5 February 2024
Navigating divorce finances
Divorce is often a challenging and stressful process, especially when it comes to dividing financial assets and property.
A recent Nuffield-funded research study titled “Fair Shares? Sorting out money and property on divorce” sheds light on the intricacies of this issue in England and Wales. Led by Professor Emma Hitchings at the University of Bristol, the study aims to provide a comprehensive understanding of how the current legal framework functions and its impact on divorcing couples.
Naim Qureshi, Senior Associate, from the Family and Divorce team at Blaser Mills Law outlines key findings from the study.
Financial context
Contrary to media portrayals, the study reveals that most divorcees involve modest assets, with a median total asset pool of £135,000. This means that the average picture for divorcing couples is far removed from what you might see in the news.
Financial vulnerability is pronounced, especially among women and mothers. This was partly because they were less likely to work full time and on average earned less than their husbands primarily because of the impact of having children on their employment. They also tended to accumulate less pension during the marriage as a result of this.
Lack of financial and legal knowledge
The study also highlights the lack of awareness among a significant number of divorcees regarding the family and their ex-spouses’ finances which creates further vulnerability. Although 60% of divorcees turn to a solicitor for advice, 40% do not and the study stresses the need for authoritative, clear, and accessible information sources to navigate the complex landscape of financial settlements on divorce.
A personalised approach
The study underlines the need for a personalised approach in reaching financial arrangements during divorce. Although the factors that are taken into consideration when looking at a financial settlement are set out in legislation, because of the individual circumstances, no two cases are the same so it’s important to seek help from a professional that will offer tailored advice.
Sorting out finances
The research unravels confusion around dispute resolution methods and legal support, with cost concerns deterring many from seeking legal assistance. Only 32% of divorcees used legal services.
Worryingly, 36% of divorcees stated that they had not made any financial arrangement with their ex-spouse when they divorced. The study highlights the potential benefits of legal oversight in ensuring fair financial arrangements and when using a lawyer, the research showed that couples were more likely to consider the pension arrangements, on-going spousal maintenance, and a greater share of the home for the wife.
Splitting equally – is not the norm!
It’s important not to assume you will both get a broadly equal split, the study reports that only 28% of divorcees received approximately half of the total asset pool. Unequal distribution is often the case because of the individual circumstances, needs, and objectives of the divorcees.
Pensions, assets, and debts
The study highlights lack of awareness and understanding of pensions, emphasizing their significant role in determining post-divorce financial positions. Pensions are often one of the largest assets in a divorce. The research showed a lack of interest in the pension and a view that it should remain with the person who contributed to the pension.
Achieving a financial clean break
A significant proportion of divorcees aspired to achieve a clean financial break and having no financial ties with the ex-spouse. Spousal maintenance arrangements were primarily used to address post-divorce living adjustments rather than serving as a perpetual income source. Maintenance is not the meal ticket it was.
In conclusion, “Fair Shares?” provides valuable insights into the challenges faced by divorcing couples, shedding light on the complexities that influence financial decisions and outcomes in England and Wales. Understanding the intricacies of financial arrangements during divorce is essential, and the study’s recommendations aim to help divorcing couples better prepare for what may lay ahead.
For further information or advice please contact Naim Qureshi on 01494 781356 or email naq@blasermills.co.uk.