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Distressed, Divorced (and eventually Di-lighted?)

More than 4 in 10 marriages end in divorce so there’s no point in beating yourself up. However tough you are and whoever’s ‘fault’ it was, there is a fairly long road of financial and legal points to navigate. From sorting the house, to working out child care arrangements, dividing the assets, agreeing any maintenance and splitting pensions, it’s not much fun at all. We can’t make it go away. But we can help you tackle this one step at a time and give you an honest view of what you might be in for.

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I like this tribe – Just don’t tell my ex.

Find a lawyer

Unless you are confident you and your ex can agree everything amicably, chance are you’ll need to find a lawyer. This does not come cheap. Ask your friends, financial adviser or work colleagues for any personal recommendations. Empathy with your lawyer is important, but remember, you want this person to fight your corner, sensibly and practically, not to be your best friend. The Midult has a great piece on the 23 best divorce lawyers in the UK here which is quite fun reading although – warning- most of those listed in it charge “like wounded bulls” and there are cheaper options!

  • Realistically, a divorce lawyer will cost in the region of £200-£300 an hour – unless you are Angelina Jolie. The total costs really depend on how much of a fight you are going to have. Without much dispute and avoiding Court, you might get away with as “little” as about £5,000-£10,000. If you’re fighting everything, it gets super expensive.
  • Get a sense of what lies ahead – have a read of the childcare maintenance rules for example or use this online calculator – it’s actually a fairly standard formula unless you earn more than about £150,000 a year.
  • You might want to consider engaging a financial adviser for a ‘cashflow modelling exercise’ to get a sense of what you actually spend on the household and the kids – as a guide this exercise can cost about £750-£1,000 but it could be worth it.
  • Trying to keep as much out of Court as possible is very sensible. There comes a point when your anger may only be funding your barrister’s next skiing holiday.
  • If you don’t have any personal recommendations, Irwin Mitchell and Slater & Gordon are two national firms which support clients through divorce.

Pensions splitting

This probably doesn’t feel like it’s super important right now, but some divorcing couples forget to include the pensions assets in the mix when this can be the most valuable asset after the house. The court will include the value of any pensions in the mix so make sure you do too. Generally speaking there is a Pensions Sharing Order – the pension is divvied up and the person receiving a bit of this as part of any settlement will need to open up a pensions account for this to be transferred into. This page from the Pensions Advisory Service spells it out in more detail.

  • If you need to open a pension account and are a bit stuck, we think Aviva, Fidelity or Standard Life are all reasonable and solid options if you just want to park this money somewhere decent for now and think about it in more detail once the dust has settled
  • Our 10 minute podcast with financial adviser Pete Matthew covers this in some more detail, and tackles a question from a reader, Matilda
  • Paraplanner Richard Allum reminds us to keep a note of company pension schemes, personal pensions and State Pension amounts to help when settling divorce finances. He explains more here.
  • In order to implement a pensions sharing order, trustees will need to see a copy of the final sharing order and annex (which includes the % split), a copy of the decrees nisi and absolute, and a note of where the balance is to be paid (or where you want the pension to be moved to)

Divorce financial check list

We’ve produced a checklist of the key financial decisions you will need to make – or the things you will need to do. These include working out what to do with the house and the mortgage, working out what child maintenance you will pay/receive, splitting up the wealth and sorting out pensions. This divorce checklist will give you a very good idea of what to expect and what to think about and act as a prompt for all the info you’ll need to collect to start those difficult discussions.

  • Speak to a lawyer early doors. Even moving out of the marital home – easy to do when emotion is at its peak – can be said to set precedent. Unfortunately everything is under the microscope.
  • If you earn less than £156k and you’re the main breadwinner who will have the kids the minority of the time, maintenance is circa 20% of your income for 2 kids, falling proportionately for every night they spend with you. Get the exact number here. 
  • The very basic starting point for asset division is a 50:50 split of the wealth that has been accumulated during the marriage – so if your house has gone up by £30,000 since you bought it as a couple, the ‘back of the fag packet’ starting point is £15,000 each.
  • Cars, houses, pensions, furniture, things you bought during the relationship – it all goes into the mix.
  • The longer you have been together, the greater the case for an equal split. If you’ve been married for less than 2 years, for example, there’s obviously less of a case for this as your contribution to the overall pie will have been much less than a ‘homemaker’ or a ‘breadwinner’ with a 20 year marriage.

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Important stuff!

Holly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice, nor are we regulated by the industry watchdog (although we do talk to them a lot). For every story on this site about a good investment, or something which went up by 10% or made someone £200, we could share a story about a bad investment, something which fell by 10% or lost someone £200. Nothing’s certain when investing so if you’re really unsure, or dealing with complicated stuff like working out what to do with a pension when you retire, we’d really suggest you get some financial advice. Here are some tips on  how to pick a good financial adviser. Or check out Unbiased or VouchedFor. Just remember, commission has been banned now so advisers need to be very clear with you about what you are paying them and when.