Pensions  

Couples must tackle financial issues early in divorce process

Couples must tackle financial issues early in divorce process
 

Following a surge in applications for divorce last year, Evelyn Partners has urged separating couples to address financial issues early in the process.

The first Monday in January is known as ‘divorce day’, given the uptick divorce lawyers see in enquiries after the Christmas period.

Evelyn Partners, previously known as Tilney Smith & Williamson, has appealed to divorcing couples to be cognisant of the key issues that arise in divorce particularly around pensions, property and tax.

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This year, property is a particularly important asset to consider as the rising interest rate environment may change what is affordable for a newly single individual.

Against a backdrop of pandemic and lockdown stresses being replaced with financial and cost of living pressures, 2022 saw an increase in the numbers applying for divorce.

According to statistics from the Family Court, the second quarter of the year saw a 22 per cent increase in applications compared to the same period in 2021, while in the third quarter there was an 8 per cent increase.

Evelyn financial planning partner and head of family and divorce, Ben Glassman said this rise may be in part due to the introduction of the no-fault divorce bill last April.

The bill aims to reduce the potential for conflict amongst divorcing couples in England and Wales by removing the ability to make allegations about the conduct of a spouse and allows couples to choose to jointly end their marriage. 

“It now seems very probable that some parties who had split on good terms in 2021, were probably holding off petitioning for divorce and have waited until the legislation came into force before making an application,” Glassman said. 

Before the introduction of the bill, couples had to give adultery, unreasonable behaviour or dissertation as a reason for divorce or show that they were living apart for two years by agreement, or five years if one party did not want the other party to go.

“It is to be hoped that a less confrontational system will allow crucial decisions on things like finances and allocation of assets to be made with more clarity and to achieve more beneficial outcomes,” Glassman said. 

“Although as the law change eases the practicality of divorce, more couples in the short term at least might be expected to formalise their separation,” he added.

Evelyn Partners outlined a number of the key issues that couples need to consider during the divorce process.

Splitting assets 

Across the board, a court usually considers a 50:50 split as a starting point when reaching an agreement on assets if the marriage was one of more than five years. This covers property, pensions, savings and any child maintenance.  

Try to be clear-headed about the family home 

One spouse often wants to keep the family home when getting divorced, especially where there are children involved.

Glassman warned however that this does not always make sense, particularly when taken into context with other existing assets.

“Property is usually the biggest asset, and if one partner wants to stay in the family home, they will often have to forgo the majority of the other assets such as savings and pensions.