OLS Solicitors Blog
The pitfalls of not sorting out your finances before filing a divorce in England and Wales
Going through a divorce can be an incredibly stressful and emotional experience. However, it’s important not to overlook the financial aspects of divorce, especially in England and Wales, where the courts have wide discretion in how to divide marital assets. Failing to sort out your finances before filing for divorce can lead to a range of pitfalls that can have long-lasting financial consequences.
One of the most significant financial pitfalls of not sorting out your finances before divorce is the potential loss of your pension. In England and Wales, pensions are considered a marital asset and can be subject to division upon divorce. However, if the pension is not properly valued or divided, it can result in significant financial loss to one or both parties.
Pension specialists advise that the best way to protect your pension in a divorce is to seek advice from a qualified financial advisor or pension specialist early on in the process. A specialist can help you to understand the options available to you and can guide you through the process of valuing and dividing the pension. Failing to properly value or divide the pension can lead to future financial difficulties.
Another common pitfall of not sorting out finances before filing for divorce is the failure to disclose all assets. In England and Wales, both parties have a legal duty to provide full and frank disclosure of all assets and liabilities. If one party fails to disclose an asset, it can result in the court setting aside the divorce settlement, which can be costly and time-consuming.
It’s essential to seek legal advice and to be transparent about all assets, including investments, savings, property, and inheritances, to ensure that the division of assets is fair and equitable. Failure to disclose all assets can lead to financial losses and can prolong the divorce process.
Another pitfall of not sorting out finances before divorce is the risk of being stuck with a mortgage or other debts. Joint debts, such as mortgages, loans, and credit card debts, can be a significant financial burden, especially if one party is unable to take over the debt or refinance it on their own.
It’s important to seek advice from a financial advisor or mortgage broker to determine how best to handle joint debts in a divorce. In some cases, it may be possible to refinance or transfer the debt to one party. In other cases, the property may need to be sold, and the debt paid off from the proceeds. Failing to address joint debts can lead to financial losses and can prolong the divorce process.
In conclusion, sorting out your finances before filing for divorce is essential to avoid financial pitfalls that can have long-lasting consequences. Seeking advice from qualified professionals, including financial advisors, pension specialists, and legal experts, can help to ensure that the division of assets is fair and equitable and can protect your financial future. With the right guidance, it’s possible to navigate the financial aspects of divorce successfully.
References:
“Divorce and Pensions: What You Need to Know” by Andrew Pennie, Forbes Advisor, July 22, 2021