Did you know Monday, 8 January, was “Divorce Day”? According to the legal sector, the first working Monday of the year always sees a spike in divorce enquiries. In 2022, the new “no-fault” divorce legislation came into force. We thought we’d look at the impact from the new divorce rules on financial planning and share some things to consider.
Getting a divorce, or a dissolution of a civil partnership, is an emotionally challenging time. The stress of a relationship breakdown can prove difficult when you are attempting to sort out your finances. Although the new divorce rules haven’t made proceedings faster, it’s now a much simpler process. However, this has increased the risk of people rushing through proceedings without considering their finances.
Managing financial matters efficiently before a divorce will help you protect your money, property and assets.
“No Fault” Divorce
In April 2022, the Divorce, Dissolution and Separation Bill became effective. The government wanted to align divorce rules with family justice to reduce conflict and disputes. One main aim was to avoid confrontation where children are involved. You no longer have to provide a “permissible reason” and evidence for why your relationship has broken down. In the past, you would have needed to claim adultery, unreasonable behaviour, desertion or separation.
The new rules also make the application process easier without the possibility of one person contesting the divorce. As you can now make a sole application for a divorce, this has given those trapped in abusive marriages a much-needed lifeline.
There is a 20-week cooling-off period, known as a “meaningful period of reflection”, which enables couples to reverse divorce proceedings. This time frame also gives people more time to get their financial and child arrangements organised.
Financial agreements
Despite the 20-week cooling off period, there’s still a real risk that people overlook important aspects of their finances. This has become particularly evident in situations where people have separated and have agreed informal arrangements. Even when couples write their own financial agreement, this isn’t legally binding unless a judge-approved Consent Order is issued. The process of dividing assets could turn into a dispute later down the line.
Ideally, conversations around how to split shared money, property and valuable possessions need to happen before proceedings start. This enables both parties to seek financial advice so they each understand the total value of their assets.
Leaving financial arrangements until after the Final Order of a divorce or the dissolution of a civil partnership is risky. There’s a chance that your ex-spouse or ex-partner could raise a claim on your assets in the future. Knowing how much you have will also enable you to plan ahead, for example, allowing you to make preparations to move out of a shared home.
Financial planning for a divorce
When our team carry out a financial review for a client getting divorced, we will check the following:
- Salary, income streams or business revenue, along with monthly outgoings.
- The value of any property, including second homes, holiday lets and rentals.
- Any valuable shared possessions, such as cars, artwork, antiques, etc.
- Joint bank accounts, savings and investment portfolios.
- Private and workplace pension schemes.
- Overall value of their estate.
We can work alongside our clients’ solicitors to help them draw up a suitable financial agreement. If you are thinking of getting a divorce and need legal advice, we can put you in touch with one of our trusted legal partners.
Financial advice, Nottingham and Lincoln
It’s important to get a financial review before you start divorce proceedings. You will be better prepared for your future by seeking professional financial advice. Getting a financial plan in place will give you some much-needed security, so you can focus on the legalities.
Balance: Wealth Planning has offices in Nottingham and Lincoln. Our qualified and experienced team will help you navigate through the financial aspects of a divorce. With our support, you can look forward to a securer financial future.
If you’re planning to divorce, get in touch to speak to our financial planning team.
https://professionalparaplanner.co.uk/how-new-divorce-laws-affect-financial-planning/
https://www.shbsolicitors.co.uk/post/what-are-the-new-divorce-rules
