Have I lost out in my divorce settlement? Unexpected expenses were added to my share

Have I lost out in my divorce settlement? Unexpected expenses were added to my share

I feel as if I have been unfairly treated in my divorce settlement.

Following my divorce and dividing of the assets, I learnt that a principle called ‘notional costs of sale’ had been applied to my share, despite the fact that the matrimonial home was not being sold.

What concerned me further was that I was not told in advance that it was being applied.  I was not given a breakdown of the final figure and it only came to light after it was all too late. A figure of 3% was used on the value of the property.  I was informed these costs are ‘always’ applied yet I now learn they are not mandatory and are open to negotiation. How can this be fair?

Jane Keir
Fri, 01/10/2020 – 15:00

VB/via email

The practice of deducting notional sale expenses from the matrimonial home can seem confusing and unfair. It comes from the requirement that both parties to the divorce must give full, frank and clear disclosure of all their financial and other relevant circumstances. As the ultimate objective is for the parties to negotiate a full financial settlement of their respective claims and have it approved by a judge, the financial disclosure they make of their assets and income must be net of all liabilities, charges and tax. 

In the vast majority of cases, the matrimonial home will be subject to a mortgage, the value of which has to be deducted from the overall gross value of the property and so do the sale expenses, such as legal and conveyancing costs. Sale expenses have been calculated until very recently on a figure of 3% of the sale value of the property, but as the property market has cooled, it is possible to argue down this figure to 2.5% or 2%. 

Where it can feel unfair is when one spouse has to either buy a new home (including the payment of stamp duty and legal costs) or rent one, while the other spouse remains in the matrimonial home and appears to have none of this expense. 

It is very likely, however, that the spouse who stays in the house will sell it at some point when they, too, will have to pay the entire sale expenses or their estate will have to do so if they die while still owning the property.  After an appreciable period of time has elapsed, these expenses are likely to be much greater, so there is a consequence for the spouse who resides in the former marital home, even if they remain there for a long period.

In my experience, the application of notional cost of sale is common practice in divorce settlements. I suspect that had you tried to argue the unfairness at the time it would have been pointed out to you that in the future a sale of that property would be inevitable.

Jane Keir is a family law and divorce partner at Kingsley Napley LLP

Do you have a money question for our panel of experts?

At Moneywise, we have a panel of top experts to help with your money and investing questions. If you have a tax issue that’s keeping you awake at night, a question about investing that you’ve always wondered but been too shy to ask, or even need a full money makeover for free, we’d love to hear from you.

If you have been treated unfairly by a firm send the details to Moneywise’s Fight for your Rights and we could take up the fight for you.

Email fightback@moneywise.co.uk

If you have a question about your investments or investing in general, put it to our Investment Doctor.

Email editor@moneywise.co.uk

If you have a question about your personal finances – anything from tax to state pensions, inheritance tax, property sales and more – write to our Ask the experts panel.

Email advice@moneywise.co.uk

Would you like a full money makeover? We will arrange a free one-to-one meeting for you with an FCA-regulated independent financial adviser worth over £2,000.

See Moneywise.co.uk/money-makeover for more details.

Syndicate to OneSite

Queued for syndication

New best-buy Cash ISA launched by Paragon paying 1.31%

New best-buy Cash ISA launched by Paragon paying 1.31%

Paragon expands savings range with new notice Cash ISA.

Brean Horne
Fri, 01/10/2020 – 13:12


Paragon has launched a new market-leading 120-day notice cash Isa paying 1.31% AER.

Customers can sign up to the account online with a minimum deposit of £500.

Notice accounts work by requiring the saver to give advance notice before withdrawing any money from their account.

How does the Paragon 120 day notice Isa compare?

Paragon offers the best rate of return for a notice cash Isa at 1.31% (AER). 

The Earl Shilton 90 day notice cash Isa and Aldermore’s 30 day notice cash Isa follow closely behind, offering 1.30% AER. 

Most notice accounts require between 30 and 90 days before a saver can withdraw money, but some can ask for as much as 180 days.

While Paragon currently pays the highest rate of interest, its notice period is much higher than its competitors.

Should you lock your money away for better returns?

Usually the longer you are willing to lock your money away in a savings account, the greater rate of return you’ll get.

With interest rates being notoriously low, these types of account can seem tempting.

They do, however, come with withdrawal restrictions which could prevent you from accessing your cash in an emergency.

If the money you’re thinking about locking away is your emergency fund, it may be best to choose a savings account that offers more flexibility to access your cash in case your circumstances change.

Savers that already have a rainy day fund in place but want to save a little extra may find that locking their extra money away could get them better returns.

Our guides on the best cash Isa rates and best savings rates reveal the top savings accounts available on the market right now.

OneSite Article

Syndicate to OneSite

Queued for syndication