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Life after divorce: money, children and the future

9 minutes

We speak to divorce experts to find out the main financial implications of getting divorced and how they can be managed.

  • Keep open lines of communication
  • Try to take an objective, rather than an emotional, view
  • Accept that things will be different, including financially

Money


Think strategically, not emotionally

According to ContactFamily, a service to help separated/divorced parents communicate, most divorces cost between £5,000 and £25,000. Communication manager Lana Hunter explains: “Once solicitors get involved, and if you need to go to court, the costs sky-rocket.”

While it can be extremely hard to put aside emotions – especially if there is a party who feels ‘wronged’ – doing so is beneficial for the bigger picture. Divorce coach Emma Heptonstall recommends separating out the emotional issues from the financial ones.

“The court doesn’t care about what happened, but about what is fair. It bases decisions on things such as the time you’ve been married, the contributions each of you have made –financially and non-financially – and any children.”

Holly Andrews, managing director of independent financial brokers KIS Finance adds: “You should keep in mind that the more money you spend getting divorced, the less you will have left to begin your new life.”

List your assets

Experts say it’s a good idea for couples to do as much of the financial groundwork as soon as possible.

“Before the divorce process begins, it’s useful if you both can compile a list of your assets and debts, making sure you both have copies of documents for your insurances, loans, hire purchases, mortgages and investments etc,” explains Andrews.

“If you can help each other to get organised, it’s a good start to an amicable divorce. This is especially important if you need to remain on decent terms for the sake of children.” However, if working together on financial disclosure is not possible, it can be done with the help of professionals, including mediators or through lawyers acting for each party.


Look at the overall financial picture as well as the short-term

Many divorcing spouses focus on one asset, often the family home, and can overlook the longer-term benefits and security of others, such as pensions or investments, says Georgina Rayment, senior associate and expert  in family law at Prettys.

“We encourage clients to project forward five or 10 years and think about what life might look like and what financial ambitions they have. This can guide negotiations and sharing of assets,” she explains. 

Additionally, Grant Cameron, a partner in family law at Threthowans explains: “Consider your financial situation and your objectives, particularly in the short term, so you can agree how the rent or mortgage and utilities will be paid on an immediate basis.”

Understand that change is necessary

Unless they are wealthy, the couple must realise that their lives will change.

Joanna Farrands, partner in family law at Barlow Robbins, explains: “Dividing one household into two will always impact lifestyles and living standards. Accepting this from the outset should help individuals to consider compromise.” This might involve selling the family home and buying two smaller properties, or one person moving out.



Obtain legal advice

Legal advice is absolutely critical, says Rayment. A consent order, which is legally binding once approved by a court, details a couple’s agreement as to how to divide their finances.

“If there is no court order, claims by an ex-spouse can continue long after the divorce has been concluded,” she explains.

“This means that if one spouse goes on to make a fortune, the ex-spouse may legitimately have a claim against some of that years later.”

Family


Consider your own emotional health…

After a divorce, people’s lives change massively. Heptonstall describes the transition as similar to a grieving process and that some people will need support.

“Your identity changes – you become a single person and a single parent, so you have to think differently, and it may be the first time in a long while that you are responsible for budgeting.

“Be prepared for the grief, and understand it takes time to come to terms with the change in your life.”


And that of the children

The well-being of any children is paramount. Divorce can be traumatic for them, especially if the parents are in a high-conflict situation.

“Children are  robust and can adapt quickly when it comes to the family dynamic changing,” explains Nabila Fowles-Gutierrez, divorce coach and director of Divorce Survival. “What they can’t cope with is the arguments and nastiness. Parents must set themselves standards of behaviour.”


Understand your family’s financial needs

Parents have a responsibility to make decisions for their families, argues Fowles-Gutierrez.

“There is a lot of reliable information online on the process for people who are going through divorce. Access that before making any decisions.”

It’s also important for both parties to consider what might need to change in children’s lives, explains Heptonstall.

“Understand what the children’s financial needs are – there might be child maintenance decisions, which are about providing accommodation, food and clothes.

“And if they have enjoyed activities such as dancing lessons, piano or karate, you must work out whether you can afford to keep doing them.

“Also, make sure you have provision on death of either parent to ensure the children are provided for and that child maintenance payments continue.”

The future


Consider the benefits in coming to an agreement

If couples can keep communicating, despite things being tense, Hunter says, “then things are more manageable”. Indeed, not every divorcing couple is at each other’s throats – many are able to maintain mutual respect, which benefits the children.

Graphic designer Deborah Green and her ex-husband discovered early on it was better for them to agree before involving professionals.

“We realised that if we negotiated between ourselves, we would get a lot more out of it, and what we would spend on lawyers we could spend on our children,” she explains.

“I maintained communication with my ex, and to me that was worth the financial compromise. As a result, there was gratitude on both sides and we don’t argue over who buys things for the kids.”

Natalie Cramer, owner of Natalie’s Creative Cakes agrees.

“From the minute my ex-husband and I decided to split, we said that however we felt and whatever happened, the kids came first. Any time there were flashpoints, we remembered that, so it was very easy.”


Divorce can be a chance for a fresh start

For most people, divorcing necessitates the lowering of their expectations, argues Green.

“Both parties need to be able to afford a home and get on with their lives. It might be necessary to start earning again – and it’s important to see this not as a negative, but as an opportunity to grow and start fresh,” she says.

Cramer says the change in her working life set a good example to her children. “I became really driven after the divorce and my business flourished.”

Divorce can be a complicated process but, assuming both parties are able to communicate with each other somehow and maintain respect, it doesn’t have to be as difficult as it is often portrayed.