Types of Agreements / Orders
Again, what may suit one family does not necessarily suit another - the hardest part is finding the right solution for you that as far as possible help everyone to be housed, and to be able to pay their bills. This can be very hard if there is not much money around, and sometimes same very difficult decisions will have to be made.
Housing is the most important need for everyone. This can be achieved by the existing family home either being sold and the proceeds being divided so that each spouse/partner can purchase their own homes; or one spouse/partner keeping the family home but raising money and "buying out" the other spouse's/partner's interest - that spouse/partner then uses the money to buy another home.
If it is not possible to sell or buy-out, so as to raise enough money for other homes to be purchases, then we may need to look at other options, such as the family home being sold but the majority of the money being used just by one spouse/partner to be able to provide a home for the children, In return for having the majority, the other spouse/partner could, for example, keep any other assets such as pension or savings.
Another alternative is to keep the family home for one spouse/partner and the children (usually reliant on the mortgage being still affordable) and the other spouse/partner keeping a charge over the house. The charge works like a mortgage, in that it is registered over the title to the house -it will provide for a percentage of the house to be paid to the non-resident spouse/partner on the first of certain events happening. The usual events are if the resident spouse/partner dies or remarries, decides to sell the house, or the youngest child finishing their full time secondary education. (This is a brief overview of how a charge can operate full details would be given should this be an appropriate solution for your situation).
Different ways of ownership can also be considered - for example other family members may be willing to help out, either with lending money or becoming a joint owner/mortgage holder with the resident spouse/partner, so the non- resident spouse/partner is freed from the mortgage over the family home and can perhaps raise their own mortgage on a new property.
There are also various Housing Associations who can assist with shared ownership property where you own a percentage of the house, and rent the remainder from the Housing Association. See our useful contacts page for further information on this.
The ideal situation of course is for both of you to be able to purchase homes, but this is entirely dependent on the assets available within the marriage or partnership. If it is simply not possible, then it may be that rented accommodation or Local Authority housing will have to be considered.
Other capital assets also need to be taken account of-for example, life policies can have a surrender value. They
could be sold or surrendered, or one party keeps them and either "buys out the other from the policy, or has the
policy in return for another asset being retained by the other spouse/partner. There may be other investments such as
shares, ISA's and the like - all values need to be taken into account, and this coupled with housing needs, can help decide how they are divided.
Pensions are also capital assets, though treated differently to the capital assets considered above. This is because you are either going to use it only on retirement, or, if a pension is capable of gains cashed in (not all of them are) that, usually only available from the age of 55. Tax implications must also be considered.
There are three options for dealing with a pension fund:
Pension Sharing: This is where a percentage of one spouse's/partner's pension fund is taken out and placed into a new pension fund for the other spouse/partner. The two funds are then entirely distinct from each other and each continues investing their sum pension fund into the future.
Pension Attachment: Is when the pension fund of one spouse/partner remains intact until their retirement. At retirement, the Pension Trustees of the fund are directed to pay a percentage of the lump sum and/or the pension income to the other spouse/partner.
Pension Offsetting: Occurs when the pension fund has no claim made upon it, in return for the other spouse/partner retaining all or the majority of another asset, for example the house.
Pensions are complex, and this is only an overview. More details will need to be considered in each case, and quite often advice from an Independent Financial Advisor will be needed, and sometimes a report from an Actuary about the value of a Pension Fund or Funds/Income will also need to be considered of course, as both of you must have sufficient money to enable you to pay your bills.
All sources of income will be looked at first - salary including any regular overtime or bonuses; working and/or child tax credits; any other state benefits being received or which could be claimed; and child benefit. Interest from any investments or private income will also be reviewed, such as from sources like family or Trusts, or share dividends.
If you do have children, we would look at the amount of child maintenance that would be received or payable, dependent on whether the children were resident with you or not. See our useful contacts page to follow a link to the Child Maintenance Service where you can complete an online form and obtain a guide on the level of child maintenance that could be assessed in your case.
Whether spousal maintenance is payable by one spouse/partner to the other is very much reliant on looking firstly at all the
other sources of income and also considering what outgoings each household is going to have.
As set out at the beginning, by necessity this is only a general overview of the issues and factors that can arise when dealing with financial issues.