Contractor Limited Company and Divorce - Need advice

[punjabilad]

It has been on the cards for a long time but now time has come up. We have been discussing what she wants out of the settlements and I never had any major issues with what she was demanding but lately she has been very agressive and everytime she has new thoughts from her web of advisors. Anyway here is the situation:
1. We come from India.
2. Been married for 13 years and have two kids.
3. Few Properties in India, some in joint name and some in our individual names. All bought and paid by me.
4. Own a house here, owned by me and paid by me.
5. She was a house wife and has been working for last 2 years and earns about 1000 a month. Not much of a pension.
5. I have been contracting for just over 2 years via my limited company and take out min salary plus dividends just before hitting the max tax.
6. Finances apart, I want joint custody of the children with equal time with both parents. She agrees mostly but sometimes not.

My questions are how the child benefits are calculated i.e. based on sal+dividends or the income of the business, which is about £110-120K per year?
Does CSA considers the funds in the business as well for child maintenance?
Whether the final divorce settlement considers the funds in the business.

I must admit, I have never taken any advice from the solicitors as I have always believed in a fair deal but seems to be upping her ante all the time.

Any advice is appreciated.

[northernladuk]

I believe the company money will be made part of the settlement...

But there is tons of discussion on various aspects of your situation in these threads...

https://www.google.co.uk/search?q=di...hrome&ie=UTF-8

[punjabilad]

I believe the company money will be made part of the settlement...

But there is tons of discussion on various aspects of your situation in these threads...

https://www.google.co.uk/search?q=di...hrome&ie=UTF-8

Many thanks, thats what I googled and going through the threads.

Since she does not have a pension of her own, I guess my pension pot (not very huge though) is also a potential target. Any point me taking out pension benfit? I guess that will only help if pension pot is not targetted, not sure if it is a good idea anyway. Also, the timing of transfer may create another set of problem, dont know!

[punjabilad]

Thanks for the link, thats what I am going through right now.

regarding settlement, will it make sense for me to move part of funds to my pension? Considering she does not have a pension of her own, my pension is also a potential target.

Should I be looking at 50/50 or more like 70/30 for sharing the assets? I prefer a clean break, where I do not owe her anything apart from the child maintenance, plus I want the joint custody of the children.

[northernladuk]

Depends how good your solicitor is won't it? Assume the worst I think.

[MPwannadecentincome]

Firstly my sympathies... I have been through this myself and in fact even though I have final settlement I am still facing court actions as my ex wants more money than I am paying in the court order and is threatening me with an other court order.

Anyway, a better place to raise this question is wikivorce.com a specialist forum with a discussion board for all things to do with divorce. It has Google search in the site and you can post some questions and people are helpful without the sarcasm and nasty comments.

In my case yes I had a Ltd Co but less than £70K in there which I argued was sufficient for paying corporation tax bill due and funding dividends needed to pay personal tax bills and for any benchtime, particularly as I was able to demonstrate how much bench time I had in the previous 2 years (total of 6 months at that time). So the funds in the company were not considered, however if there had been significantly more then I am sure it would have been different.

Child maintenance is at the end of the day based upon personal tax return gross income - in fact with the change in dividend tax from Apr 2016 and dividends are no longer grossed up this works in our favour. Go to child maintenance options website for guidance on how to calculate based on number of children etc etc and put in the gross weekly income. You can register with child maintenance service and they will look at your last tax return figures and calculate, however by default they seem to ignore dividends and get it wrong. Do not rely on that mistake as at some point they correct it. Better that you register the case with child maintenance before your Soon to be Ex (STBX) does it and she will tell them you earn more than you actually do. Note if you take out more dividends than normal then you will be liable for extra child maintenance if that goes higher that what was on the previous year's return.

Also if you want a clean break with just the child maintenance then expect to give up most of the equity, if you want to keep house equity or a share of the proceeds after sale then expect to pay spousal maintenance index linked for a very long time (in my case until death). With 2 kids involved you won't get anywhere near 50:50. You will have to declare every property, bank account and pension, yes the pension could be split. Get the solicitor to advise on how to value the pension's worth as it is not £ for £.

Good luck.

[punjabilad]

Many thanks MPwannadecentincome, my sympathies with you as well as I was reading one of your thread and wish you luck!

Anyway, a better place to raise this question is wikivorce.com a specialist forum with a discussion board for all things to do with divorce. It has Google search in the site and you can post some questions and people are helpful without the sarcasm and nasty comments.

Thanks for this. This is where I am going next.

In my case yes I had a Ltd Co but less than £70K in there which I argued was sufficient for paying corporation tax bill due and funding dividends needed to pay personal tax bills and for any benchtime, particularly as I was able to demonstrate how much bench time I had in the previous 2 years (total of 6 months at that time). So the funds in the company were not considered, however if there had been significantly more then I am sure it would have been different.

As I said, my company has been trading for just over two months and have funds of the same range you have mentioned. However I did not have any break and infact I am at the same place where I started contracting. I also have to pay corp tax and will need dividends next year. I read somewhere about new trade aspect. Does it help in anyway? Does quitting the contract help in anyway? I would rather have some good time, relax, travel than paying her..Does that harm my case ?

Child maintenance is at the end of the day based upon personal tax return gross income - in fact with the change in dividend tax from Apr 2016 and dividends are no longer grossed up this works in our favour. Go to child maintenance options website for guidance on how to calculate based on number of children etc etc and put in the gross weekly income. You can register with child maintenance service and they will look at your last tax return figures and calculate, however by default they seem to ignore dividends and get it wrong. Do not rely on that mistake as at some point they correct it. Better that you register the case with child maintenance before your Soon to be Ex (STBX) does it and she will tell them you earn more than you actually do. Note if you take out more dividends than normal then you will be liable for extra child maintenance if that goes higher that what was on the previous year's return.

Thanks for that piece of information. We have not even filed for divorce yet but I think I will file in a day or two. We are still living in the same house and are considering going for a mediator service. Is that advisable at this stage? Idea is that once we have an understanding, I will move out. At what stage, I should be registering the case with child maintenance?

Also if you want a clean break with just the child maintenance then expect to give up most of the equity, if you want to keep house equity or a share of the proceeds after sale then expect to pay spousal maintenance index linked for a very long time (in my case until death). With 2 kids involved you won't get anywhere near 50:50. You will have to declare every property, bank account and pension, yes the pension could be split. Get the solicitor to advise on how to value the pension's worth as it is not £ for £.

Good luck.

I have always been honest with her and have no issue declaring every single thing I own. Did you mean to say that even with me paying spousal maintenance, I would not be getting anywhere close to 50:50 or whether that was when I just want clean break? Do you think moving some funds from my business into the pension pot will make sense?

She has said she will tell me tomorrow what she wants from me in terms of equity share and on a regular monthly payment. She has been told/advised that it is my daily rate that will be used to calculate my annual/monthly income to find out the child maintenance but it seems she is wrong there.

Many thanks again to you.

Regards,

[MPwannadecentincome]

As I said, my company has been trading for just over two months and have funds of the same range you have mentioned. However I did not have any break and infact I am at the same place where I started contracting. I also have to pay corp tax and will need dividends next year. I read somewhere about new trade aspect. Does it help in anyway? Does quitting the contract help in anyway? I would rather have some good time, relax, travel than paying her..Does that harm my case ?

2 months trading and already 70K in the bank? Wow! Well if you can afford not to do the contract then upto you go ahead and give it up and enjoy the 70K however be careful her solicitor can use your earnings capacity as an argument to get a certain level of maintenance whether you are working or not. Better IMO to be in contract. I have no idea what new trade aspect is.

Thanks for that piece of information. We have not even filed for divorce yet but I think I will file in a day or two. We are still living in the same house and are considering going for a mediator service. Is that advisable at this stage? Idea is that once we have an understanding, I will move out. At what stage, I should be registering the case with child maintenance?

Mediator is a good idea in fact before any court case can be heard you have to have visited a mediator even if just to say you don't think using a mediator will work. Register the child maintenance as soon as you leave the house so plan your leaving accordingly.

I have always been honest with her and have no issue declaring every single thing I own. Did you mean to say that even with me paying spousal maintenance, I would not be getting anywhere close to 50:50 or whether that was when I just want clean break? Do you think moving some funds from my business into the pension pot will make sense?

With 2 kids you will not get 50:50 unless you pay substantial maintenance. Judge will secure needs for mother and kids as a priority above other things but leave you enough for your needs. If you can mediate and agree before it gets to a judge it is a lot better so don't get caught up too much in a few percentage points. Pension counts as I said before so whether you move it from company into pension is immaterial.

She has said she will tell me tomorrow what she wants from me in terms of equity share and on a regular monthly payment. She has been told/advised that it is my daily rate that will be used to calculate my annual/monthly income to find out the child maintenance but it seems she is wrong there.

The daily rate applies to the company's income so cannot be used to calculate your personal income. Your personal income is the salary and dividends you draw out of the company. Don't fool yourself into thinking to draw too little otherwise you will attract attention to the massively growing funds in your company at 35K per month.

Now as I said, wikivorce is a better place for divorce topics.

[punjabilad]

2 months trading and already 70K in the bank? Wow!
.

Sorry that is for 2 years :-

Many thanks for all your inputs/advice.

Regards

[tarbera]

50-50, you will be lucky to end up with 80(her)-20(you) when her lawyers (you will be paying 80K for) get involved