Surviving financially in season of divorces

MOST of us will have recovered from our festive hangovers by now, but the pain will endure if Christmas ended in a blazing row and you are seeking a divorce. Early January is peak divorce season, when lawyers are besieged by couples who have decided to start afresh in the New Year, rather than giving it just one more go.

Adultery, growing apart, money issues, abuse, and addiction are the main reasons for divorce, and there has been growth in “silver splitters”, over 50s leaving their first, second or even third spouse.

Whatever caused the break-up, every couple faces the same question: how to divvy up their assets.

CUT OUT CONFLICT

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said you may hate the sight of each other, but avoid all-out war: “Without a degree of civility, divorce is incredibly stressful for everyone, particularly the children, and may add thousands to your legal bills.”

Lawyers charge between £150 and £400 an hour, so ask whether you really need their help arguing about who gets the sofa, she said.

If you struggle to speak civilly, use email or text messages, but think before you press send: “Never send anything you would not be happy to have read out in a divorce court.”

Always respond quickly and honestly to financial queries. “If you delay or forget to include assets, you will raise the temperature dramatically,” she said. Establish no-go topics that always lead to arguments: leave those to your lawyer. “Mediation can cut the costs dramatically, and in straightforward cases couples can reach agreement for less than £600,” she added.

COURT COSTS

Rhiannon Lloyd, family barrister at 4PB, said it may be cathartic to cry “I’ll see you in court” but these may be the most expensive words you ever say, costing tens of thousands of pounds. “Mediation, arbitration and collaborative law are less stressful than slugging it out in court, and you can deal with matters when it suits you rather than following a court-dictated timetable,” Lloyd said.

You are also more likely to be able to face your ex once it is over, important where children are involved. This also applies to a second divorce, especially if you have not recovered financially from the first. “Usually it will be easier to identify what property is separate, as it has already been quantified and obligations to previous spouses take priority,” she said.

WOMEN MISS OUT

All assets must be taken into account, including property and pensions, otherwise women in particular can lose out. At age 50, women have on average just £56,000 in their pension pot, which is half the £112,000 saved by men at the same age, and the gap widens with age, according to pension provider Aegon.

David Everett, partner at pensions consultancy LCP, said many family law practitioners either overlook pension wealth, or fail to have it properly assessed: “Too many lack in-depth understanding of how pensions are treated on divorce, despite specialising in divorce matters.”

Divorce can also be unfair if one partner is far wealthier and can afford the best legal advice. Quanta Capital managing director Simon Dawson said dependent spouses often struggle: “They do not have the funds to pay for legal help when it is really needed, during the actual proceedings.”

Specialist litigation finance, sometimes called matrimonial finance, allows one partner to borrow money to pay for legal advice, which they can repay from the eventual settlement. He said: “This minimises stress and increases the chance of an early agreement.”

TAX CHANGES

A proposed change to the law could make divvying up family assets even harder, warned George Williamson, co-founder of family law specialist litigation funder Level.

Currently, people who move out of their home have 18 months to sell without facing a capital gains tax (CGT) bill. Chancellor Philip Hammond may cut that to nine months in a crackdown on landlords that could unwittingly punish divorcing couples.

“Selling within nine months will be unachievable during complex divorce proceedings,” said Williamson. This could leave people facing an unavoidable CGT bill running into tens of thousands of pounds, further reducing the assets to divvy up.

‘Without a degree of civility divorce is incredibly stressful and legal bills can cost thousands’

REMARRIAGE DANGER

Growing numbers of older people are getting remarried, but this can bring as many legal difficulties as divorcing.

Hethertons Solicitors head of private client Barbara Stephens said when you marry, any existing will is revoked: “Unless you make new wills, children from a previous marriage could be disinherited in favour of your new spouse, who is likely to be your main beneficiary under intestacy rules.”

The law states that the spouse will receive £250,000 from the deceased’s estate, and all personal possessions, provided they survive the deceased by 28 days. “They are also entitled to half the remaining estate, with the other half divided equally among surviving children,” Stephens said.

This could leave your children with a shrunken inheritance, causing huge family rows, she warned.

If remarrying or registering a civil partnership, take legal advice to draw up a will that reflects your wishes and protects your intended beneficiaries.

Divorce is costly and painful at any time of year, but try to keep conflict to a minimum. When couples fight there is only one winner: their lawyers.