Readers will remember that last year I ran a summer competition. There were plenty of entries from readers, along with dozens of comments and some good debates. So here’s a competition for summer 2012.
To enter: I’d simply like to hear your thoughts about the next steps for the fictitious family, featured below. It is a puzzle but as before, you don’t need to be a lawyer to take part and there are no right or wrong answers.
The best answer received before Thursday 9 August 2012 will win a box of chocolates and a bottle of champagne, so put your thinking cap on!
Janice and Peter met at university where they both studied accountancy. They went on to complete their professional exams and subsequent training contracts at the same accountancy firm in London. Immediately after Janice and Peter qualified, both aged 26, they married.
Peter’s family is wealthy. His wealthy parents gave him a cash deposit of £500,000 to help the couple buy their home, which cost £650,000. It was bought in Peter’s sole name a few months prior to the marriage. He took out an interest-only first mortgage with a building society for £150,000, to pay the balance. Peter also entered into a second mortgage, of £500,000, in favour of his parents. This was “just in case” things went wrong between the couple. No repayments have ever been made. The terms of the mortgage are that payment will become due in full on demand, with all accrued interest. Janice does not know it exists. It is registered as a valid second charge against the property in the Land Registry.
Peter’s parents are in their mid-70s and in reasonable health. They have a large estate in addition to the money they loaned to Peter. Upon their deaths, Peter will receive a substantial inheritance to share with his sister.
Janice and Peter were both kept on by their firm after they qualified, but Janice became pregnant shortly afterwards and gave birth to a son, Simon. She continued to work part-time after returning from maternity leave, although it was very difficult. Five years later she had a daughter, Suzie, and since then has devoted her time to raising the children. In the meantime, Peter has done well and is now an equity partner in the firm. He earns £400,000 per annum, which is approximately £265,000 after tax. He has capital of about £150,000 in the firm, which he cannot draw upon.
The family lives comfortably. The family home is now worth about £1.4 million and in 2007 the first mortgage was extended to £800,000, to cover the purchase of a house in the Algarve. This house was bought in Peter’s name. Recently Janice and the children have been spending most of the school holidays at the house without Peter, who continues to work in London. The house is currently worth about £650,000.
***
Simon is now aged 12 and Suzie is seven. Both attend private schools at a total cost of £25,000 per annum. Peter has been paying into a pension and it is currently worth about £150,000. There are joint savings of £50,000, which is in fact an inheritance Janice received. Peter has invested it and put it into joint names.
Shortly before Simon was born, Peter had an affair. Janice found out about the adultery. She was devastated and her first thought was to end the marriage but, heavily pregnant, she decided not to. She lost her trust in Peter, however. When Suzie was conceived, Janice was having an affair of her own – with one of their work colleagues. She believes that Suzie may not be Peter’s child. She ended the affair during her pregnancy.
Recently the situation at home has been getting worse. Janice thinks Peter may be having another affair. He has acquired two mobile phones. He has changed the password on the home computer for his personal email account. He is distant and short tempered. He makes excuses about how he can’t go on holiday this summer. When he did finally join the family in the Algarve at Easter, he cut it short, claiming work required him to return. Janice suspects that Peter is having an affair with his PA, who seems to be contacting him non-stop.
One night last week, when both had too much to drink, Janice confronted Peter with her suspicions. He refused to confirm or deny the affair. He would only say he no longer loved Janice and he needed to consider his position. Deeply upset and desperate to hurt him, Janice told Peter that Suzie was not his child. She said that she was going to divorce him and “take him to the cleaners.”
Peter hit back by telling her about the secret mortgage to his parents. He stated his intention to make her homeless and penniless. He told her that he would keep Simon with him, claiming she is an unfit mother. He said he didn’t want anything to do with Janice or Suzie again and that if she didn’t tell Suzie the truth, he would. He is demanding that because of her deceit, she immediately vacates the property with Suzie and, if not, he wants a DNA test to determine paternity.
Competition question: what is your advice to this family?
For example:
What should be done about Suzie?
Should Janice leave the house?
If Peter and Janice do divorce, what do you think would be an appropriate financial settlement for both of them?
Enter now, by leaving your comment below. Good luck!
I would sit and talk to the family eplan to then about me and the dad getting a divorce and let them know its not there falt that we dicide that we did not what to be together and we would sort the fince out together
She should have a DNA Test but say nothing to the child until they know results
No she shouldnt leave the house
The split should be 50/50 because of his not telling the truth andputting everything in his name even her money is in both of their names. And also because of his affairs she had to give up work to look after the children
This man seems cold, so I think a DNA test is required either way. Also if they do divorce the truth needs to be known.The two properties together are worth 2 million and 50 thousand. To buy out of all of them would be 1.3 million. His actions show deception yet her actions show by letting him invest her inheritence shows she was willing to share everything. Also as he has invested her inheritance what is that worth now. At the beginning of the marriage she worked then she had HIS son and worked part time bringing in money towards the upkeep of the house and child, holidays etc… although he bought the property in the Algarve solely in his name they were married and although she was no longer working she contributed by bringing up the children and keeping and looking after the properties. I assume they both wanted to start a family and both qualified in there proffesion however she sacraficed her career and allowed him to climb his career ladder so that the children could be looked after.Tthe children or one of those children do belong to him and without his wife taking care of them all these years could he have been as successful as he is and have done what he has done.
Sell the properties and pay the debt of 1.3 million then I think the remainder should be shared 450.000 to him only becasue he will never let her walk away with half and 300,000 to her. I beleive for the fist year he should pay the majority of the childcare costs on the understanding she will find herself work. Maintatinance needs to be set up and aslo she needs to find out how much her investment can bring back. He has the security of a yearly after tax income of £265,000 she has no income at the moment and will have to arrange childcare at an extra cost so she can go back out to work. There is nothing to say that if she had not of been the one to opt to stay at home and look after the children and house that she too could of been on £265,000 per year after tax. Also without a pre nup can he actually do any of what he is saying.
where the pension is concerned hopefully by the time he can draw on it they will both of settled down with someone else, she could ask for an extra £50,000 but i myself would hope by then she wants nothing from him and is in a happy and healthy relationship. yes he has £150000 in the Business actually thinking of this I would ask for that extra £50,000. They have both done wrong but I think this man has had this planned from the beginning why on earth did he marry her if he had a just incase plan this mn has serious trust issues.
The child should be included in whats going on as he would notice that something was amiss anyway and the DNA test should be done. The money should be shared equally between them and because she has put a lot into the relashionship as well having to give up certain things in her life.
All rather messy.
Firstly, neither of them should rush into anything. The main priority should be the children as they are still too young to understand the ramifications of affairs or what a divorce may entail.
If they attend a boarding school then they may not have picked up on the vibes in the house as yet. If they are at a local school then they will realise something is wrong so BOTH parents need to reassure them that it is not their fault. Peter demanding a DNA test and cutting off his daughter will only cause severe resentment in the future so he needs to put that issue to one side and be the kids Dad. Irrespective of whether he is the biological father, he is the only father Suzie has known.
Family mediation may help. There is infidelity on both sides and while it is unlikely the marriage will survive, they do need to remain civil for the children’s sake. Janice would likely get custody of both children if they went to court (as she gave up her career to look after the children so not the act of an “unfit mother”). Peter could stay with his parents in the meantime so the children has some stability and routine maintained.
Long term…both should discuss financial affairs with a law firm specialising family divorce. The assets should be split evenly (as even though Janice hasn’t been working, she still has been contributing by looking after the children). There needs to be settlement on the children’s education and where they will stay (family home or another property). Access rights should also be discussed.
But, before it ever gets to this stage, family mediation would try and see if the marriage was salvageable.
I am not a lawyer but work for the Scottish Children’s Reporter Administration and hear about families at war with the children used as pawns in the parents mind games. The SCRA determines what is right for the child first. This may mean not living with either parent (in abuse cases where both parents take substances) but with another relative. When tempers fray, the child is asked to leave the room so they are not involved in the dispute and decisions can go before the Sheriff court if the family object but are legally binding once the decision has been made.
They should definitely seek mediation as they have a lot invested in this relationship ……besides the financial commitment which is clearly very complicated,
Suzie is just 7 years old and presumably has enjoyed a close relationship with the man she believes to be her father……and presumably this has worked both ways so to dismiss her from his life is a hot-headed decision and hopefully not one that would be followed through by the threatened action. If mediation proves not to be an option or ultimately fails, then everything should be divided 50-50 which is conducive with the length of their relationship, the initial commitment they made to each other the debt they owe to their children,
Wow, on first review, what a mess. However, as with many such family situations, a step back, calm head and some time can make the picture a little clearer. Emotions between the parties are obviously extremely heightened at present and the state of distress between Janice and Peter is going to swiftly rub off on the children, if it hasn’t started to already.
We are told that the big showdown between Janice and Peter happened “one night last week”. We are not told what has happened since then. Are both parties still living in the home? Are the children aware something is up? Are the parties still communicating or just living in silence waiting for the other to act? I expect neither party has budged, yet, from their normal routine. Of course, it is highly likely the children will be aware something is up and I expect silence reigns at present. Tensions will be high.
Ideally, assuming matters have cooled even a little from the initial flare up last week, I would encourage the parties to seek marital guidance. There are clearly a lot of issues here – most significantly a high level of deceit. It may be that there is too much water under the bridge for any chance of reconciliation but when a marriage and a family are at stake then there is a responsibility on the parties to really consider whether their marriage is over and if there is any chance third party intervention would help then this should be investigated. The issues of Suzie’s paternity and the secret family mortgage could be discussed with the assistance of a trained family therapist.
Looking now to the more specific issues raised:
Suzie
The key here is that Suzie is a seven-year old child. We are not told whether Peter did ever break the news to Suzie that he is not/ may not be her father but I imagine that if he has not done so in the heat of the moment then he will not do so. Regardless of whether he is her natural father, I would hope and expect he would have affection for her and would not be so cruel as to break such devastating news in a callous manner to such a young child. Perhaps I hope too much…
The question of paternity raises so many issues. Peter and Janice ideally need to work together to discuss whether they ultimately want to know whether Peter is Suzie’s natural father and, more importantly, whether it is in Suzie’s best interest to know if Peter is not her father. I would be advising Janice and Peter to seek specialist advice from a child therapist/ psychologist as to how best to introduce the concept of biological paternity to Suzie. I suspect that, in the long run, it is in her interest to know and probably better that she knows sooner rather than later, whilst she is still young.
Should Janice leave the family home?
I would advise Janice not to leave the family home. She needs to think first and foremost of her children, as would a Court. The children need stability and a home, especially during what is likely to turn out to be a very tumultuous time. Further, Janice appears to have little/ no income/ capital in her own name. We are not told of any liquid supply of capital Janice can rely upon (the £50,000 is said to have been invested in joint names) and it will take her time to relight her earning capacity.
I would very quickly take steps to register matrimonial home rights in Janice’s favour, at the Land Registry, as well, and investigate whether any similar protection is possible within the Portuguese jurisdiction in relation to the Algarve property.
Financial settlement
Working on the basis that the couple cannot reconcile and divorce proceedings are issued, I foresee significant issues arising as the parties attempt to reach financial settlement. The level of secrecy and deceit regarding the family mortgage as well as the disparity in earnings leads me to believe there needs to be some key realignment of attitudes towards the ‘matrimonial’ finances before negotiations can even begin to be constructive.
The emotional issues will no doubt hamper progress and I would undoubtedly advise both parties to seek good, independent legal advice in relation to finances on divorce. On the face of it, this does not strike me as a case for mediation or collaborative law as far as the finances are concerned. That is not to say that mediation would not be suitable if further help is needed in relation to the children.
Assuming the figures we are given follow thorough disclosure, I calculate that we are looking at a pot of the following:
Net assets: £1.3 million (disregarding the family mortgage and business assets)
Business assets: £150,000
Pensions: £150,000
Income (P): £265,000 net per annum
It goes without saying that how I would approach this case would depend on who I was representing! If I was acting for Peter then I may seek to advance the argument that the family mortgage stands. If, however, I was acting for Janice then I may seek to argue that the house was bought in anticipation of marriage and was intended as a family home for the parties with the mortgage being a mere insurance policy for Peter; if the marriage did not go the distance then ultimately, the intention was no doubt that he would receive those funds back from his parents at some point in the near future after the mortgage had been repaid.
Looking from a wider perspective, I would envisage the following comments being considered by the parties:
• In order to avoid the family mortgage issue being dragged through the Courts, can agreement be reached? Would Janice and Peter, for example, be able to agree that, to put the issue to bed, a certain amount of the debt be considered Peter’s ‘family money’ and so be left on his side of the equation, with the balance of the debt being included within the matrimonial pot? Obviously, this would depend on Peter’s parents’ co-operation. Otherwise, a Court may well be left to decide that the money is all matrimonial and if Peter’s parents weren’t willing to co-operate then the Court may simply make an Order on the basis that the money is Peter’s and therefore already on his ‘side’ of the settlement. Janice’s £50,000 inheritance can be brought into the equation at this stage, as part of negotiations, but arguably it has been mingled with joint finances.
• How attached to the family home are the parties? How settled there are the children? The attitude towards the family home is likely, as is often the case, to shape the overall settlement. If there is little attachment and Janice and Peter agree the family home should be sold, along with the Algarve property. Depending on how the matter of the family mortgage is settled, there should still be sufficient equity to allow each party to purchase a decent house each, mortgage free, with at least three bedrooms. There should be some off-setting in Janice’s favour in respect of Peter’s business assets.
• Janice has been out of the employment market for over seven years. However, she is professionally qualified and is only in her late-thirties – she would therefore have an earning capacity albeit it may take her some time to do some refresher courses. In addition, account should be taken of it having been a family decision for Janice to remain at home with the children. It would not be unreasonable for this status quo to remain at least until Suzie starts secondary school. Again, I would like to know what Janice’s attitudes to maintenance and getting back to work are – she may prefer the idea of getting back to work or she may be adamant that was never the family’s plan.
• My instinct says sufficient spousal maintenance should be ordered to allow Janice to remain at home until Suzie starts secondary school. This could then be tapered off a little to encourage her to retrain/ start part-time work when both children are at secondary school. After several years, this could reduce right down to a nominal level. Peter would obviously be seeking a clean break and whether a bar could be included within the settlement may depend on further analysis of Janice’s job prospects and whether the parties would consider off-setting the maintenance at some point (now or in the future in return for a deferred clean break) in return for capital i.e. Peter takes less of the capital for a deferred clean break. The issue of the family mortgage could also be brought into negotiations in this respect. I would not be overly comfortable with an immediate clean break: capital is quickly eaten up by a person who is not working.
• The pension should be split to allow for equality of pension income on retirement pursuant to a pension sharing order following an actuary’s report.
• The agreeable level of child maintenance is likely to depend largely on the outcome of any paternity test. I suspect that even if Suzie turns out not to be Peter’s biological child, once the dust settles, he may well wish to continue to parent her. In any event, the Court does have jurisdiction to order that child maintenance be paid by a step-parent in relation to a child of the family. How important is private schooling to Janice and Peter? Does Peter feel sufficiently strongly that the children should be privately educated that he will agree to pay the fees without a fight?
There are many ifs buts and maybes and much of how this case progresses would depend on the attitudes of the parties.
It will not matter in financial proceedings that either or both parties had affairs. A DNA test should be carried out on the child; however this should be kept from the child from the time being!
In terms of the family home, although this was kept in Peters sole name, this should not now prevent Janice from being entitled to it. It will be added to the matrimonial pot as will the savings and the Algarve home. The home should be seen as the family home even though Peter has morgaged this to his parents as an insurance againest the marriage failing. After a marriage of this long, that would be unfair to uphold. The fact that Janice has left her career to look after the family along with the length of marriage will ensure that she is properly afforded for. Peter will likely have to pay spousal maintenance but of course Janice will be seen as young enough and qualified enough to take up work again, so this will be a consideration.
Janice should stay in the home with the children as no doubt she will be there primary carer for the time being, the children should have the least amount of disruption.
It would be unfair child maintenance were to be affected in terms of Suzie possibly not being Peters child however quite possible especially if her real father is identified!
Both parties should seek a solicitor as soon as possible and perhaps mediation could be, at first, attempted.
I would usually suggest seek marriage guidance in break-ups, however several aspects of this situation indicate that reconciliation are out of the question but conciliation may not be.
The issue of the paternity of Suzie should be settled regardless of the state of the marriage, simply for the sake of the child (and indeed perhaps the father). Indeed whatever the outcome of such an investigation it should bear little relevance in the financial settlement other than in determining levels of child support.
Janice should certainly not remove herself from the family home. Aside from the disruption to her children it also reinforces her presumptive right to continued occupancy.
I believe that the financial settlement should be based on the value of assets regardless of the outstanding mortgages and that these should be split 50:50. I appreciate that this would appear significantly biased against Peter however there are several reasons I would argue this (I would add his likely inheritance bears no part). I have however made an assumption that Janice would gain custody of the both children as nothing in the information given suggests that she is unfit and I suspect the courts would favour her in the issue.
The main reasons for the equal split are:
Whilst a substantial part of the costs of the house were given as a gift by Peters parent’s, once given it become his , to choose to do with as he wishes. He chose to put it into property. It was however not simply property but a family home. He was in an established relationship and married six months later. Whilst the mortgage on the property was in his name, Janice obviously contributed to the household both in terms of the outstanding (initial) mortgage , household costs and in terms of creating a home and raising children.
The main reason for the disproportionate split (as Peter will be liable for the mortgages) is the lack of commitment to an equal and long lasting partnership, excluding his partner from financial decisions from the very onset of the marriage. He was also the first to find a physical relationship outside of the marriage.
In terms of Janice’s acceptance of the extension of the first mortgage I am sure that this was done on the basis of their presumed financial security, based on their earning capacity and Peter’s expected inheritance. Whilst she can lay no claim to the later it has played a part in mutual decisions made on behalf of the family x
I appreciate this is a layman’s view of the situation and I am not sure how the mortgages secured on the property could be discounted in the considerations. However given the intention of the second mortgage was secured without Janice’s knowledge and designed to be to her detriment (and with no obvious cause) I feel that there must be a mechanism for doing this.
I think the central point is that Peter appears to have been planning an exit strategy from the relationship for some time, one that was not just designed to secure his position but to be to the extreme detriment of Janice. This planning can not be seen as justified prudence on his part. Indeed his whole financial management of their affairs during the marriage appear designed as an attempt to exclude his partner.
They should just go on Jeremy Kyle – they get a free DNA test and at least Janice would get some money out of it – thats what most people do!