5 Financial Divorce Myths – Financial Advice and Divorce

Finances after Divorce
Mary Waring
Independent Financial Advisor and Author of  The Wealthy Woman: A Man is Not a Financial Plan: A Woman’s Guide to Achieving Financial Security

If your husband has dealt with the family finances during the period of your marriage then it’s very likely that during the divorce negotiations you can feel fearful and overwhelmed when looking at the financial issues.

There are a few myths worth looking at around finance:

Myth 1: You aren’t entitled to a fair share of the assets

Don’t assume that if you have earned less than your husband that this will impact on your settlement. Women often earn less; either because they are a stay at home mum, maybe the family finances don’t require them to work, or they do a lower paid/part time role due to child care issues.

Frequently women believe that if they haven’t contributed financially to the marriage that they will be entitled to a lower share of the joint assets on divorce.

However, this is incorrect. The court will base the settlement on the financial needs of both parties, especially the one looking after the children.

If it’s a short marriage, typically you go will leave the marriage with what you bring in. But in a longer marriage all assets (and in fact all debt) are pooled and the aim is to divide equally, as much as possible.  This is regardless of who owns which assets.

Myth 2: Your husband will be financially penalised

Do not assume that if your husband wants to end the marriage, or maybe his affair was the reason for the divorce, that the law will in any way punish him financially to your benefit. I often hear women saying “I want him to pay” for what he’s done.

But the law is not there to punish one or other spouse. Its aim is to split the available assets according to each parties needs. The court does not consider moral right or wrong:

If your husband has left the marital home, he will need to be rehoused. If there are children to the marriage he will need an appropriate sized property so that there is sufficient room for the children to stay when they spend time with him.

Myth 3: You will always be able to maintain the same lifestyle after divorce

Financial Advice and Divorce
On this basis, maintaining the same lifestyle just may not be possible.

Following divorce it’s very likely you will want to maintain the same lifestyle as you enjoyed during your marriage.

If there are sufficient funds to go round that’s likely to be the outcome.

However, consider what will happen if there isn’t enough money. The same income that was being used to support one household during the marriage will now be used to support 2 households following divorce.

On this basis, maintaining the same lifestyle just may not be possible.

You must consider the joint finances. If there is not sufficient money for you to stay in the family home, the law will not uphold your request.

Listen to what your family solicitor advises you will be an appropriate outcome. They have years of experience and can predict the likely outcome with some confidence.

Work closely with your financial adviser to see if it is possible to stay in the family home. Look at the various options, budgets, and what it is you can afford.

 Myth 4: Keeping the family home is the best option

Financial Advice and Divorce
Myth – Keeping the family home is the best option

My experience is that frequently the wife wants to stay in the family home and the husband wants to keep his pension intact. He views the pension as “his” money compensating him for the hours he’s put in at the office.

Staying in the family home can often be an easier option for the wife. In a period of extreme upheaval and uncertainty it can be really comforting to have some stability. It causes the least disruption and upheaval for the wife and the children.

However, before you decide this is the outcome you want, you must consider the wider implications of being awarded the home and therefore potentially receiving no pension share.

Consider what income you will live on when you retire, especially if maintenance will cease at retirement age.  There is always an option to downsize at a later stage, but do you know whether that will realise sufficient funds?

 Myth 5: Thinking you are a “common law wife”

Frequently women who are co-habiting with their partner and not married (or not in a same sex civil partnership), think they have the same protection as a wife.

Although we often hear the term “common law wife”, there is infact no such thing in law.

It is a widely held belief among women that if you are cohabiting but not married that you will have the same rights as a spouse. However, this is a myth, and this is the case regardless of the period of time you have been living together and even when you have children.

Following separation your partner will need to provide financially for the children. However, there is no legal requirement for him to provide for you or provide a share of the wealth created during your relationship.

What should you do?

Getting to grips with finances during this very difficult and emotional time will often be challenging. But you only have this one chance to get the right settlement for you and your children. Work closely with your professional advisers to ensure you understand the implications of each of the financial options and you choose the one that’s right you.

Mary Waring

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