With a rise in divorce rates among over 60s, securing a stable financial future is essential for separating couples especially those looking to retire. Often a great emphasis is placed on the emotional impact of divorce; however practical issues such as the division of financial assets are of paramount importance. It is no secret that divorce or separation is both an arduous and potentially costly process for those involved, which unfortunately can continue to effect ex spouses long into their retirement.
Research conducted by financial services group Prudential has highlighted the detrimental effect of divorce on retirement funds and pensions. The results published reported that those who had previously been through the breakdown of a marriage could expect an annual loss of £2,100 from their retirement income. Furthermore Prudential’s study also showed that divorcees should expect to carry a larger amount of debt in comparison to those who were still married, causing them to delay the date of their retirement.
It is essential that those going through a divorce are well informed of the various financial options available to them to ensure they receive a fair settlement. In order to achieve this, divorcing spouses must attempt to remove themselves from the emotive issues and adopt a practical view when negotiating the division of monetary assets. By following these 4 steps you can secure your financial interests and move forward with the next stage of your life.
1) Down sizing property
Understandably, many divorcing spouses often have a strong emotional attachment to the family home especially where children are involved. However serious consideration must be given as to whether you can afford the financial burden of taking on a mortgage without the support of your partner’s income. Although initially it may seem difficult to leave a place where you have so many fond memories, taking a share of your partner’s pension and downsizing to a smaller property can ensure you have sufficient funds to support you into your retirement by significantly reducing your annual outgoings.
2) Dividing retirement income
It is essential that the value of yours and your partner’s pension is taken into account when reaching a financial settlement. Dividing pensions is highly complex and requires technical skill and expertise, seeking advice from a financial advisor and a specialist family law solicitor is essential in deciding a fair settlement. Typically couples opt to divide the total of their pension pot; however where one spouse is the sole provider or main contributor parties should look to take a fair share of the annual retirement income. In cases where one party does not have the same earning capacity as their spouse this will ensure they receive the same level of income providing additional financial security into retirement.
3) Managing joint debts
Naturally during the course of a marriage couples invest in joint accounts and loans, of which both parties are equally responsible. It is essential separating partners are aware of full extent of their financial circumstances, including any debts acquired during the relationship. Further research by Prudential showed that divorcees should expect to retire with average debts of £22,100. Closing joint savings accounts at the earliest opportunity as well as consulting a specialist solicitor regarding the division of monetary assets can limit the adverse impacts outstanding debts can have on your final settlement.
4) Finalising financial arrangements
Obtaining a consent court order will prevent the other party from making further financial demands once the marriage has formally ended. This was recently demonstrated by the case of Wyatt v Vince where the court granted the ex wife of wealthy business man Dale Vince permission to pursue a financial claim 20 years after the marriage had broken down. For further information see here.
Following the breakdown of a marriage the sharing and division of savings can be extremely complex with there being no set formula to follow. Each case turns on its own facts. Our family law solicitors specialise in the division of assets, including pensions, allowing us to propose settlements to achieve a successful solution in line with your objectives. For further information or to speak to our dedicated family law team contact Farleys on 0845 050 1958. Alternatively please complete an online enquiry form.