How to achieve financial stability after Divorce

Financial stability after a divorce is something clients desire, but there is a lot to consider in that equation and it’s something our family solicitors have supported clients with.

The general election, volatility in the housing market and pension unpredictability have affected separating couples; some will delay their divorce until life balances out a little bit more.

“Couples are often less confident to go it alone, break up the family home or chance the property market when there is a cost of living crisis, some will put off divorce during this period, however an experienced solicitor with knowledge of pension sharing and the wider financial implications can help bring stability to the split, so it’s important to get legal advice on this specific area,” said Divorce and Family Law Solicitor Lucinda McWatt.

“Both parties need to think of this as a time to look forward, to consider their financial independence and look at every aspect of divorce and separation – as only with a clean financial break can couples move on,” she added.

Joint or sole divorce application

Following the introduction of the Divorce Dissolution and Separation Act in April 2022, which allows ‘no-fault’ divorce, jointly or individually, 76% of applications were made by a sole party in 2023.  However, the average waiting time from a sole application to a conditional order was six weeks longer than a joint application (36 weeks and 30 weeks respectively) and this gives plenty of time to plan finances and for either party to make sure they are provided for.

Pensions and divorce

Even in 2024 there is gender inequality when it comes to pensions.  Research indicates that only 12% of couples consider their pension as part of the divorce proceedings, and women are significantly more likely to waive their rights to a partner’s pension as part of a divorce, however due to lifestyle choices many of them have significantly smaller pensions than their partners.

“I always tell clients that the joint value of pensions is an important financial asset in any equitable split,” said Lucinda McWatt.

“We have clients who apply for their own no-fault divorce online, but then come to us to advise on the final financial arrangements which is far preferable than one side ending up with a poor settlement.

“If a couple moves to a final divorce order before sorting financial arrangements, they can be left vulnerable in respect of inheritance, pension benefits and pension sharing orders.”

Rebuilding your financial stability after a divorce

Rebuilding your financial stability after divorce requires time, patience, and strategic planning. By taking these steps, you can regain control over your finances and build a secure future for yourself.

1. Assess your current financial situation
   • Make a list: Include all bank accounts, retirement accounts, properties, debts, etc.
   • Determine your income: Include salary and any other sources of income.
   • Evaluate monthly expenses: Track all your expenses to understand spending habits.
   • Understand your debt: Know the interest rates and minimum payments.
   • Create a repayment plan: Focus on paying off high-interest debts first.
   • Consider debt consolidation: If it lowers the interest rates and simplifies payments.
2. Create a budget
   • Income vs. Expenses: Ensure your expenses do not exceed your income. Focus on essential expenses such as housing, utilities, food, transportation, and insurance.
3. Review and Update Legal Documents – it’s important when you get divorced to make sure your Will is updated and that is something we can also help with.  At Pearson, we have a specialist Wills team to make the whole process as straightforward as possible for clients.
   • Beneficiaries: Update beneficiaries on insurance policies, retirement accounts, and Wills.
   • Estate Planning: Reassess your Will and estate plan to reflect your new situation.

“Get specialist financial advice at an early stage, even if you’re having a go it alone no-fault online divorce, a good solicitor can help with the monetary side and make sure you get a clean break,” added Lucinda.

How can we help?

For legal advice on all aspects of family law, divorce, separation and financial arrangements contact the Pearson Family Law Solicitors on 0161 785 3500 or enquries@pearsonlegal.co.uk

Subscribe to our newsletter

Please note that the information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Pearson Solicitors and Financial Advisers Ltd or any of its members or employees. Professional legal advice should be obtained before taking, or refraining from taking, any action as a result of this article.