DIVORCE – one word with a big impact
It’s only seven letters, but that one word can have a massive impact.
Divorce rates in Scotland have been in decline since 2006.
They hit their highest in the early 80s and apart from blips in 1993 and 2006 (likely due to the Family Act 2006), it continues to drop.
It seems that we’ve gotten better at being just ‘a couple’.
Lockdown can do that to you.
Stuck inside, putting up with one another and their foibles.
Or it could be that less of us get married each year.
The marriage rate in the UK has decreased by almost a third since the 50s.
Because as much as we put up with each other, the idea of making it a formal arrangement seems less attractive. Maybe.
This article is by no means exhaustive but we hope it will give you an idea of what to plan for…
The initial costs
There will be some costs that you will have to pay (such as filing paperwork with the courts) and some costs that will be dependant on which route you decide to go down. For clarity’s sake, we’re using Scottish terms. Divorce cases are either ‘simplified‘ or ‘ordinary‘ and in Scotland, depending on which court the case goes to, there is a sliding scale of costs.
Simplified means both sides are amicable to the divorce.
Ordinary is for when one or both sides are not amicable or if there are other considerations.
This can include if both of you are unable to agree on finances or your situation is complex (i.e. you are both owners of a small business) then you will almost certainly need additional legal help. And just so you are aware, the average cost of divorce in Scotland is now over £14k. We hope you realise that it is not going to be a cheap option!
The law will start by looking at all assets and making a 50/50 split.
Any further legal decisions made will depend on the following:
Financial needs and contributions
Welfare (your own, depending on your age and health. As well as any children under 16)
Length of marriage
Other factors to consider are debts (personal or business which are in one person’s name will be their responsibility, unless agreed upon.
That company car you got them, which you took a loan out for? That’s yours to pay. Ouch!
Seek professional help?
Let’s be honest – ‘legal process’ and ‘plain English’ are not bedfellows.
So as well as considering legal advice, you may want to get financial advice too.
Even if you think it will be straightforward and amicable, an adviser will know more about capital gains tax or ways to save assets than a solicitor.
Make sure you arrange for a ‘divorce financial order/agreement‘. This states that all finances, once agreed upon by both parties are legally binding. So the more you can agree on financially, before legal proceedings, the less chance of any nasty surprises later on. Without this, there is nothing to stop you being asked for more money later on.
Short term, you may worry about how you’ll cope sorting out your own finances.
In the longer term, it will be a good thing for you. Understanding your own finances will help you make plans for the future.
If you’ve previously relied on your ex-partner to sort out the money, it’s empowering to be in charge of everything without having to rely on anyone else.
A good habit would be to start a spending diary for a few months (or longer, if you can). This will help you get a sense of what you’re doing with your money – and maybe spot some places where you could make savings.
Hide & seek?
‘Surely though, I don’t have to declare everything financial, do I?’
Yes, you do.
Avoid the temptation to try and hide some assets from the other as everything has to be disclosed – if one of your bank statements shows a deposit to an external account which hasn’t been mentioned before or there are several large unexplained withdrawals with no paperwork, this could be considered perjury. The penalty of which can be either seven years or a court-ordered fine. Not the best move to make when you are trying to move on with your life!
Today is the first day of the rest of your life
Paperwork all signed off?
Court date over and done with?
When the dust has settled, when the decree absolute has been issued, finding out your finances aren’t in great shape is a bit of a letdown after everything you’ve been through. Because you may be back looking at the joys of renting. Or owning a home as an individual rather than part of a couple. And trying to make ends meet.
However, put all that aside. The good news is that this is a fresh start.
Everything is now in your hands.
Once you’re back on your feet, start an emergency fund. And only then, after that, should you think about savings and investments.
It could be sensible to make sure you can access your money whenever you need to, at least until everything settles down, so an ISA may be the most adventurous financial decision you’ll make at this point.
You may also need to look at your retirement plans, as your pension(s) may have been reduced by a qualifying agreement.
But remember that you’re stronger than you think you are!