How to manage a divorce or separation
While no couple usually wants to head to the divorce courts, if splitting up is the only solution there are several things you can do to ensure your break-up doesn’t end up breaking the bank.
January often sees a jump in the number of couples deciding to divorce, with many feeling the strain after the stresses of Christmas, or wanting to make a fresh start in the New Year
Sarah Coles, head of personal finance at Hargreaves Lansdown said: “Divorce lawyers see an uptick in enquiries immediately after the festive period – rivalled only by the rush just after the summer holidays. Splitting up requires us to come to agreements over all sorts of things with someone we have already decided we can’t have a relationship with.”
While no couple usually wants to head to the divorce courts, if splitting up is the only solution there are several things you can do to ensure your break-up doesn’t end up breaking the bank.
Keep talking
Difficult as it may be to stay amicable, try to keep communicating with each other, rather than relying on solicitors, as this will help keep costs down. Divorce always requires some negotiation and compromise, so if one or both of you is determined to stick rigidly to a certain position, the divorce process will quickly become expensive and take longer to conclude.
Research also shows that both parents are more likely to have good relationships with their children over the long term if they go to mediation rather than court when they separate or divorce. For more information on mediation, visit the website www.nfm.org.uk.
Get the most out of your pension - find the right pension plan for you
Power of Attorney - do I need one?
Drying laundry in your home causes havoc with your health and home
Remember pensions
Separating couples often focus on assets such as property and savings, and tend to neglect pensions, but it’s vital to factor them in.
Myron Jobson, senior personal finance analyst at interactive investor, said: “How to divvy up finances is often a source of contention, with the home normally seen as the prize asset, while pensions are often overlooked.
“People grossly underestimate the value of pensions, but they are usually the largest asset for divorcing couples, accounting for 42% of household wealth on average, according to the Office for National Statistics (ONS).”
There are three main ways of dealing with pensions during divorce, pension sharing, pension offsetting and pension attachment orders.
Pension sharing which involves all or some of one person’s pensions being transferred to the other is usually the most popular option as it allows a clean break. Pension attachment orders can be more complicated, as one person must agree to pay a portion of their pension income to the other when it starts being paid. These payments will stop when that person dies. Pension offsetting, as the name suggests, involves the value of pensions being ‘offset’ against other assets, such as the family home.
Dean Butler, managing director for retail direct at Standard Life, part of Phoenix Group, said: “This offers a clean break and doesn’t need a court order, but could lead to one person having little to live on in retirement. The decision is also based on the value of the pension today, so it will involve one person giving up their entitlement to future investment growth.”
Consider arranging your own divorce
You may be able to arrange your own DIY divorce if you can agree on things such as how you’ll look after any children, and how you’ll split up savings, pensions, property and possessions.
If you are able to agree on these things beforehand, you won’t have to go to a court hearing, and the divorce paperwork should be fairly straightforward. However, bear in mind that just because you and your ex want a DIY divorce, it won’t necessarily be accepted by the courts, so you may want to seek legal advice before requesting your agreement is embodied into a Consent Order.
Helen Hanson, senior associate at Stowe Family Law said: “Whilst it is an entirely reasonable step for couples to take to try to reach an agreement quickly and amicably between themselves to reduce time, legal costs, and stress, the couple most not be mistaken into thinking the Court will simply ‘rubber stamp’ their agreement.
“The judge, when considering the agreement the couple have reached, will have the power to ask questions and has complete discretion to refuse the agreement. A judge is likely to refuse the agreement if it does not appear to represent a fair and reasonable split of the marital assets or if the Judge does not consider the parties have provided adequate financial disclosure.”
Remember that if you do opt for the DIY route, you will still have to pay a £593 fee to apply to the court for a divorce if you live in England or Wales, with a Consent Order costing £53 if you can agree how to divide your assets. Costs vary in Scotland as there are two different ways to get a divorce, but to apply for a ‘simplified’ divorce or dissolution the cost is £134 if you go through the Sheriff Court, or £140 if using the Court of Session.