With the introduction of no fault divorce in April of this year, many couples are now choosing the DIY route for their divorce in an effort to keep their relationship amicable. There are many positives to the change in divorce law, particularly if there are children involved, as being able to divorce without blaming one party, or waiting two years, sets the tone for a less hostile divorce, and a better future co-parenting relationship.
However, finalising your divorce online and receiving your Final Order does not end your financial relationship with each other and you may not realise the extent of your financial claims against each other. Your marriage is not just confirmation of your romantic relationship with each other, it creates a financial relationship too (remember that old saying – what’s mine is yours!). In fact, legally ending your marriage (i.e., the process of getting divorced) is the straightforward part, and legally ending your financial relationship is the (usually) more difficult part. The only way to end your financial claims against each other is by a Court Order, either by a Consent Order (an agreement you have reached that is drafted into an order and sent to Court for approval) or by the Court making a decision for you.
If you have agreed with your spouse that you’ll finalise your divorce online yourselves, perhaps jointly, you may feel that getting some legal advice will be seen as a confrontational step. It really isn’t though: taking advice from a solicitor will not mean that you will end up in financial court proceedings at all, in fact the opposite is the case. The legal system for finances on divorce is designed to keep cases out of court, channelling couples towards amicable agreements at all times. It is really important that you know how your finances should be divided to ensure that your agreement is fair and meets your future needs.
Pensions in particular are often overlooked when divorces proceed without any legal advice. Within a financial settlement, the sharing out of pensions with your spouse may be one of the most important, and valuable areas – a percentage of one spouse’s pension pot is transferred into a pension pot for the other. A recent Which survey revealed that of the 948 people who have divorced since the law changed in May, 71% didn’t include pensions in their financial settlement. Research by the University of Manchester showed that the average pension for men aged between 55 and 64 was £147,224, yet the average for women of the same age was £49,410, and the difference between the two averages increased in the next age bracket.
A common agreement that people reach between themselves when they get divorced is that one person keeps more of the equity in the family home, and one party keeps their larger pension (known as offsetting). However, offsetting the larger pension, or overlooking pension sharing completely can lead to a great disparity of income at retirement age with one spouse potentially in financial hardship while the other spouse has more than enough to meet their retirement needs. Taking legal advice on pensions will allow you to know how best to divide all of the assets so that you and your ex will have the same level of income at retirement.
If you’re going through divorce now, or have done so recently using the new online procedure, but need to understand how best to protect yourself when arranging the financial side of things, do get in touch to arrange an initial meeting with one of our team.
The majority of divorcing couples aren't including pension in settlements, with fears that new no-fault divorce laws could make the problem worse