Financial planning through divorce

Whenever anyone thinks about financial planning through divorce, one of their first thoughts will be that it will be expensive.

But does that have to be true?

It’s inevitable that there will be costs associated with divorce, and that assets will usually be divided between the parties.

However, there are many steps that can be taken through financial planning to minimise the costs..

Practical steps to take when your marriage breaks down

There are a number of practical steps that you can take that will help you get through the divorce.

Firstly, you should close all joint accounts, and separate your finances from those of your spouse, as far as possible. Obviously, if a joint account remains open then your spouse can drain it, including any money that you deposited into it.

Secondly, gather together details and paperwork in relation to all of your assets (including pensions) and liabilities. This will help you fully understand your financial position, and you will have to disclose these details.

Thirdly, make a budget. This will help get you through the divorce, and beyond. The budget will tell you your financial needs, which will be a vital piece of information when the financial settlement is decided.

Lastly, refrain from making any major financial commitments, until the divorce settlement is finalised. You may find that you will not be able to afford those commitments.

Preventing sale or re-mortgaging of matrimonial home

In most divorces the matrimonial home is the most valuable asset, and its value will usually be divided between the parties. Obviously, you will want to protect the asset, pending finalisation of the divorce settlement.

This is not a problem if the home is owned by you and your spouse jointly, as your spouse cannot deal with the property without your agreement.

But what if your spouse is the sole owner of the property?

You have a right to occupy the matrimonial home, even if your spouse is the sole owner. You can protect that right by registering a notice of home rights at the Land Registry. This will also effectively prevent your spouse from selling or re-mortgaging the property, as the buyer or lender would not proceed with the transaction until the notice is removed.

Saving on fees

Various fees are likely to be incurred in the course of the divorce, from court fees to expert’s fees.

The amount of these fees can be quite substantial. There is currently a £593 court fee to issue the divorce application.

A simple way to save on these fees through financial planning is to share them with your spouse.

The divorce application can now be made jointly by both spouses, and they can agree to share the court fee.

Similarly expert fees can be shared, by the parties agreeing to instruct a joint expert, and to be bound by the expert’s valuation.

Take advice!

It is essential that you take expert legal advice. Obviously, the advice will cost money, but it may save you far more in the long run.

For example, good advice will help you to avoid unrealistic expectations, or arguing matters that will not be relevant to the outcome, such as the reasons for the marriage breakdown. If you have a good idea of what you may be entitled to, and avoid arguing over irrelevant matters, then you are likely to make smart financial planning decisions and to make a substantial saving on costs.

You may also need to take financial advice, for example in relation to pensions. Your lawyer will be able to put you in touch with a financial adviser.

Agree matters!

Matters can be agreed with your spouse directly, through solicitors, or with the help of out of court solutions, such as family mediation and collaborative family law.

Note that before you can agree matters both parties will have to make full disclosure of their means, so that everyone knows what is at issue. It is therefore best to make this disclosure as quickly as possible.

If you can’t agree matters, consider arbitration, whereby the parties agree to have their case decided by a trained arbitrator, and to be bound by the arbitrator’s decision. This can be far cheaper than contested court proceedings.

How much does a divorce cost?

There is of course no answer to this. The amount that the divorce costs will ultimately depend upon the issues involved, and upon the parties. As indicated above, if they are able to agree matters then the costs will be relatively little. On the other hand, if they argue about all matters then the costs will quickly skyrocket.

How can we help?

For further information on how we can help, please see our Divorce Finances page.

Walker Family Law is an award-winning family law practice, recognised as one of the leading family law firms in the South West of England with services covering family law & mediation, divorce law, child-law and arbitration.

Please contact us if you require any further information.