Our lives split into different chapters, some an easier read than others, and divorce is just one arc in the narrative that is particularly unpleasant. But the good news is that no one has to face it alone. There are so many resources available to help you navigate through your divorce, making sure you come out the other side in a better position.
Divorce is often a difficult and draining process, and it is usually the first time that finances come under the spotlight. There will be a lot of changes ahead of you; perhaps you’ll have to move house or alter your hours of work. It will take time to adapt.
Understandably sorting your finances and updating your records might not be at the top of your to-do list, but there are a few things you really must do to protect your finances following divorce. This article offers a handy financial planning checklist for your next phase of life.
Post-divorce financial planning checklist
Here’s a handful of things we recommend you run through and make sure you update following your recent change in circumstances:
Changing your name
You may want to change back to your maiden name; if so, you will need to contact all of your providers including your bank, mortgage provider, pension provider, and HMRC to name just a few. You’ll also have to notify your Doctor and the DVLA too.
As with changing your name, if you’ve had to move house, you will also need to notify any providers about your change of address too. Money.co.uk have a handy moving house checklist to make sure you’ve got them all covered.
Checking your insurance life cover
You will need to review any existing life insurance. Firstly, are the policies held jointly? If so, one of you will have to take it over as a single policy or you’ll need to cancel it entirely.
It’s also worthwhile checking that the amount of cover you have; if you’ve had to increase your mortgage as a result of the divorce, your existing cover may not be enough. Also, if you have children the situation gets more complicated as you will need to ensure they are provided for on your death too.
Ensuring your beneficiaries are updated on your policies too is incredibly important. It’s better to do this directly with the provider rather than just relying on your will (which also might need updating, see below).
If you have death in service benefit through your work, make sure you ask your employer about updating the beneficiary on this too.
Rethinking your will
You should update your will to reflect your new set of wishes. Divorce doesn’t invalidate an existing will, but if it doesn’t have the correct provisions within it your estate might not be divided up how you intended it to be.
And, if you don’t already have a will in place, maybe the divorce is the prompt you need to get one. It’s especially important to have an up to date will in place to ensure that your money and possessions land in the right hands.
Read our previous blog here, for the eight reasons you should have a will in place.
Review Power of Attorney
A Power of Attorney is a document that allows you to appoint someone (an agent) to make decisions of your behalf if you’re unable to. There are two types of Power of Attorney, one that covers financial affairs and one that deals with your health and welfare.
If you have a Lasting Power of Attorney (LPA) in place, divorce will remove your ex-spouse as your attorney. If they were your only appointed attorney, or they were appointed to act jointly with another (as opposed to jointly and severally) then your existing LPA is deemed null and void, and you will need to do another.
If you don’t have an LPA, then you should consider doing one. It’s important to know someone you trust is dealing with your affairs, should the worst happen.
Updating your pension provider
As with your life cover, you need to make sure you update your death benefit nominations on your pension policies. Pensions tend to fall outside of your estate, so it’s important to make sure your beneficiaries are known to the pension provider, rather than relying on your will.
Rejigging your finances
Divorces tend to get complicated when it comes to dividing up assets. You and your ex-partner might be able to agree on who gets what amicably, however, if your finances are a little more complicated and harder to divide, then you will need help from a professional.
There are a few options if you do decide to get professional help. You can either 1) arrange for a couple of sessions with a solicitor, and then sort the filing and paperwork yourself, 2) use a mediator to help you and your ex-partner reach an agreement. Or, 3) use a solicitor to deal with the whole process. Your financial planner should be able to point you in the right direction of a solicitor you can trust.
And, if you’re expecting to receive a lump sum as part of a financial settlement, you’ll need to carefully plan how you’re going to use this money. Again, your financial planner can work with you to make these decisions, ensuring your future is as bright and secure as possible.
- The Divorce Podcast – Covering all areas of divorce in the UK. From personal experiences and the legal process/legislative updates to advice from experts on co-parenting and more.
- The Money Advice Service – Set up by the government, the Money Advice Service offers tips and guides, to help the UK public improve their finances. They have a content hub here, full of useful resources to help prepare and protect your finances in a divorce.
- Citizens Advice – Their webpage here offers a simple guide for dividing up your money and belongings when you separate, offering solutions for a variety of different circumstances.
- Professional advice – Not only will a financial adviser take care of your financial concerns, but they will also provide emotional support through the whole process so that you can focus on you and your next chapter.
If you would like some financial planning guidance around divorce, then please get in touch and speak to one of our financial planners.
We are also hosting a webinar, details can be found here, please do join us.