interests. Don't agree to sell anything yet. What account does the rent payments and dividends go into? Who has access to this? Whee is the money coming from for you to live on at the moment? Can he claim that you have been spending his income for your own living expenses since the split?

 

[joycenmat]

It is funny when it is so obvious to others and not to them. I already learned th listen to others (depending on the situation) Friends and family 90% of the time know you better than anyone so if they say "that guy is bad for you" etc etc i know to listen even if it sucks and they are always right. The one time i didnt listen and it ended badly and took a year of my precious time! (Can i bill him for that!!?)

Remember you will always be ok. It gets worse before it gets better. But the other side is SOOOOOOO good. And you have to believe in yourself.

AS lizzie and i said. He is looking after numero uno..Years of marriage do not matter to a man on a mission.

You write like a good rational person. With a good sense of the situation and lots of honesty. You will stick to your guns and be braver nad more confident for it. I can see lots of people seeking your advice in the future.

PS My mum joined a divorce group and ranted raved partied had fun and felt more alive than ever. Join one! Even a forum..A lil Venting is beneficial for moving on and our sanity

 

[Mr. Fabulous]

Years of marriage do not matter to a man on a mission.

- women are just as likely to cheat on their husbands as men are to cheat on their wives
- women initiate 70% of divorces

It seems years of marriage mean even less to women on a mission than men.

babushka - I wish you all the best and I hope you come out the other end of this as relatively unscathed as possible.

 

[joycenmat]

Its ok Mark. I know the statistics are pretty even. I was just relating that to her situation not making a generalisation. My apologies if that came across as aimed at all men. (which it is not, I love my dad and my brothers. )

 

[babushka]

Thanks everyone again, for more encouragement and positive thoughts - all help me to stay sane. I have a circle of close family members (including his) and friends, here and overseas, who have rallied behind me and invited me to come and stay with them if I ever felt lonely or wanted to get away.

Skater: He said he opened a bank account in his own name because "if you die, the joint name account may be frozen and it is easier for me to access money for living if I have an account in my name only". He said very little money is in that account at present.

The rent income from the 3 investment properties in the name of the trust goes into an account in the trust name. We both have access to this account. From time to time I make payments for his loans on these properties from this account. The dividend income goes directly into another loan account.

At the moment, the money for my living expenses (food and household bills) still comes from our joint name account where his salary goes in and he said he would leave in place until he decides on what to do. My lawyer said if he stops giving me money for living expenses then we would go to court to seek an order for him to set aside so much of his salary for my living expenses on a temporary basis until the binding financial agreement is in place.

A funny thing was that when he moved out he said his mother lent him money for the deposit and first month rent! Our credit card bills are very high at the moment with him taking a holiday to Asia & Europe for 2 weeks (by himself) and all the new appliances he bought for the rented unit.

Joyce: His aunty kept saying to me, not to stay home and cry but to go out and keep myself busy. So, I meet up with friends and play golf once a week. I have big plans to travel and do good for many causes after the financials are in place. One of my friends said "statiscs has shown that generally women outlive men, so just think you don't have to look after him in the nursing home when he is old or pay his large medical bills when he is sick"

Lizzie and Mark: Thanks for your posts. It is strange but throughout our crisis to date, I do feel sorry for my ex - eventhough he has done a terrible thing to me. He has not shown much emotion and kept a distance from me as if I was a leper.