Sometimes it pays to sweat the small stuff?
11 July, 2017
If you're like most people going through a divorce, you'll be focusing on the big issues. But there are also several other issues that can be missed.
If you’re like most people going through a divorce you’ll be focusing on the big issues; where am I going to live, what about the kids, who is going to pay for stuff, what do we do with pensions and so on. Big issues that need a lot of attention. But, there are also several other issues that can be missed that may look less important on the surface but can have a big impact if not now, then in the future. So, here’s a few things to watch out for.
Make sure you know who’s got what and what it’s worth. It’s not just the pension but other benefits that you could’ve shared had you stayed together such as life assurance and a tax free lump sum. You can read our guide to pension sharing (https://www.boringmoney.co.uk/quick-reads/pensions-sharing-and-divorce/) here.
If one of you is keeping the home you need to think about the mortgage; will the bank or building society allow one of you to take on the mortgage, can you afford it?
Will one of you keep a financial interest in the home and what will the conditions be? This is often done if there aren’t enough other assets for a financial settlement (it’s called a Mesher Order) but could mean that the property has to be sold when the children are 18 for example.
If the divorce is finalised and the property sold more than 18 months after one of you left, there could be a capital gains tax bill to pay. If you’re worried about this you should speak to an accountant.
Did you enjoy your ex’s perks from their job such as subsidised child care, gym membership, housing allowance etc and what will it mean to you to lose them?
Life assurance & other protection
Most couples with a mortgage have a joint life assurance policy to pay off the loan if one of them dies. How will you deal with this now? There may also be other policies held in joint names that you need to think about.
You might want to think about setting up new life assurance or health insurance on your ex after the divorce. This is important if your ex will be paying maintenance or school fees (https://www.boringmoney.co.uk/learn/articles/invest-to-pay-for-school-fees/); what would happen if he or she died or was ill and couldn’t work?
Will any benefits you currently get be affected by the divorce?
Will you be able to claim additional benefits such as Working Tax Credits and Child Tax Credits?
Who will the Child Benefit be paid to?
Can you boost your State Pension by using your ex’s National Insurance record?
We’re sorry to throw all of this into the mix, at a time when you already have a lot on your plate. If you need some help, see if you can find a local financial adviser who will see you for an hour or two to take all of your questions. If so, go prepared with a list of questions and have a summary of your financial position ready. You can find a good financial adviser for about £150 – £200 an hour depending on where you live. That can sound like an expensive few hours but they might save you thousands in the long-run?
If you do want to look for a financial adviser we suggest you check out Vouched For (https://www.vouchedfor.co.uk/). And if it all feels too awful today, then you could always treat yourself to a nice take-away with a glass of wine and pick up the fight again tomorrow!? Good luck.
For more information on divorce, visit our distressed divorcer Learning Path. (https://www.boringmoney.co.uk/learn/learning-paths/divorce-the-financial-bits/)