YESTERDAY was the first working Monday of the year. If you’re happily married, the relevance of this day may well have passed you by. But for those regretting uttering the words ‘I do’, it’s been dubbed by lawyers as ‘Divorce Day’ as the festive period tips couples over the edge into taking action. Divorce or dissolution of a civil partnership is never easy. Especially when it comes to sorting out your finances. But help is at hand.
Sadly, it’s expected that the number of divorces is set to increase this year following the introduction of the no-fault divorce in April 2022.1. This new law allows couples to divorce on the basis that a marriage or civil partnership has broken down irretrievably. The idea is that it will help put an end to the blame game and allow separating couples to focus on reaching swifter and more amicable conclusion to divorce arrangements – particularly when it comes to children and finances.
To counter knee-jerk divorces, the law change also brought in a 20-week period for meaningful reflection from starting proceedings to applying for a conditional order. But early signs still showed that there was an instant uplift in divorces. In the April to June 2022 period which immediately followed the government’s new law, 33,566 couples applied for a divorce – which was up 22% more than the same period in 2021.2.
If you’re someone who has recently decided to divorce, it’s no doubt been a really tough start to the year, with many a difficult decision yet to be made. There’s a lot we can’t help you with, but what we can do, is support you with some practical financial pointers.
Step one – take stock of your finances before you divorce
In the run up to your divorce, you need to think about what your financial future will look like as a single person. So, the first thing you need to think about is a projected budget for living alone. Among the things you’ll need to consider are paying off any debt, saving for your retirement, as well as putting money aside for emergencies and long-term illness or life insurances.
You’ll also need to take stock of your assets, so you can decide how these should be divided. And it’s worth thinking about updating your will, power of attorney and any third-party agreements that existed between you and your ex-spouse. If you’d opted for your ex-partner to receive any of your pension in your ‘expression of wish’ you’ll want to think about that too. And whether you need to update any benefits you might receive or work benefits.
Read more about finances from separation to divorce here.
Step two – take control of your finances after your divorce
Once you’ve divorced, it’s time to get real. If you took the time to map out a projected budget for your new single life before you divorced, you’ll need to check if the expectation matches reality. And then, it’s time to think about your future and how to get your money working harder for you – whether that’s saving as tax efficiently as you can for the here and now or saving for your retirement. And, if you didn’t get around to it before you divorced, you really should update your new un-married details and any beneficiaries before you forget.
You can read more about arranging your finance after divorce here.
Step three – consider taking financial advice
Following your divorce, you might be left with plenty of questions about your financial future. You may have received a large lump sum and/or rights to part of your ex-partner’s pension. Or you might need advice on rebuilding your pension pot.
That’s where our financial advisers can help. They’ll spend time getting to know you, your circumstances and your goals, before coming up with a personal recommendation to help you make the most of your money.
If you have a minimum of £100,000 to invest for the long term you can find out more about financial advice here.
1 The Independent
2 Divorce Online