Divorce is not just an emotional upheaval; it so often leaves a toll that has a lasting impact on your financial health. In such a turbulent moment, a financial planner taking the mental burden of sound financial thinking before, during, and after divorce can make all the difference. Here’s the inside scoop of the true financial cost of divorce, and how you can combat it.
The true cost of divorce: in numbers
- 15% go in debt to cover divorce
- 45% see their income shrink post-divorce
- 280,000 recent divorces stalled due to money concerns
- 18% need time off work due to the emotional toll – compounding the financial strain
- Over £9,000 Average annual income drop in the first year post-separation
Financial unfairness in divorce
41% of people perceive the divorce process as financially unfair, feeling that one party is favoured over the other. Despite this widespread sentiment, only 7% seek financial advice during their divorce. A lack of professional guidance can often lead to significant financial missteps that lead to a feeling of unfairness, and ultimately have long-term consequences.
3 financial pitfalls you should consider
- Overlooking pensions: While 50% of divorcing couples consider the value of their family home, only 13% take pensions into account when dividing assets. In fact, 23% of couples actively waive their rights to the value of pensions altogether. This oversight can be detrimental, especially for those who take on responsibilities such as childcare during the marriage, leaving them with less in their own retirement pot and struggling in later life.
- Exposure to future financial claims: Only 31% of divorcees sign clean break orders, a legal agreement ensuring both parties' financial ties are completely severed and that after the divorce, neither person can make any future financial claims against the other. The remaining 69% that haven’t signed clean break orders are exposed to future financial claims which can lead to unexpected financial burdens down the line.
- Forgetting wills and beneficiaries: Nearly 900,000 UK divorcees have not updated their will to exclude a former partner, and 11% have not removed their ex from being their pension beneficiary. This oversight can result in unintended inheritance disputes and financial complications.
Don’t become another statistic: how you can achieve a fair outcome
Financial advice can make all the difference to help you avoid these pitfalls and ensure you don’t become just another statistic of financial unfairness during the divorce process. At Quilter Cheviot Financial Planning, our experts guide you through every step – from understanding the full scope of your assets to securing your financial future – to ensure you get an outcome that is financially in your favour.
Our dedicated team is here to provide the support and advice you need to navigate this challenging time, so you can make informed decisions that protect your financial wellbeing. Don’t let financial missteps add to the emotional burden of divorce – let us help you achieve a fair and secure outcome.
Sources:
Financial remedies on divorce and dissolution: Summary of scoping report
Law Commission report on financial remedies in divorce: Mishcon de Reya comments | Latest
Reforming Financial Remedies on Divorce and Dissolution - IBB Law