Divorce and Your Finances - 5 Important Considerations

Ellie Jones, Partner in our Family Law Team in Lincoln specialises in financial remedies following relationship breakdown. Here, she outlines some of the key money matters you should be aware of if you are thinking of divorce...

1.    Protect your position at the outset

It is extremely important at the outset of any separation that you protect your position as much as you can.  This relates to properties, savings, pensions, businesses and liabilities.

Careful consideration needs to be given when thinking about how to protect interests in jointly owned property or property owned in one party’s sole name.  You may need to take action at the Land Registry to change beneficial ownership, register notices or even just change your correspondence address.  

Thought should be given to bank accounts and other investments and the ability of either party to draw down on sums or increase overdrafts.  Undertakings or other protection may need to be obtained in relation to pensions, particularly where one party is over the age of 55, or is approaching that age.  You may need to make a new Will or think about any joint life policies.

2.    Get the valuations right

Another important consideration is obtaining realistic valuations for all assets.  

The family home can often be the asset with the most significant value and, for that reason, it’s vital that the valuation is correct – particularly where the property might be retained by one party and is not being sold. The starting point is to obtain a number of market appraisals to get an idea of the value.  If this doesn’t allow a valuation to be agreed, the instruction of an experienced and well-respected chartered surveyor should be considered, so that an accurate valuation can be obtained.  

If there are pensions involved, it is always sensible to consider a pension actuary who can provide a fair valuation of pension rights.  

If there are businesses, an independent and knowledgeable accountant should be instructed to provide advice as to value as well as liquidity and tax consequences.  

3.    Don’t be too trusting

It is vital to make sure that there is an exchange of financial disclosure before entering into any financial agreement on divorce.  It is reasonable to request disclosure of financial documentation and any suggestion from the other party that this isn’t necessary should be a warning sign that they may be hiding something.  Without having full disclosure, you could end up agreeing to a settlement which is not fair and could miss out on your reasonable share of the assets.   

You should also make sure to take your own independent legal advice on any proposed settlement so that you know and understand the law and relevant factors that should be considered.  Don’t be persuaded if the other party tries to convince you that you don’t need your own lawyer.  

4.    Think about the best strategy for YOU!

Remember, no two divorces are the same.  Although you may have friends, family or colleagues who offer you advice following their own experiences, their situation may have been very different to your own and the advice they were given may not apply in your circumstances.   

It is vital to take professional advice from an experienced and trusted lawyer to develop a strategy that you are happy with and which is tailored to your own situation.

5.    Plan for the future

Whatever your age, it is important to give serious consideration to milestones that will be reached in the future.  Forethought about these issues at an early stage can allow you to ensure that your needs are met both now, and in the future, within any settlement.

Some considerations you may need to think about are things such as children growing up and leaving home and how that will impact upon your income and housing, what should happen to maintenance if you were to cohabit in the future and how will you meet your income needs upon retirement.  

It is, of course, not possible to predict everything that will happen in the future, but some milestones are more likely than others, and giving consideration to those at an early stage upon separation should ensure that you are set up for most eventualities in the future.  

For an initial discussion about your financial circumstances (and any parenting issues) we offer a Preliminary Advice Meeting, tailored to you, followed up in writing for £150 + vat. Call 01522 542211 to book a telephone or video meeting. Face to face meetings are also allowed in certain circumstances.

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