Financial Planning for Divorcees
Financial Planning for Divorcees
“Til Divorce Do Us Part”
By Becky Barnet: Strategic Development Director
In February last year the Office for National Statistics released some depressing figures:
The ONS estimates that 42% of marriages now end in divorce
34% of marriages are expected to end in divorce by the 20th wedding anniversary
The greatest chance of divorce is between the 4th and 8th wedding anniversaries
In 2011 there were 117,588 divorces in England and Wales: the comparable figure for Scotland (from the Registrar General) was 9,814.
The Scottish figure was the lowest for thirty years – so on the face of it the trend may be reversing. Sadly, that is almost certainly not the case.
It is widely accepted that the recession means that many couples who wanted to divorce simply couldn’t afford it – in some cases couples are even having to continue living together after they’ve taken the decision to divorce. But with the economy now improving we will almost certainly see an upturn in the divorce statistics.
No-one gets married with the intention of splitting up – but as the figures show, all too often a marriage ends with the couple going their separate ways. If the divorce happens at a relatively young age and there are no children involved then it can be a simple process. If that’s the case with you, this website could be useful.
However, the longer a couple have been together the more complicated divorce proceedings are likely to be – and the more there will be a need for financial planning advice.
This is particularly true once pensions are brought into the divorce proceedings – and this trend will only increase with the Government’s drive to make sure that everyone is ultimately enrolled in a workplace pension.
The value of a pension – especially if someone is in a public sector pension scheme – can run into hundreds of thousands of pounds and it can outstrip the value of the family home as the main asset a couple own.
In our experience it is still the case the pensions are all too often not valued properly in divorce proceedings, leading to one of the couple – and it is invariably the wife – being ‘short-changed.’
The financial calculations involved in divorce proceedings are being further complicated by increasing life expectancy.
Traditionally, solicitors have relied on the Duxbury Tables, particularly where divorce occurs in later life and one partner is to receive a lump sum which is intended to support him or her for the rest of their life.
However these tables were drawn up in 1992 (by Mrs Duxbury’s accountant) and life expectancy has increased significantly since then. Equally importantly, accepted rates of growth on investments have decreased significantly.
We have some serious doubts regarding these tables, and yet they are still being relied on in many of the divorce cases that we see – often to the significant disadvantage of the wife.
Financial planning associated with divorce is not going to become any easier – and it’s one of those areas where you need to take action sooner rather than later. And yet it’s difficult – there’s an understandable reluctance to get involved in the minutiae of pensions planning.
At The London Investor we understand how difficult a divorce can be. That’s why we give efficient, professional, easy-to-understand advice: we’ll take care of the financial side of the divorce, leaving you free to rebuild your life and look after your family. You’ve enough to worry about, without worrying about money.
If you feel that you may be heading towards a divorce – or your clients tell you that they may be – then please don’t hesitate to get in touch with us. We’re happy to listen, and to help.
Financial planning associated with divorce is not going to become any easier – and it’s one of those areas where you need to take action sooner rather than later.
#1: Divorce rates increasing
The ONS estimates that 42% of marriages now end in divorce, 117,588 divorces in England and Wales and the figure for Scotland 9,814.
#2: More need for financial advice
The longer a couple have been together the more complicated divorce proceedings are likely to be
#3 Pension settlement
Once pensions are brought into the divorce proceedings they can outstrip the value of the family home.
#4: Duxbury tables
Traditionally, solicitors have relied on the Duxbury Tables, (drawn up by Mrs Duxbury’s accountant 1992)
#5: The world has changed since 1992
We have some serious doubts regarding these tables, and yet they are still being relied on in many of the divorce cases that we see