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?
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!