Divorce And Your Finances

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Organising a divorce can be a whole lot more complicated (and emotional) than organising a wedding.  The process can, however, become a lot easier if you approach it with a clear understanding of your rights and obligations.  Here is a quick guide to help.

If you have children, their welfare will always come first

This is a lot more than an expression of intent.  It’s the law and it’s standard practice in family courts.  What this means in practice is that either you and your ex-partner work out suitable arrangements for your children or a judge will work them out for you.

It’s generally in everyone’s best interests for parents to come to an agreement about their children.  Firstly, this helps to keep parents on the same page as they go into the future.  Secondly, if a judge has to do it, then neither parent may end up happy with the outcome.

Child maintenance is a joint responsibility

Both parents are responsible for the upkeep of their children.  If one parent has physical custody, the other parent will be expected to provide financial support (assuming they can afford it).  If physical custody is shared then the financial support will be adjusted to reflect this.

Prenups (and postnups) can be accepted

Prenuptial (and postnuptial) agreements are not, yet, legally binding in the UK.  They are, however, very likely to be upheld provided that they meet all the criteria for a legal contract.

Having the children does not guarantee you will get the house

Family courts generally prefer to keep children in their established family home.  They can, however, only do this if the parents can still afford it after the divorce.  Given that one parent will (usually) have to move out, this generally requires the other parent to be able to get a mortgage in their own name.  If they can’t do this, then the house will need to be sold.

Even if the parents are able to afford the home, the custodial parent may not end up with full ownership of it.  They may simply be given the right to live in it until their youngest child is grown up.  After this, the house will be sold and the equity divided between the parents.

Splitting pensions pots is complicated

Pensions pots are, usually, considered as part of divorce proceedings.  Splitting them can, however, be extremely complicated.  If a couple has sufficient assets overall, then a pension pot can be “offset”.  In other words, the partner without the pension pot gets a greater share of other assets (usually the house).

If, however, this is not possible, then pensions can either be shared or attached.  With sharing, one partner takes ownership of part of the other partner’s pension fund.  This may sound simple but the process itself can be complicated and very expensive.

With attachment, the partner without the pension gets a share in their ex-partner’s pension when their ex-partner starts to claim it.  This process is much simpler and more affordable.  It does, however, mean that the partner with the attachment claim only gets their money when their ex-partner decides to take their pension.

Professional advice is a great investment

In a divorce situation, there are three professionals who can make your life a lot easier.  They are a financial advisor, a mediator and a lawyer.  A financial advisor can help guide you through the financial practicalities not just of the divorce, but also of your post-divorce life.

A mediator can help you come to a functional arrangement with your ex-partner.  A lawyer can make sure that your divorce is put on a solid legal footing.  Having everything in order before you present your case to the courts will make it much more likely that the courts will just sign it off as it stands.  It will also help everyone concerned to recover and move on with their lives.

There may be costs involved in engaging a financial adviser, mediator and lawyer

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