Q&A: Divorce and your finances
The costs of divorce are high - both emotionally and financially. Katy Ward answers 10 key questions on how to protect your pocket if your marriage ends.
The UK already has one of the world's highest divorce rates and sadly, divorce-online.co.uk estimates this figure could rise by 2% in 2010.
During the credit crunch, unhappy couples postponed their divorces because they feared they would not be able to sell their homes for a fair price. As prices rise, many couples are expected to file for divorce.
Retailer Debenhams seems to have cottoned on to this possible trend. Last week, the company announced a 'divorce gift list'. Using this service, divorcees ask friends to buy items for their new homes.
But what happens to assets acquired during the marriage? Here I address 10 of the most common concerns.
1. Will I have to go to court? That sounds expensive!
You're right. Going to court can be an extremely costly business especially if both partners hire expensive solicitors.
However, there are other options. It is possible to arrange the divorce yourselves. Divorce Online, for example, offers a DIY divorce for just £69.00. Bear in mind, you should seek advice if you are unsure about any aspect of the divorce. Otherwise you could end up losing what's rightfully yours.
Alternatively, you might want to consult a mediator. As an independent negotiator, he or she can run through your options to help you reach a mutually agreeable financial settlement.
2. Who gets the house?
It's no surprise that property is one of the biggest concerns for divorcing couples. The end of your relationship can be stressful enough without the added pressure of finding somewhere to live.
However, selling the house and dividing the proceeds could be the simplest solution. If this isn't possible, one partner can take over the mortgage. Remember you will need to prove you can keep up with the repayments after the divorce. It's important that you speak to an independent mortgage broker about your options.
3. Will my ex have to help pay for our children?
Divorce is never clean cut when children are involved. After the marriage ends, both parents remain financially responsible for the children even if one has left the family home.
The parent who moves out should pay child maintenance to the main carer until the child is at least 16. However, maintenance could be extended if the child goes to university or college.
If the divorce is amicable, you can come to a private agreement about child support or you can apply to The Child Support Agency (CSA). The CSA will look at all the financial information to calculate how much maintenance should be paid.
4. I stopped working when I got married. How will I support myself?
Your ex may have to pay you spousal maintenance. This means the court will order him - or her - to make payments towards your living costs. Spousal maintenance can last for a set period or, in some cases, life.
Payments end automatically if you remarry but not if you move in with a new partner. However, the court can adjust spousal maintenance at a later date to reflect your new circumstances.
It's also worth checking if you qualify for state benefits such as income support or housing benefit. Visit the Jobcentre Plus website to learn more.
5. What about our life insurance?
However difficult it is to talk to your partner during the divorce, you will need to discuss any life insurance policies you have together.
Once you have come to a decision, contact your insurance provider. It may be possible to remove one person's name from the policy or you could surrender the policy entirely.
It's crucial to check the surrender value (the amount you have paid into the policy minus any penalty costs) before you make any decisions. Likewise, you should seek independent financial advice before taking any drastic action.
6. Where do we stand with our pension?
For many couples a pension is one of their most valuable assets and will be an important factor when the court arranges a financial settlement (should you go down this route).
If one partner has given up work to care for the home and family, he or she will frequently be given a larger share of the pension. This compensates for the contributions he or she would have made if they had continued to work.
If you and your partner are reaching a financial settlement yourselves, it's vital you discuss your options with an independent financial adviser.
7. My husband ran up a lot of gambling debt. Will I be stuck with this?
As a general rule of thumb, spouses are jointly responsible for debts. However, the court may take a different view because this debt was caused by your husband's irresponsible behaviour - not yours! Mention your concerns to your solicitor.
8. I am a gay man in a civil partnership. How do I get a divorce?
Firstly, you'll need a 'dissolution of civil partnership' and not a divorce. Otherwise, your situation is not that different from a heterosexual couple.
The court will consider many of the same issues when dividing your assets. As with any relationship, the main factors are length of relationship, pensions, individually-held assets and, most importantly, children.
9. Where else can I go for advice?
Organisations such National Family Mediation and the Citizens Advice Bureau can offer advice about money matters.
However, you're also likely to be under a great deal of emotional strain. Friends and family who have gone through a divorce themselves could offer invaluable support during this time. If you start to feel overwhelmed, talk to your GP.
10. Would I have avoided this headache with a pre-nuptial agreement?
Pre-nuptial agreements are not legally binding in this country but they are not meaningless either. In recent cases, the court is increasingly taking them into account when arranging financial settlements.
Also, pre-nuptial agreements may become legal in the future so it could be worth signing one if you do marry again.
**Articles featured on BeatThatQuote.com are for information purposes only and reflect the views of individual writers. Articles are not, and should not be considered as, financial advice. BeatThatQuote.com strongly encourages our readers not to rely solely on information contained within this article/our website, but to conduct their own research and seek independent advice about the financial products they purchase.**
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