SurvivingInfidelity.com^®

Hi all, I’m a father of 2 going through a divorce currently living in the UK. Im in my 30s. My ex had an affair and although I tried to make it work she is very toxic and id be better off without her. Lots of heartache and therapy later here i am. I have a lot of respect for anyone going through or been through what i have.
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Anyway i have the decree nici and we are just discussing financials. It’s complicated as I run my own business as a LTD company director, but its just me. However annoyingly my Ex has 30% shares which we did for tax advantages originally. We are going through mediation with advice of lawyers. We have agreed so far to 50/50 with the kids.
I earn more than her around 60k or so, although i earns more last year as a one off…and she is on 30k…there aren’t really any other assets e.g. pensions etc to use...I would like some advice on the below in order of priority…
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1) HOW TO SPLIT FINANCES AND WORK OUT MAINTENANCE – We have been in a 3 bed nice house. We have sold this STC.
MY EX: £177k affordability to borrow + £90,000 deposit roughly. = £267,000 for new property.
ME: £221,600k affordability + £90,000 deposit roughly. = £311600 for new property.
*note deposit is what we would have split 50/50 from current house after all sale and purchasing costs removed.
* affordability is based on me giving her £800 maintenance per month - which i think is high for now, and will reduce later on
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Note: neither of us can afford a 2 bed house here, so we would have to accept a 2 bed flat, which in the area go for 250-280k for something ok. Because i can afford more, am i obliged to give her more out of the deposit to even it out? I have been advised if i do this i can add in a charge back clause as that would be an uneven split….or because her needs are being met by affording a flat is it fine that the affordability is uneven?
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EXAMPLE
MY EX: £177k mortgage + £130,500 deposit. = £304500
ME: £258k mortgage + £49500 deposit = £304500
(note EX gets £40,500 more than me here in deposit and will be a charge back at a later date.)
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Im not even sure if i can afford the numbers they say… its really difficult as self employed getting a mortgage right now…
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Or if i move into a property that she can afford, does it remove that need to pay her more. The difference doesn’t allow us to change the type of property we get so i dont see why i would need to. I don’t see why i should give her an uneven split also. With me giving her the maintenance our NET income is basically the same, which also feels ridiculous as i do a lot more work (she works 4 days a week)
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2) WORKING OUT OUTGOINGS - We are sharing items at the moment to ensure we have all the information we need before our next mediation session. One bone of contention causing us both hassle is our individual outgoings. I am basing the budget on a reasonable needs and ex is basing it on outgoings over the last few months. However I am very aware she has been overspending over the last few months including SPA days, trips to racing, buying house plants, expensive haircuts and multiple meals out at £80+. She wants to use last few months bank statements for this reason, and I want to base it on a forward thinking plan of what we can reasonably afford with net income moving forward. What is right, is there a template? she keeps saying ‘you cant tell me what to spend money on’ which is insane as its 66%+ my income she’s spending. She couldn’t afford that on hers alone.
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3) RE: BUSINESS VALUE TO HER – A business is worth what someone is willing to pay for it. Take me out of the business and it is worthless. It doesn't have any contracts, employees, no assets, no stock, no IP or ownership. I treat it like a freelancer, its marketing...do project work get paid and then spend the money. When someone evaluates this they will come to the same conclusion. I have been advised this could take 3+ months and cost £4k+ from my solicitor and research to get a proper valuation. It's a lifestyle business that has always been set up this way. I suggest we simply divide the available money, which is around 15k. I have provided a balance sheet letter from my accountant to her. Again should we waste time with a valuation? any other advice?
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Many thanks in advance 🙂

Local Legal advice is really the only way to ansewr these questions. None of us are that familar with the law as it applies to your case.
Do you take your portion out as income or dividends? Have you paid dividends to your wife for tax purposes. If so that's going to be messy. She would be able to expect to be paid those dividends going forward. You may need to make an offer to buy her out. If your wife hesistates about your offer you will likely need to pay for the valuation.

Ability to afford has little to do with settlement. You can use an adjustment of the asset payouts to bargain for lower maintenance or her rights to your business. Alimony may be granted but is just considered a bridging process until your ex gets on her feet. Most of your money going to your X will come from child maintenance. Gov.uk describes a formula that is with adjustments for your income and how often the kids overnight with you. I would use that as a starting point.

As the previous poster said, you need local advice as most of us here won't be familiar with the rules and practices in your jurisdiction.

In my case, my stbx-wife and I jointly owned (50/50) a business organized as an s-corporation (as they are called here). We both worked in the business, although I did more, and were compensated with wages accordingly. It was an equipment-intensive business, and most years profits were re-invested in "new" equipment for the business. Any other profits were either retained by the business, or given in equal distributions to each of us.

So the business had assets, both tangible property and money in the bank. We were eventually able to agree on a valuation of the tangible property, and thus together with cash on hand, the overall value of the business. With that, she bought out my 50% share of the business using cash from the business (so really, a share buy-back). I in turn bought a few items of the business's tangible property that she wasn't going to use (so the net payout was effectively reduced by that).

We ignored the value of "goodwill" in determining the overall value since I can't take the business with me -- it's tied to real estate that she owns -- and she can continue to operate the business (on a more limited basis) and rely on that income in lieu of spousal support from me.

So not sure how that helps you figure out your situation, where all of your business's assets and goodwill is tied up in YOU. Her 30% stake would seem to entitle her to a 30% share in all the net income you generate going forward -- perhaps in lieu of any other type of spousal support (maintenance). Otherwise you would need to buy her out, somehow. If between the two of you, you can come up with and =agree on a valuation of the business on your own, then you don't necessarily need to involve an outside appraiser (unless it would be required by the courts in your jurisdiction?).

Or you just close up the LTD and continue operating as a sole proprietor going forward?

[This message edited by TurnedTurtle at 6:58 PM, Friday, May 20th]

RE: BUSINESS VALUE TO HER

I don't know the business laws in the UK, however during our separation, we both were directors and share owners in our Co.

As I wanted to resign from the Company, the monetary buyout or settlement was a point of discussion between us.

We dismissed having the company valuation...my corporate lawyer explained the difficulties as well as the fee range. It was not worth the effort from financial perspective. In other words, too costly for the size and type of business we ran. A consultancy business.

We negotiated a lump sum agreement between the two of us, without the lawyer. I resigned. He became the sole proprietor.

The absolute worst advice ever offered on SI is legal advice – mine included. All we can do is offer some general terms that MIGHT apply, but for you in your situation the best option is to have a solicitor guide you through whatever needs to be done.

I would THINK (based on my business knowledge, experience with general business law and common sense – NONE that might apply in UK divorce, civil or business courts…) that you have two options.

The value of a company is based on what someone is prepared to pay for it AND what the seller is willing to accept. That is a true basic that probably applies world-wide. So how should 30% of a small company be valued?
How easy would it be for you to close this one down and establish a NEW LTD in your sole ownership? What’s the cost, what would you be forfeiting? New marketing? New branding? Have to let 10000 customers know or only 10? New phone-number? New web-page? Whats the REAL cost?

In my neck of the woods there is a fee for creating a company, as well as a minimum amount that needs to be added as shares. If I were to take assets or values from another company that I was closing it could create some liability towards that company and it’s debtors. If the tax authorities deem that this is an act to devalue the old company to establish a new one there can be legal implications with fines and even criminal charges. For example: I couldn’t use the same phone numbers without a written contract with a realistic value.

Let’s put it this way: Let’s say your company owes suppliers 1000 and has some assets valued at 5000 on the books (tools, computers, accounting software…) and let’s say it costs 500 to create a new company and you need to show payment of 1000 in stocks…

So if you decided to close the old company to get rid of your ex as a stakeholder you would have to pay 1000 to clear debt, sell the assets at something near value (let’s just stick to 5000), fork out 1500 to start the new company. Total of 7500, plus the hassle of notifying customers and all that stuff.
To me it might be worth anything between 2000-4000 simply to get her to forfeit her share and to keep the "old" LTD running. The upper number would be based on no real cash being used, but rather as 4000 in some other asset co-owned.

This it the BUSINESS angle – not the legal angle.