Getting divorced can be a difficult time and it’s an experience that an increasing number of people in the UK are facing.
According to research published by Divorce Online, 2022 saw the biggest increase in divorce rates in more than a decade. Meanwhile, 8 January also marks “Divorce Day”, a day on which there is often a rise in divorce enquiries on the first working Monday of the new year.
If you’re going through a divorce, managing the practicalities of separating your financial affairs during this potentially stressful and emotionally challenging time might feel overwhelming.
You probably have lots of questions about what could happen to your money when you separate from your spouse or civil partner.
Read on for answers to the most common financial questions about getting divorced.
How much does it cost to get divorced?
There is a £593 fee (2024) to apply for divorce. Generally, the person who is petitioning for the divorce will pay this, unless you come to an amicable agreement to split the cost with your spouse or civil partner.
You may also have some or all of the following costs to cover:
- Solicitor’s fees
- Court fees
- Arranging a financial settlement
- Mediation or arbitration fees
- Ongoing costs such as child maintenance.
The total cost of your divorce will depend on your specific circumstances and how easily you and your partner can reach an agreement.
Seeking independent financial advice could help you understand your position, organise your financial paperwork, and take action to prepare for the potential financial costs of getting divorced.
Will assets be split 50:50 when I divorce?
There is no hard and fast rule or formula for calculating how assets should be divided when a couple divorces.
Many factors will be considered, such as the needs of any children and the length of the marriage. This may not always result in assets being split 50:50.
You may be able to agree on this issue as a couple or you might need the help of a mediator. Alternatively, the courts can decide.
The most important first step towards reaching an agreement is for each party to provide full details of their financial position. So, you could prepare for discussions by locating and organising your financial paperwork as soon as possible.
Will I have to share my pension with my spouse?
Pension sharing is just one of the options available when you get divorced.
A Pension Sharing Order from the courts means that assets are split immediately so that you and your partner can independently decide what to do with your share.
Sharing a pension could help to achieve a clean break while ensuring that both you and your partner are provided for in your retirement.
However, some pensions such as small self-administered schemes (SSASs) are difficult to split and there may be administrative costs for doing so. Also, if you share a pension, one of you may receive a lower income or lump sum than you might otherwise have been entitled to.
Alternatives to pension sharing include pension offsetting and getting a Pension Attachment Order from the courts.
If you opt for pension offsetting, you and your civil partner or spouse will keep your individual pensions, but these will be offset against any other assets you own. For example, if the value of pensions and property are roughly the same, one of you might decide to take the pensions and the other the family home.
Pension offsetting is often simpler, but it could be difficult in some situations to divide assets fairly using this option. It may also mean that one party has significantly less pension wealth than the other – for example, if you have taken a property – and this could leave you with an income shortfall in later life.
Pension Attachment Orders
A pension attachment allows the courts to redirect part of a pension to the ex-spouse or civil partner. The pension still belongs to the named scheme member, but they are legally obliged to provide a specified pension income or lump sum when their benefits become payable.
This option could clarify expectations and ensure that both you and your ex-partner have some provision in retirement. However, it does not offer a clean break in the same way as pension sharing and offsetting, because you’ll need to retain a degree of contact until the pension benefit becomes payable.
The person in receipt of the payment also has to wait for the party who owns the pension to start drawing benefits, and so has no control over when an income or lump sum may be paid.
How a financial planner could help with your divorce
You may benefit from the help of a solicitor to manage your divorce, but a financial planner can help you to understand your financial position and achieve a fair settlement by:
- Supporting you to complete financial paperwork
- Assessing the valuations of both parties’ pension benefits
- Acting as a financial neutral for both parties to reach a settlement outside of court
- Assessing your post-divorce income and expenditure to help you plan for the future.
This could potentially speed up the divorce process and reduce your legal fees – for example, by helping you to complete the necessary forms quickly and accurately.
Get in touch
If you have further questions about how a divorce could impact you financially and want to prepare for the proceedings, we can help.
Please get in touch either by email at email@example.com or by calling 0117 9303510.
A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.