5 Comments Self-managed super funds, superannuation, wealth management
Where the money initially came from is now irrelevant. The fair thing to do would be pro-rata the split based on what each of you put in eg if she put in $300,000 and you put in $100,000 but the property sold for $300,000 - she would get back 3/4 of that ($225,000) and you get back 1/4 ($75,000) since that's the relative amount you each put in.
Of course the law courts may see things differently based on more detailed considerations.
Thanks for replying, not sure if I explained myself properly.
Around 8 years ago, we built a holiday house for $168,000. My now ex-wife received an inheritance of around $90,000 that she put towards that cost. Along with a loan of $80,000 for the remainder of the cost of the house and also a loan of 130,000 for a block of land.
Only my wages serviced both the loans. When we eventually sold the property it was sold at a loss.
As I have suffered a loss on all the repayments I made, would I be correct in saying that her contribution should also wear a percentage of that loss?
My financial contribution by way of repayments was 60% and her inheritance was 40%
We have since divorced and are doing a financial settlement, she and her lawyer are making a claim that her inheritance greatly increased our current assets and are saying she is entitled to all of her $90,000 back.
Would really appreciate some insight into this
The fact that your wages serviced the loans while you were married is irrelevant. There were things that she was doing that contributed to the marriage that may not have a direct monetary value. Income from members of the partnership go into the family pool while expenses come out of it, It is not valid to claim that the financial pool is anyone's in particular, it is owned by both of you.
[QUOTE=Norm] ....We have since divorced and are doing a financial settlement, she and her lawyer are making a claim that her inheritance greatly increased our current assets and are saying she is entitled to all of her $90,000 back.....
You could argue that is she hadn't put in that money you may not have taken out that loan and may not have ended up with a loss - she too was a factor in the loss. It's a case of "would of - could of - should have" and you can only speculate what the alternative outcomes would have been and how good or bad her choice was.
End of the day you have a shared financial balance to split between you and her and it sounds like it's going end in court since she wants back more than she is entitled to (I think the $90k is her top limit starting point, to be negotiated down from there). Unfortunately, if it goes that far, the courts will decide the split and it may not necessarily seem fair.
I think this situation does not really need expert advice to determine where does that amount of finance belong to now. Since your ex has used her inheritance as a form of investment for the joint-account house, she cannot expect to have it reimbursed back fully into her inheritance. From the first day she withdrew funds from her inheritance, those funds should have stopped being categorized under inheritance as a whole. That is rather straightforward and makes complete sense.