Divorce is something most couples never expect to go through. And while the hardest part can be dealing with the emotional fallout, the financial consequences can have an effect long after the divorce has been finalised. But what can you expect when you get divorced? The rules around who gets what often aren’t clear. Here are five things you need to know about divorce and your money.
1. What you own won’t necessarily be split 50:50
The starting point for how your home, property, savings and pension etc are divided is “need”. That means the court would look at what each of you needs to live on. If you have children, their needs will be the priority and the partner they’ll be living with – or spending more time with – will also have their housing needs prioritised.
This could mean that one partner – the husband or the wife – could come away with a larger proportion of the property, savings etc than the other. In so-called ‘big money’ divorces, where there’s more money and assets than is needed to provide housing for the husband and wife and to provide for the children, the starting point for dividing assets is 50:50, but it doesn’t have to be stuck to rigidly.
SAVVY TIP: In Scotland, the situation is different. The assumption is that everything you’ve acquired while you’ve been married is divided ‘equitably’, which often means shared equally.
2. You don’t have to use a solicitor
You don’t have to use a solicitor to get divorced; you can do it yourself. Then your only costs will be around £400 to pay for the divorce process. You can also use a divorce website – there are now dozens of them around.
However, paying for a solicitor may be a really good investment. I get dozens of emails from women going through divorce who want – or need – someone to talk them through the law (which can be complicated and has lots of grey areas) and the implications of different financial options. It’s a must if your divorce is anything other than amicable.
3. There’s no ‘one size fits all’ approach
Quite often, even if assets are to be split equally, there are different ways of achieving the same outcome. This could be selling the family home, one partner buying the other out, one partner’s pension being divided at the time of divorce or keeping their pension intact and offsetting its value against other assets.
SAVVY TIP: Read my article on What happens to the family home when you get divorced?
4. There are different ways to get divorced
Many people still think of divorce as involving lawyers firing off aggressive letters to each other with the divorcing couple caught in the middle. Thankfully there are some very enlightened lawyers these days. And there are options such as mediation (where you and your husband/civil partner are in the same room for a series of meetings) and collaborative law (here, you’re both in the same room but each of you has your own divorce lawyer with you).
In some cases, these options can be cheaper than a traditional divorce (and certainly cheaper than one that goes all the way to court). But the main benefit isn’t any cost saving. Couples who’ve been through mediation or collaborative family law often say it was a positive experience that made them feel more in control.
5. The pension should not be overlooked
Many couples focus on the family home and what happens to that – for understandable reasons. But the pension, especially if it’s a final salary scheme, could be worth as much as the family home. The pension can be divided (or shared, as it’s called) at the time of divorce. Or its value can be offset against something like the family home.
You can read more about What happens to the pension at divorce – why you shouldn’t overlook the pension and why dividing the pension at divorce can be complicated. This can be a complex area and it may be worth paying for specialist advice.
SAVVY TIP: A number of years ago I wrote an article about divorce and finance. A reader contacted an independent financial adviser and solicitor about her divorce because of it. And, as a result, she received a share of her husband’s £400,000 pension.
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