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This article was published on September 6th, 2024
A 1967 study found that going through a divorce is the second most stressful life event a person can go through, where you have to make many complex decisions that can result in life-long consequences, including the management of your finances. Financially planning for the future is unlikely to be at the forefront of your mind during a marital breakdown, however securing your future within your new financial position should not be overlooked. At Thorneycroft Solicitors, we understand the many complexities that come with getting divorced, that’s why we have a dedicated team of specialist divorce solicitors to support you every step of the way. In this blog we will explore how to financially plan for divorce and secure your future beyond marriage…
As a married couple, your finances become interlinked, even your separate bank accounts, savings and investments. When going through the process of divorce, your assets will be separated and possibly relocated with a fair financial settlement reflective of both parties’ situations. In this instance, your assets could be your income, property, businesses, ISAs, trusts, pensions, etc.
Here are our tips for financially planning for divorce and securing your future beyond marriage:
Contact our team of specialist divorce solicitors on 0800 1979 345 to discuss your legal rights and obligations. They will also be there to support you every step of the way.
Gather any and all documents relating to your financial assets, including payslips, bank statements, mortgage payments and household bills. The more information you can provide, the better our team will be able to understand your financial situation.
Begin your journey towards financial independence by only using your individual accounts. It is advisable to freeze any joint accounts before you begin the division of your assets to prevent any rash financial decisions affecting the proceedings.
Calculate any changes that may happen to your income now you’re a single earner and create a list of outgoings to determine your financial situation after the divorce. This will help you keep on top of your finances during the transition period.
The court will always endeavour to equitably divide assets between each party, by considering the length of the marriage, spousal contributions and future financial needs. However, there may be certain assets that require negotiation. Make sure to stand up for what you believe is fair, but be prepared to make compromises as well.
If there are children involved within the divorce, you may either be entitled to or required to provide spousal support, which refers to ongoing financial assistance to ensure the recipient can maintain a similar standard of living for said children as they did during the marriage.
Many people going through the divorce process are unaware that they may be entitled to their partner’s pension, especially in instances where one partner has been the primary earner. There are multiple ways your pension can be shared between you and your ex-partner, which often require complex analysis and negotiation.
One of the hardest decisions you will have to make during the divorce process is what to do with the family home, especially if there are children involved. There are many ways in which the family home can be divided between you, which will depend on who’s name the property is in, your financial situations post-divorce and your dependents. It is crucial to consider the financial implications of all scenarios to choose the right one for you.
The court will generally try to avoid disrupting a business in order to protect employees and shareholders who are not involved in the divorce, however there may be instances where the asset needs to be divided or sold, even if the partner was uninvolved.
Going through a divorce can have considerable tax implications which need to be taken into account when planning your future finances. If you plan on dividing any ISAs, they may lose their tax benefits as transfers can only be made to the same individual or former married/civil partner upon death. Your filing status will also change once the divorce is final, which could result in a change in tax bracket and deductions available.
The division of your financial assets during the divorce process may have an impact upon your credit score. If you mainly used joint accounts throughout your marriage, you will need to carefully consider the division of these funds and the payments that came out of them. You will also need to look at establishing credit under your own name to create a financial identity separate from your ex-partner. Although there will be many things taking up your attention during this time, it is crucial that you keep an eye on your credit score so you can address any issues and protect yourself for the future.
It is advisable to revise your Will after any major life event to reflect your new situation and ensure your assets will be divided how and to who you wish. You will also need to update your existing insurance policies to reflect your new situation and possibly take out new coverage if you were previously covered by your ex-partner.
Once the divorce is finalised, take time to re-evaluate your new financial situation and set new financial goals.
If you’re considering a divorce but are worried about the financial implications, contact our specialist divorce solicitors on 0800 1979 345 or fill out our enquiry form below and a member of our team will be in touch at a time convenient to you.
