DIVORCE – REVIEWING YOUR FINANCES

It’s a fact of modern life that as many as 42% of all marriages in the UK end in divorce. The break-up can be a traumatic time for all concerned and have major financial repercussions for both parties and their family.
There are no rules governing how assets should be divided, but there’s a broad starting point of 50:50. If the divorcing couple can’t agree on the division of their financial assets, the court will decide how these should be apportioned between them, based on factors such as their age, earnings ability, property and money, and role in the relationship (e.g. breadwinner or primary carer). The needs of any children of the marriage are always considered paramount.

The marital home
One spouse can buy the other out and keep the house, or the property could be sold, and the proceeds divided. If there are children, a parent will often want to remain there with them. In which case, any existing mortgage arrangements will need to be reviewed, especially as the other partner may wish to buy their own property. It’s worth exploring all the options with us.

Pensions
Many people think that a pension solely belongs to the party who is named on the policy, but that’s not the case. A pension has to be considered in the division of assets. Pension assets can be apportioned in various ways, by:
• offsetting the value of one spouse’s fund by transferring a lump sum, or other assets to the other spouse
• splitting the pension fund into two separate pensions
• arranging that when a pension comes to be paid, a portion goes to the other spouse.
Taking professional advice can help you consider which options are most appropriate for your circumstances.

Life policies
A decision will need to be reached as to whether policies are surrendered or retained. The type of life policy held will play a key part in how any policies are settled. A single policy may be easier to settle than a joint policy, as each policyholder is likely to have the amount of cover they need already. Those with a joint policy will need to decide if they want to continue or cancel the policy and start a new single policy each.
If policies are retained, the name on the policy will need to be altered and the beneficiaries may need to be reviewed.
If maintenance is payable and funded from the income of one party, it may be appropriate to take out life insurance in case they die or become incapacitated and unable to continue to make payments.

Facing the future
Once the financial settlement has been agreed, the chances are you’ll need to reconsider your financial goals. You should think about remaking your Will too.
Knowing you’ve made the right plans for the future can play a part in helping you move forward to a new life.

Your home may be repossessed if you do not keep up repayments on your mortgage.