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Personal finance

Dealing with divorce – 5 steps to help make things easier

Divorce is hard and all the sudden changes can be overwhelming. Here are five steps that might help make your financial life easier.

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Divorce is hard. Nobody would rush into it after one bad Christmas, but sometimes a fortnight of one another’s company can be the straw that breaks the camel’s back.

Divorce lawyers annually see an uptick in enquiries immediately after the festive period – rivalled only by the rush just after the summer holidays.

But that’s just the tip of the iceberg.

Splitting up means we have to come to agreements over all sorts of things with someone we have already decided we can’t have a relationship with.

If you’re facing this, it can feel overwhelmingly difficult, but there are steps that can help to take some of the pain out of the process.

This article isn’t personal advice. If you’re not sure if something is right for you, ask for financial advice.

1

Try to keep things as amicable as possible

You don’t have to stay friends, but the more you can agree between you, the less you’ll spend with and on lawyers. This goes for the financial settlement, but also for arrangements for any children.

When you do need to use lawyers, it’s even more of a reason not to let the disagreements drag on – each niggle you argue over will add up in legal fees.

We're here if you need help

If you’re going through or have gone through a divorce, we can help you managing your account.

2

Get help from the right people at the right time

A straightforward divorce might be something you can handle on your own. But if you have pensions, property, significant savings and investments or children to think about, speaking to a lawyer and a financial adviser are good ways to protect yourself from an expensive mistake.

Even if you need to talk to someone about the emotional upheaval, then make sure you’re using the right specialist for that too. Talking through your anger with your lawyer is expensive, and they’re not going to be able to help as much as a counsellor could.

Counselling services like Relate can help if you’re not sure where to start.

3

Pay attention to your pension

If your spouse has been building up a pension for years, pension specialists are particularly valuable. It might make sense to get a pension valuation as part of the financial disclosure, and it can be worth having an adviser to check the numbers.

They can also help you pick the most appropriate way to share the pension. Whether one person keeps it and trades it against other assets – you split the pension pot into two – or you agree to share it when it’s being paid out.

After the split you should revisit your pension arrangements and work out how you can manage some of the changes to your finances from the divorce.

4

Don’t get pushed around

Don’t let your efforts to stay on good terms be used against you.

If they threaten to stop negotiating, they demand more unless you agree, or they try to threaten you with things like access to children, instead of being bullied into a poorer deal, let your lawyer take them on.

5

Start rebuilding as soon as possible

You need to assess where you are and start rebuilding your finances as soon as you can.

If you’ve run up debts or spent your emergency savings on the divorce, paying them off and building back your emergency savings are priorities.

We usually recommend three to six months’ worth of essential spending in an easy-to-access account if you’re working, and one to three years if you’re retired.

Don’t forget insurance too. You need to check what you have in place, and make sure it still suits you. If you’re relying on maintenance payments, you should consider insuring the life of the person paying them, to protect your family from all eventualities.

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Written by
Sarah Coles
Sarah Coles
Head of Personal Finance

Sarah provides insight and analysis to the media on topics such as savings and financial planning, and co-presents HL's ‘Switch Your Money On' podcast.

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Article history
Published: 9th January 2024