Guide to Managing Your Finances During and After Divorce

Managing your finances during a divorce can add an additional layer of complexity at a difficult time. As an experienced family law solicitor, I often guide clients through the financial maze that accompanies divorce. This article will provide you with essential information to help you understand and manage your finances during and after divorce.

During the divorce process, both parties have a responsibility to provide full financial disclosure. This includes income, assets, debts, and expenditures. Transparency is crucial for a fair division of assets and determination of support obligations. You are also responsible for maintaining joint financial obligations, such as mortgage payments, utility bills, and any other shared debts until these can be divided or resolved in the divorce settlement. Additionally, consider seeking professional advice to help manage any immediate financial needs and obligations during this transitional period.

The division of assets in divorce is a significant concern for many. The court aims for a fair distribution of assets, which doesn’t necessarily mean equal. Factors such as the length of the marriage, the financial needs of each party, contributions to the family (both financial and non-financial), and future earning potential are considered. Assets include properties, savings, investments, and valuables. Both parties should work towards an amicable agreement, though if this is not possible, the court will make the final decision.

The family home is often the most significant asset and a major point of contention. Whether you can keep the family home depends on various factors, including your ability to afford the mortgage on your own, the needs of any children involved, and your ex-spouse’s willingness to transfer their interest in the property. Sometimes, one party may buy out the other’s share, or the home may be sold with proceeds divided. In cases involving children, courts may favour arrangements that provide stability, such as allowing the primary caregiver to stay in the home until the children reach adulthood.

Child maintenance is crucial for the child’s well-being and covers their living costs. The primary caregiver is usually entitled to receive child maintenance from the other parent. The amount is typically calculated based on the paying parent’s income, the number of children, and the level of overnight contact with the children. You can agree on the amount privately, use the government’s Child Maintenance Service (CMS). Regular reviews of the maintenance arrangement are advisable to ensure it remains fair and adequate as circumstances change.

Spousal maintenance may be awarded to support a lower-earning or non-earning spouse during the process which is called interim maintenance and post-divorce. It’s calculated based on factors such as the length of the marriage, the financial needs and resources of each party, the standard of living during the marriage, and contributions to the marriage (including homemaking and childcare). The goal is to allow the recipient to adjust to their new financial circumstances and become self-sufficient over time without undue hardship. Maintenance can be for life or for a specified term.

Pensions are often one of the largest assets in a marriage and must be considered during divorce proceedings. There are several ways to handle pensions in a divorce: offsetting the value against other assets, pension sharing orders (where the pension is divided at the time of divorce), or pension attachment orders (where payments are made when the pension is drawn). It is crucial to get a valuation of the pension and seek professional advice to understand the best approach for your situation.

• Taking Control of Your Financial Future: Post-divorce, taking control of your financial future is essential. Start by creating a detailed budget to understand your income, expenses, and financial needs. This will help you adjust to your new financial reality and ensure you live within your means.
• Adapting to New Financial Realities: Divorce often leads to significant changes in your financial situation. Be prepared to adapt your lifestyle and spending habits accordingly. Consider seeking financial advice to help plan for your future, including investments and savings strategies.
• Update Legal Documents: Update your life insurance policies, wills, and any other legal documents to reflect your new circumstances. Ensure your beneficiaries are current and your estate plan aligns with your new financial status.
• Review Debts and Credit: Take stock of any joint debts and work to resolve them. Monitor your credit report to ensure all changes are correctly reflected and to safeguard against any financial mishaps.
• Build an Emergency Fund: Start saving to build a financial cushion for unexpected expenses. This is crucial for achieving financial stability and peace of mind post-divorce.
• Seek Professional Advice: A family law solicitor and financial advisor can provide valuable insights and help you create a sustainable financial plan tailored to your new life.

Managing your finances during and after a divorce can be challenging, but with careful planning and professional advice, you can navigate this period successfully. Remember, taking proactive steps and seeking support can help you secure a stable financial future for yourself and your children.

Ready to take the next step? As leading family lawyers in Milton Keynes, our team of family law specialists can advise you about your divorce. As well as our head office in Milton Keynes, we also have solicitors in Bicester, Watford, and Central London where we can arrange appointments to see you in person. Talk to us in confidence and find out where you stand. Get in touch – we’re here to help.

This article is intended for the use of our clients and other interested parties. The information contained in it reflects the author’s view and is believed to be correct at the date of publication. However, it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional legal advice.