Background
Katie and Oliver came to mediation following 18 months of financial discussions through solicitors.
Katie lived in the former family house with their 10-year old twin girls, conceived through IVF, and Oliver had moved into rented accommodation. He has a new partner. They were married for 23 years. Whilst they had an arrangement for their daughters to spend time with each of them, communications were strained as they had yet to resolve their financial situation.
Katie and Oliver shared their financial resources, assets and debts. They were both equal partners and directors of a limited company and worked together on a day to day basis.
Katie and Oliver shared the view that agreeing a financial settlement would not only provide stability for their family but also clarity for employees in the business. Feelings were running high. Both Katie and Oliver felt financially constrained and unable to move on in their separate lives.
Problems faced
Whilst Katie and Oliver both shared the view they would need to sell the former family house in order to meet both their housing needs, they had different views about the value of the business and its future. Katie was an independent film producer. Oliver managed the business and was the more financially knowledgeable about the running of the business.
Katie and Oliver both worked and received an income from the business and acknowledged if it ceased trading, they would each need to secure new employment or set-up a new business.
Katie suggested they continue to run the business together for financial benefit. Oliver viewed this would be unsustainable and unfair on the employees.
Katie and Oliver spent considerable time discussing the value of the business as a going concern, in addition to the mortgage-free business property.
Katie and Oliver explored the option of Katie running the business alone, Oliver running the business alone and selling the business. They acknowledged if they sold the business, the value would be reduced as client relationships would be with them personally and not the business.
Conclusion and outcome
Over the course of three shuttle mediation sessions of two hours each (where both parties use different waiting rooms, arrive at different times and undertake mediation in different rooms), Katie and Oliver gathered detailed and up to date paperwork, valuations of the business, their properties, vehicles, motorbikes and pension fund CEVs.
Oliver and Katie also looked at their future financial needs and those of the children. In this way, they were able to put together a clear picture of their combined assets and, with the help of the mediator, decide how these assets could be divided in a way that met as many of their needs as possible and ensured they both had a level of financial security for the future. They were also able to see where they were could make savings in recognition of their changed situation.
Oliver and Katie agreed on a financial settlement and decided to sell the former family house, enter into a pension share agreement to equalise their pension fund CEVs and that Oliver would continue to run the business alone and retain the business property.
Whilst they recognised that they had different views about the value of the business, they shared the view that Katie receiving the greater share of the equity in their properties reflected her perspective that the business has a value as a going concern.
The pension fund in Katie’s name was considerably more than the two pension funds in Oliver’s name. Whilst they agreed to enter into a pension share agreement, they also explored the option of pension offsetting against other assets. They agreed that in order to meet everyone’s housing needs a pension share agreement would provide them each with enough liquid cash to purchase a property bearing in mind their ages, individual borrowing capacities and affordability.
Katie and Oliver acknowledged that when Katie no longer works in the business, there will be a disparity in their incomes. They discussed the option of periodic payments from Katie to Oliver and both expressed a preference for a financial settlement on a clean break basis. Whilst they considered the option of periodic payments being capitalised as a lump sum, Katie was unable to fund this.
With the help of legal advice, they agreed a minimum financial support sum for their daughters until they reach 18 years and to use the child maintenance calculator to determine any increases.
