There’s nothing like going through a divorce or separation to make you stand up and seriously consider your personal finances. Even if you go through something like Splitting Up with your partner after discussing your separation at length, there can still be matters you have not considered.
Flying solo financially
When thinking about the financial side of your divorce or separation, one of your first thoughts will be whether or not you will be able to cope financially on your own. Many couples splitting up can feel the detrimental effects of living on one salary and having to pay regular bills and keep up with other financial commitments. One of your initial steps should be thinking about what your life will look like when you are managing all your finances on your own, including what you can afford, where you will live and what your lifestyle will be like.
Financial support for children
In terms of the law’s stance on your divorce or separation, the financial needs of any children involved will be a priority, including both their existing and future needs. This means that the courts will want to make sure that despite their parents’ divorce, children continue to experience the same standard of living as they did when their parents were together.
When possible, it is advantageous for parents to reach their own financial agreement concerning children. This can alleviate stress and prevent all parties from having to go through sometimes lengthy court proceedings. For example, one parent who is not living with the children as often as the other may pay maintenance to ensure the children’s basic needs are met. When an agreement on maintenance is not possible, the Child Maintenance Service can calculate the required amount.
Thinking about Pensions
Although claiming your pension may seem a distant milestone, during a divorce, a pension is considered a matrimonial asset by the courts. Often accumulated over many years, pensions can become a considerable financial asset in a divorce and yet it can be an area that is often overlooked.
While pensions are included as part of a divorce, it does not necessarily mean that each party will receive a 50% stake. Other factors, including children’s needs, the family home and additional financial assets will be brought into the equation.
There are three key options when splitting a pension, including offsetting where the value of a home, for example, may be offset against the value of the pension. Offering a clean break route, pension sharing divides the rights of a pension between two ex-spouses, allowing them to have pensions in their own individual names. There’s also Earmarking (or Attachment) which reserves a portion of the pension to be put to one side for an ex-spouse to claim when they reach retirement. Consulting with an experienced family lawyer will help you consider all available options.
Don’t forget about Wills
It’s also important to think about any Wills you or your partner may have in place. Divorce and separation do not automatically invalidate a Will following divorce, however, its terms do change. In some cases, the Rules of Intestacy will be applied which could result in the people you want to benefit from your Estate following your death, not doing so.
Conclusion
Although the prospect of having to handle finances after splitting up with your partner may seem daunting, it is an important area to consider very carefully. The decisions you make can have a long-term impact on the lives of both spouses. A skilled family law team and/or financial adviser can support you in making good choices about your financial future following divorce or separation.
