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‘Divorce Day’ – what you need to know

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Written by: Emma Lunn
10/01/2022
The first working Monday of a New Year has been dubbed ‘Divorce Day’ by lawyers who see a surge in couples enquiring about separating.

After Christmas and after the summer holidays in September are the peak periods when marriages come to an end, from couples pushed to the brink after spending more time together. 

According to the Office for National Statistics (ONS), the average age of divorce is 47.7 years for men and 45.3 years for women, with couples typically calling it a day 12.3 years after getting married. 

When you’re older you face two major risks from divorce. The first is that you’ve spent longer building assets, so you have more to lose. And the second is that you have less time to get your finances in order afterwards. 

More than 13,000 people over the age of 60 got divorced in 2019, which is a difficult age to be starting over.

Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: “As the festive season gives way to the post-Christmas comedown, divorce season moves up a gear. The first working Monday of the year traditionally sees a surge of divorce enquiries, from people pushed to the brink after spending the festive season together. Those people sizing up a split are likely to be older than ever, which means there are additional risks they need to consider.

“It’s always worth making sure you get the advice and support you need during divorce, but as you get older, this can be even more valuable. One key consideration is what to do with pensions. In many cases, it’s one of the largest assets built up during the marriage – often largely in the name of one person – and if it involves defined benefit pensions it can be fiendishly difficult to value. It means you need to understand your options when it comes to splitting pensions, to make sure your divorce doesn’t derail retirement, and you may well need to see a financial adviser as well as a lawyer.”

What should ‘silver splitters’ watch out for?

Not understanding the value of what you have

The divorce process involves dividing your assets, so you need to understand the value of it all. This includes pensions. Couples often offset assets, but it’s important to appreciate the value of what you are giving up and possibly speaking to a financial adviser.

Not appreciating all your options when it comes to pensions

There are a few options to consider, so you need to be certain you choose the best one for your circumstances.

The main choices for couples are pension sharing, pension offsetting and a pension attachment order.

Not rebuilding fast enough

A divorce won’t just split your assets, it can cost a fortune too, so you need to focus on getting back on track after the divorce. You should be paying into emergency savings and rebuilding your pension.

Paying more tax

If the divorce is completed in one tax year, when you pass investments between you and your ex, there’s no capital gains tax to pay. But if you go into a new tax year, you may be liable. 

The rules on this are set to change to give divorcing couples more time, but we don’t yet know when this will kick in. Older couples are far more likely to have more investments, so are more likely to be subject to CGT. There are steps you can consider, like bringing transfers forward, so you will need to discuss these with your lawyer.

Damaging your credit rating

If you still have a mortgage, talk to your ex about it. If you’re both named on the mortgage, then you’re both liable for the full amount, so to protect your financial position you should try to maintain payments in the short term. If possible, try to agree this between you. 

If your ex refuses to pay their share, or you’re struggling to pay yours, talk to the mortgage company and see if they will allow you to pay interest-only for a period, or take a break while you sort something out.

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