The financial turmoil and considerations of a divorce

Perhaps one of the reasons for this is that couples have had to apportion blame for the failure of their marriage in order to get divorced. However, this stops being the case in April in England and Wales, when no-fault divorce comes into effect.

Up until now, one spouse (the petitioner) needed to action divorce proceedings against the other (the respondent), citing one of five reasons as grounds for divorce: adultery, unreasonable behaviour, desertion, two years of separation (with both agreeing to the divorce), and five years separation (if one person is contesting). Under the new no-fault divorce system, both people in the marriage or civil partnership will be able to make the application jointly for the simple reason that the marriage has broken down.

There are some restrictions on an immediate divorce. There’s a minimum timeframe of 20-weeks, which is intended to prevent a quick and easy option and give the couple time to reflect and consider whether divorce is what they really want.

There are still two stages of decree nisi and decree absolute, but these names will change. The decree nisi will become a Conditional Order of Divorce, and the decree absolute will become the Final Order of Divorce. As the name suggests, the latter legally ends your marriage.

Finding a lawyer

Most people will seek legal representation to fight their corner and ensure their interests are protected. Engaging a solicitor is expensive, so if you can agree as much as possible between you beforehand, it will save legal hours and reduce your costs. You should expect to pay between £2,000 and £30,000 for a divorce – but if the situation becomes acrimonious, or your finances are complicated, the sky’s the limit.

Splitting your assets

You’ll need to list all the assets you’ve accumulated during the marriage. This means the house and any other properties, savings and investments, cars, jewellery, and any other significant purchases you still own.

Perhaps one of the most painful decisions is to decide who will stay living in the family home with the children, as well as the financial implications of who will pay the mortgage each month, and how you’ll split the payments until you have a longer-term agreement. Is it a viable option to keep the house, or will you need to sell? Most banks are sympathetic to divorcing couples and will offer a mortgage holiday, but this obviously isn’t a long-term solution.

Ultimately, how you split your assets will be guided by your legal team and for you to negotiate with each other. A financial planner should also be involved to help you understand your financial position and give a negotiation point.

Pensions

It’s important to include any pensions when negotiating your divorce – it could be your biggest hidden asset!
There are a number of different options:

• Pension sharing – when a former partner is given a percentage of their ex-partner’s pension
• Pension offsetting – when the value of the pension is offset against other assets such as your house
• Pension earmarking – a form of maintenance whereby a pension is drawn down by a former partner upon retirement

Although this does mean you’ll still be dealing with your ex decades after the divorce, so maybe something you’d both rather avoid.

A financial planner will provide pension projections and future planning to help you make the right decisions for your given circumstances.

Maintenance

If you have children, where will they live most of the time? If you’re the main breadwinner and they will live with your ex-partner, you can expect to pay around 20% of your income for two children, reducing proportionately for every night they spend with you.

If you’re negotiating spousal maintenance, higher-income earners may want to consult a financial planner to help inform the fair and reasonable discussions with your ex and visualise how maintenance payments impact your own lifestyle and plans.

Changing your Will

A divorce won’t invalidate your current Will, so you’ll need to revisit and make amends. It’s probably not going to be high on your list of priorities, but if you have kids, it is very important. Talk to your solicitor, and they’ll be able to advise. Most Wills cost between £500 and £700 – although if your finances are complex or extensive, it will cost more.

Choose a financial adviser you trust

Divorce is not a pleasant experience for anyone, but a financial planner should be part of the team on your side to help you find a way through it. Amber River’s independent experts offer more than just financial planning and advice; they offer a human, open and honest approach to offer practical help that prioritises your family’s emotional wellbeing.