Christmas is often the last straw for many unhappy couples and solicitors are bracing themselves for the annual rush of new clients seeking a divorce in the days ahead.
January 9 is known as D-day, or Divorce Day, because the first working Monday is most popular day of the year to start divorce proceedings.
With emotions running high it is vital to keep a cool head when it comes to money. Separating finances can be the trickiest part of all.
Nearly three in 10 are trapped in an unhappy marriage because they cannot afford to start life afresh as a singleton, research from digital wealth manager Moneyfarm shows.
The divorce petition alone costs between £500 and £1,500, although it can be waived for those on low incomes or benefits, said Chris Rudden, Moneyfarm’s head of investment consultants. “Divorcing spouses may struggle to agree on how to divvy up finances, with pensions a particularly tricky area.”
John Robinson, a director of Cygnet Law in Redcar, Teesside, said separating or divorcing in later life adds to the complexity. “Both husband and wife need an accurate calculation of their retirement income from their state and private pensions.”
Many older couples will still be living in the family home. “This is likely to be larger than they need and it may make sense to sell and realise the capital.”
Finding a mortgage when you get older is a real challenge, as lenders are reluctant to extend loans beyond age 70 or 75, making repayments higher and less affordable. “Couples need to be realistic about what they can and cannot afford,” Robinson said.
He added: “If one party is economically stronger the person with less money could remain in the house until they either die or re-marry, under what is known as a Martin Order.”
Pensions are tricky with three options for divvying them up: offsetting them against other assets such as the home, splitting the pension into two, or earmarking future payouts through an attachment option.
This last option has pitfalls because it does not offer a clean break, and payments may stop on the death of the scheme member, so their ex loses out.
Also, if the ex-partner remarries or forms a civil partnership, the attachment order usually falls away.
Matters get even more complicated if couples have been married before, as there may be a dispute over assets they brought to their current partnership.
“Couples will also need to consider the tax implications of their settlement and how this affects what they leave to loved ones in their will,” Robinson added.
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Gita Duggal, divorce solicitor at law firm Richard Nelson, said that under new no-fault divorce laws, couples can jointly instruct a solicitor to assist them throughout the divorce process. “This may cut costs for both parties and resolve matters faster.”
Avoid court if you can. “A court dispute that goes into the final hearing can cost up to £60,000, while mediation is closer to £5,000 and may keep things more amicable.”
Do not feel pressured to take advice from friends and family. “It is perfectly normal for family members and friends to offer their advice but never feel any pressure to follow through on it.”
Splitting couples who want to transfer assets free of capital gains tax must act before the tax year ends on April 6.
Think twice before moving in with a new partner during the divorce, as their income and wealth will be taken into account when spitting assets with your ex, Duggal said.
Finally, beware DIY divorces, which can save on legal fees but could lead to an unfair split of assets or cause problems further down the line if not done properly.
Get professional advice sooner rather than later. “Putting it off will only make things more challenging further down the line.”