Divorce Day 2021: How to protect yourself during the process
Today is National Divorce Day – the first working Monday of the year after the festive period usually sees a rise in couples consulting divorce lawyers.
Divorce rates are on the up, rising 18% in the year to 2019 for heterosexual couples while among same-sex couples, divorces doubled between 2019 and 2019.
According to Tilney research, nearly half of those who have been through a divorce or separation were worried they wouldn’t have enough money to live on without their spouse.
And while divorce inquiries surged at the start of the pandemic in March, Divorce Day 2021 is “likely to be more impactful” now.
Zoe Bailey, chartered financial planner and director at Tilney said in addition to the emotional stress, there are important and long-lasting financial implications that need to be considered too.
Bailey shares the following considerations:
1) Don’t forget pensions
While people might just have an eye on the seemingly biggest financial assets, like the family home, it’s vital not to forget pension pots. This can cause even greater financial damage if not prioritised or divided in the best way for both parties, potentially leaving one of you at risk in the future.
For those over 45 years old, who may have some savings and pension policies set aside for the future, giving early consideration towards how your retirement policies may be split and subsequently be able to be built back up efficiently can make a huge impact on when you will be able to retire in later life. Remember, there is a risk that you could not automatically be given a fair share of the pension policies, which could put you in a dire financial situation in later life.
2) Think about the long-term
Immediate personal and financial responsibilities will weigh heavy on the minds of those going through a divorce or separation, alongside the objective of wanting to finalise the process as efficiently as possible to move forwards. All too often concerns about the longer-term financial impact is put on the back burner, leading to complications later on.
Think about what will be important in future years – if you have children with your divorcee, you’ll need to think about how you’ll manage long-term arrangements like school fees. Or do you need protection for any child maintenance or spousal maintenance? Or do you need to update your will now, and again after your divorce, to ensure that your money ends up in the hands of your loved ones?
3) Seek financial advice
Alongside the legal process, it’s important to seek professional financial advice during the early stages of your divorce, which can ensure that the division of assets is carried out in the best way and minimise the potential impact of tax. This can put both parties on better footing for later life. It’s already a challenging and stressful time for many, so it’s not worth adding financial concerns to that as well.