We know divorce is not the cheeriest subject, but it’s a reality that many people need to go through and face. It’s also very expensive as well as emotionally difficult for all involved. Any way to ease that burden and find ways of saving money in a divorce can be helpful for those going through it.
- Choosing a lawyer
- Finding the right court
- Deciding on the process
- Close financial accounts
- Don’t sell the house straight away
- Revise your will
- Check your child and tax credits
- Increase your pension contributions
- Hire an IFA
- Don’t live with a new partner yet
- Protect your mental health
Ideally, choose a lawyer who’s ‘Resolution accredited specialist’. Not only will they have the expertise required, but Resolution’s code of practice promotes a constructive and non-confrontational approach to divorce. Going through it this way may be an effective way to save money for both parties.
You might not actually need a solicitor, either. If your marriage is straightforward and you can reach a financial agreement with your former spouse amicably, it’s easy to file for divorce online without paying for a solicitor. Your divorce costs will then only be the £550 to process the paperwork – not thousands of pounds in legal fees. If you’re filing, you can choose to ask your former spouse to pay the fee: you’ll need to tick this on the form. If you’re on benefits or a low income, you can apply for help to have the fee decreased or waived altogether.
If you have any argument about who gets what, however, definitely find a solicitor who can help. It could save you thousands of pounds.
If you or your spouse is a foreign national then always think carefully about which country’s court you use. Speak to your solicitors and decide which court would best suit your needs.
Even in England, there are regional differences. Always beware of rushing into proceedings when there is foreign property involved. Get the advice you need first, it could be crucial to saving money in a divorce.
Court battles are not always inevitable and they’re certainly not desirable. Other dispute resolution models are available and could help you save money in a divorce. Consider mediation or collaborative law.
Not only are both cheaper than a court battle, both offer a much more dignified approach and self-determination. This is a good option for parties who are both still on good or reasonable terms. It also guarantees privacy as the proceedings are confidential. Most divorce lawyers will recommend you attempt mediation as court is more costly for them, too (it takes more time and doesn’t always get the best result they want).
Believe it or not, the ‘misuse’ of joint accounts/credit cards by an opposing, soon to be ex-spouse is rarely taken into account when the court makes a division of assets official. It’s wise to mutually agree to close these accounts as soon as possible, this way they don’t become complications. This helps both parties when saving money in a divorce.
After seeking and receiving legal advice, agree a monthly contribution to expenses early on. However (depending on whether you are the payer or payee) be careful not to establish a situation that will result in you spending more than you should. If you can’t reach an agreement about your finances, you can apply for a Financial Consent Order as part of the divorce process. You can do this yourself, but it’s a good idea to ask your solicitor to help you.
Selling a home can take time and is a stressful situation in it’s own right. It can be worse if a reluctant party is in situ. Some couples agree on one person staying while the other moves out into rented accommodation or to stay with family. It is more complicated when children are involved, too. However, if your former spouse is trying to force you out of the home before the divorce is settled, you can apply for Home Rights. This legally prevents them from kicking you out of the property until the divorce is settled.
Make sure your divorce settlement makes clear who gets what proportion of the sale of the home. This makes it very clear once you do sell up what you can expect from the proceeds of the property, helping you to plan your newly-single future.
If your property is in joint names it passes automatically to your partner upon death – as do any other assets you have. Create a new will that stipulates your new beneficiaries. If your divorce is dragging on, you can apply to change your house deeds from Joint Tenants to Tenants-in-Common – but this can be costly and change your mortgage terms. Try to apply Home Rights in the first instance and make sure your divorce agreement stipulates who owns what in terms of the property. Your new will can stipulate who will inherit your portion of the property, but if you die before your divorce is settled your former spouse could contest it.
Also remember (where appropriate) to change details regarding benefits, life policies and pensions that may involve your partner. Always seek financial advice before cancelling joint life policies/endowments. It may be expensive to obtain new cover. It also may be unnecessary if your policy is assigned to a mortgage which you are retaining.
The receipt of child benefit may not make a huge financial difference to some. However, if you have a shared care arrangement of one or more children, the recipient of the child benefit will ultimately be the person who the child remains with. That person may also be entitled to financial maintenance from the other parent until the child turns 18. Of course, all of this depends on the situation.
If you are unemployed or on a lower income and have a child in your care, you may be able to claim child tax credits on separation. You can read more about tax credits here.
If you don’t have a large pension pot, consider increasing your pension contributions. Not only does this help protect your retirement, it can reduce your income for the purposes of a financial settlement.
HOWEVER: if you’re the higher earner in your relationship, be very careful about this. Your spouse can apply to have up to half of your pension transferred to their own as part of a divorce settlement.
Hire an Independent Financial Adviser to help you navigate the tricky business of things like shared properties, pensions, and income considerations. Unbiased is a great, completely independent platform for finding IFAs and lawyers.
Your new partner’s income could be taken into account during your settlement, meaning you could end up getting much less. You would also lose your home rights: this affects you if you’re on a low income. If you’re living elsewhere and paying rent, but you own another property you don’t live in (i.e., the marital home) and it’s not on the market, you won’t get your state benefits.
Going through a divorce is a stressful, often heartbreaking, time for many. While saving money in a divorce situation should always be a priority, never forget to look after yourself. If you’re finding it overwhelming then help is always available. Samaritans offer a 24 hour divorce support line on 0808 164 0123.