New research from Legal & General Retail to mark Divorce Day (Monday 6th January) – where family lawyers report a spike in inquiries following the festive season – has found that 280,000 recent divorces were postponed due to financial pressures.
This means that 17% of all divorces that happened in the last five years were deferred because of money worries. Couples across the country stalled their separation because of income concerns (13%), rising living expenses (12%) and the cost of divorce (12%).
However, once couples did part ways, they were often worse off financially. On average, half of all divorcees (45%) see their incomes shrink in the year after divorce, by an average of 30%. This can leave someone with £9,229 less a year to live on as they face increased expenses from living costs (29%), separation costs (23%) and even from taking time off work to deal with the emotional fallout of breaking up (18%).
What’s more, in two out of five divorces (41%), people felt that it wasn’t an equal divorce financially, with one party being favoured. Despite this, just 7% of people will consult a financial adviser as part of their divorce, leaving many vulnerable to money missteps that could have long-term consequences.
While divorcing couples often consider the value of their family home (50%), 13% consider pensions when dividing assets with their partners and 23% actively waive their rights to the value of their pension. Gavin Scott, a Family Law Partner at Freeths said:
“The research shows how essential it is to obtain legal advice before dealing with the finances on divorce, in particular to ensure your future financial needs are adequately met, where possible.
Spouses may ideally want to delay their inevitable divorce, but for some separated couples there may be no choice but to divorce due to the higher unsustainable costs of maintaining two households, especially where there are young children and one main breadwinner”.
Furthermore, the delays in divorce may go some way to explaining the increase in ‘Silver Separations’ we are seeing amongst spouses in their late 50s and early 60s. That, coupled with approaching retirement and not wanting to spend their remaining gold years in an unhappy relationship.”
Only 31% of people who have divorced have signed Clean Break Orders, leaving two-thirds (69%) exposed to future financial claims from their ex. Also, one in 10 people who have divorced (897,000 – 11%) have either delayed or forgotten to remove their ex-partner from their will, risking unintended inheritance disputes. Many people have also forgotten to remove their former spouse as the beneficiary to their pension (11%) or life insurance (10%).
