MoneyMagpie Editor and financial expert Vicky Parry shares tips for the financial aspects of the stressful process of divorce
Nobody goes into a marriage expecting divorce, which is why it can become a complicated process to separate your finances when you decide to split.
But there are some important things you need to be aware of when you’re planning to divorce your spouse or civil partner, to make sure you save money in the process and avoid long-term headaches.
File for free
It costs £612 to file for divorce in the UK. However, there are ways you can get financial help to cover the fee, which in some circumstances could cover the full cost.
If you apply on your own for the divorce, your finances will be taken into account; if you file jointly then both of your income and savings will be considered. People who claim certain benefits, such as Universal Credit, can apply for a fee reduction or waiver.
You will need to have less than £4,250 in savings to qualify for the divorce fee reductions, and either less than £1,420 a month income as a single applicant or a joint income of under £2,310 for a joint application. You can add extra allowances for children, at £425 a month for children under 13 and £710 for children 14 and over.
Separate benefits claims
When you file for divorce, this will change your eligibility for certain benefits. It is important that you report these changes as soon as possible, to make sure you’re receiving everything you are entitled to.
Sometimes, this means you might get less than you have before. For example, if you have had a joint Universal Credit application and separate, your personal monthly amount will reduce to a single person’s allowance. Where children are involved, you will need to be clear who claims additional support on their claim as you cannot both claim full allowances for children.
You may be eligible for a higher amount, for example if your partner had more savings than you which reduced your entitlement to means-tested benefits. So, it’s important to report your separation as soon as you can.
Get a solicitor
Some couples have a straightforward no-fault divorce where they’re still on good terms but don’t want to be married anymore. This can make it easy to arrange who gets what, and ensure a fair split of finances.
However, if children are involved, or other dependents such as vulnerable adult siblings or parents who live with you, or there is some risk of animosity during the divorce process, a mediator is important. It will cost some money but could save you from making very big financial mistakes.
A solicitor will make sure you get what you are entitled to receive in a divorce, including things you may not have considered, such as a share of pension pots (more on that below).
Change your current account ASAP
Once you have made the decision to separate, make moves to untangle your finances. The first step is to set up a separate current account and change your salary and other income payments to this.
Joint accounts mean each person owns 50% of the account balance, no matter who paid in what. So, having a separate one protects your finances moving forward.
Be aware that your former spouse can withdraw money from the joint account at any time while they are named on it, and you will need both signatures to remove one of your names from the account.
Be careful about new living arrangements
Selling a house while going through a divorce adds stress upon stress, so try to avoid it unless your split is acrimonious. However, be aware that if the property is jointly owned, neither spouse can force the other to sell or move out during the divorce process.
If one partner owns the property, the other who is not on the title deeds can apply for Home Rights, which allows them to stay until the divorce is finalised.
You may choose to move out to reduce adding more stress to the situation. However, you should know that if you move in with a new partner during the divorce process, their income could be considered during any financial settlements.
Consider claims on pensions
Many people don’t realise that your pension could be up for grabs in a divorce settlement. This is particularly true if your spouse was a stay-at-home parent or carer for dependent so that you could work full-time. Their labour as a stay-at-home parent means they will not have been able to contribute to a pension from a salary.
Or, if they did regular unpaid work to support you, such as business administration at home to support your entrepreneurial ventures, they could put a claim on some profits or pension.
That’s why it’s important to get a solicitor that specialises in divorce or an Independent Financial Advisor, to help mediate and determine how financial assets should be split.
Update your will
Getting divorced does not automatically change your will. This means that your money and estate could end up going to your former spouse, even if you have been divorced for many years.
Changing your will also ensures that dependents such as step-children cannot lay claim to your future estate if you no longer provide for them. You may want to ensure they continue to be provided for by your estate, but it may be that you need to re-word your wishes in your will to stipulate a different percentage, trust, or set financial amount to reflect the changes in your life.
Divorce gets expensive the angrier you get
Some divorce situations are filled with understandable strife and anger. But high emotions can make people act rashly and be petty. For example, a scorned partner might take all the money from a joint account to leave their ex high and dry.
Wherever possible, try to get a mediator as early as possible in the divorce process if you think things might not be easy to manage yourselves. Their fee will save you a lot more heartache – and possibly thousands of pounds in bad divorce decisions, too.
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