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Money and divorce: 10 steps to take back control


In our 40s, we’re more likely to be amassing more wealth. For example, mortgages being paid off, higher salaries, kids perhaps flying the nest and investment pots swelling. 

But it is statistically when we’re mostly likely to get divorced too. The average age at divorce for men is 46 while for women it’s 43, according to government statistics.

Affluent people that stay married tend to be better off. The average wealth of married affluent people is currently £780,405 compared to £629,826 for divorced people, according to research conducted by Handelsbanken Wealth Management.

Most of us are better off in our 40s but this is typically an age when many couples file for divorce

Most of us are better off in our 40s but this is typically an age when many couples file for divorce

It’s a gap of £150,000 and this number is set to increase. Handelsbanken says the impact on wealth 10 years ago was £121,378 with married people worth an average £612,500 compared to £491,121 for those who were divorced.

The reality is that divorce stings all couples regardless of income and wealth. This is mainly due to expensive legal costs and households dividing into two, with two sets of energy bills, council taxes and transport costs to contend with.

There are things you can do to reduce the financial impact during and after a divorce and to regain some or even all your wealth back.

Regaining wealth back after a divorce is unlikely to be achieved instantaneously but these 10 steps could help soften the blow

1. Get financial advice 

OpenMoney’s latest Advice Gap report highlights that only five per cent of people were offered financial advice when getting a divorce.

Anthony Morrow, founder of OpenMoney, says: ‘It’s not possible to say how long it will take to recover financially from a divorce as each person’s circumstances and financial goals differ. 

‘If you set yourself a goal, an adviser should take a holistic view of your finances and be able to create a plan to help you achieve it.’

2. Invest the money

It may be tempting to use any lump sum or regular payments for luxuries like holidays. But to recover your wealth, advisors recommend investing the money.

Help with financial advice and planning

Emma Watson, head of financial planning at Rathbone Investment Management, says: ‘Investments tend to outperform cash over the long term, so you may consider investing some of your lump sum or ongoing maintenance. 

‘With knowledge of your future financial goals your financial planner can help here too. 

‘The financial planner can then work with an investment manager to help you put cash that is not needed in the short term to work for the long-term.’

Reena Mistry, financial advisor at Flying Colours, adds: ‘No matter how small the amount ensure that your investments are held as tax efficiently as possible and that you are using the available tax allowances.’

Consider any workplace benefits too. Mistry says: ‘Opting into your workplace pension can also help you accrue valuable pension benefits, especially as the employer also pays into the pension plan.’

Reena Mistry of Flying Colours says opting into your workplace pension can help you accrue valuable pension benefits, especially as your employer pays into the pension plan

Reena Mistry of Flying Colours says opting into your workplace pension can help you accrue valuable pension benefits, especially as your employer pays into the pension plan

3. Don’t settle disputes in court

Dragging your divorce battle through the courts can be very costly. A settlement reached by mutual agreement is quicker than fighting it out in court and can also save you from the emotional damage you could suffer.

James Brien, author of ebook ‘How to avoid common mistakes that can delay divorce’, and founder of Easy Online Divorce, says: ‘A disputed financial divorce settlement will cost spouses somewhere in the region of £15,000 to £25,000 each in legal costs.’

‘With so much at stake, we urge our clients towards a collaborative approach, whether between themselves or via mediation.’

Many companies now offer legaltech services which, through the use of artificial intelligence software, can also slash the cost of legal advice.

4. Don’t buy a home like the one you had

As a couple with two incomes, you were able to afford a better home. But now that you’re on your own, don’t be tempted to buy a similar home to the one you had if you’re bringing in less.

It is particularly important that those with a defined benefit pension recognise how valuable this important financial asset is and make plans for how it will be split 

Mistry advises: ‘There may be a temptation to buy a house like the marital home or to keep the marital home, even if it includes borrowing more, but this may not be feasible based on one income, so be realistic about the type of house you can afford. 

‘Seek advice as to how much a mortgage lender would let you borrow. Be realistic and purchase something that is more affordable.’

Amy Harris of Brabners says where possible the family court will seek to achieve a clean break

Amy Harris of Brabners says where possible the family court will seek to achieve a clean break

5. Negotiate and don’t split it all 50/50

Many believe that when it comes to divorce the home, savings, pensions, and businesses will all be split 50/50. But this can be negotiated.

Teresa Cullen, partner in Fladgate’s Family Law practice, says: ‘It doesn’t mean that with savings and pensions that you have to get a scalpel to get 50 per cent of each but what you could do is offset savings for a pension.

‘Or you might find that someone will keep the family business and in return for that agree that the other spouse can keep a greater share of the house, pension or savings. People generally know what decisions would suit them better than a court would.’

6. Return to work

Many stay at home parents may find it hard to return back to work, but this is one of the easier ways of gaining some wealth back if you manage your costs correctly.

Brien says: ‘Often a person’s most important asset is their earning capacity, as this helps them build rather than eat into their retirement fund.

James Brien of Easy Online Divorce says disputed divorce settlements can cost between £15 and £25k

James Brien of Easy Online Divorce says disputed divorce settlements can cost between £15 and £25k

‘While divorce settlements seek to even out inequalities between separating spouses, it is safe to say that current earning potential is going to be a strong indicator of the amount of wealth you’ll gain post-divorce.

‘Gaining wealth after divorce takes effort, but for many, divorce can actually increase their focus and drive in their chosen career.’

If you’re close to retiring you can still join the workforce as it’s no longer uncommon or taboo to work well beyond pensionable age. 

Leon Diamond, chief executive of Livemore Capital which specialises in mortgages for the over 50s, says: ‘Since the change in pension age in 2010 employment rate of women aged between 60 to 64 has increased from 34 per cent to 51 per cent in 10 years. We see over 30 per cent of our single female [clients] working past state retirement age.’

7. Don’t give up on a pension easily

Sometimes, there’s so much focus on property during a divorce that spouses are often keen to exchange their right to their partner’s pension, just to keep the ex-marital home.

Shona Lowe, financial planning expert at abrdn, says: ‘When it comes to getting the valuation, remember that only the person who is the member of the pension scheme, or who has taken out the pension, can ask for this.

‘It is particularly important that those with a defined benefit pension recognise how valuable this important financial asset is and make plans for how it will be split. The value of this is based on how many years you’ve worked, and the salary you earned – so it’s something many feel precious about.’

8. Make sure division of assets have been properly agreed

Amy Harris, family law specialist at Brabners, says: ‘Where possible the family court seeks to achieve a clean break on divorce. The advantage of this is that any future wealth can be protected from any future claims by a former spouse.’

Jayne Martins, a partner in the Family Law team at Royds Withy King, explains: ‘As long as the separating couple have agreed the division of assets and it has been embodied in a court order or separation agreement then it is not possible, save in very limited circumstances, to revisit a divorce settlement in the future, even if one of them comes into wealth following the settlement.

‘Any capital or pension split can never be revisited. However, if there are spousal maintenance payments, these are always capable of review and can be varied upwards or downwards depending on the circumstances.’

9. Consider the tax implications

Different options for dividing pensions have different tax implications. Lowe warns: ‘The ability to share or offset pension assets can provide welcome flexibility and can help structure a settlement in a way that is tax-efficient.

‘However, if you chose to do this, the pension will be taxed on the owner’s income. 

‘So, if your ex-partner owns the pension you need to consider the tax being paid on their salary. You might end up paying more tax than you would on your own income. 

If you’re confused about what your change in circumstances might mean for your pension, speak to your pension provider.’

10. Consider free advice services

Legal aid is rarely available for divorces because it was scrapped in 2013. However, it is still available in certain cases where people suffer from domestic violence, abuse, or child abuse.

Some law firms may offer a free initial consultation that you can take advantage of. You could also consult a law centre if you’re on a low income. 

They operate on a not-for-profit basis and you can find a local one at lawcentres.org.uk.

There are also some lawyers that will take on cases on a ‘pro bono’ basis – meaning they will work on divorces for free. The best time to find out more is during pro bono week, which takes place in November every year in the UK.

Find an adviser

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