Aviva’s Winter 2013 report explores the growing diversity among UK families fuelled by trends in cohabitation, separation/divorce and remarriage.
Past relationships are teaching families valuable lessons about managing money yet Aviva’s latest Family Finances Report also paints a worrying picture of unprotected incomes and outdated policies.
The Report reveals:
- Nearly half of adults who live as part of a modern family have experienced at least one previous committed relationship (involving marriage or cohabitation) prior to their current family set-up.
- More than one in six have had two or more past committed relationships, with 5% having had three or more.
- More than one in three marriages is a remarriage for at least one partner, with 15% involving a remarriage for both parties.
- Almost a third of two-parent UK families include one or more children from a previous relationship.
Income and Divorce – Financial arrangements in the modern family context can be stretched and complex:
One in three families with children from past relationships in December 2013 received financial support from an ex-partner. This includes almost one quarter who get a regular income from this source and 10% who receive occasional payments.
Regular monthly payments received range from less than £50 per child to more than £1,500, averaging out at £254 per child, per month. One in three who receive financial support rely on it to make ends meet, while another 38% would need to make major cutbacks to manage without this income.
With this is mind, it is worrying to read from the report that only one in four knows for definite that their former partner has financial protection – such as life insurance, income protection or critical illness cover – in place, that could be invaluable in helping secure maintain these regular payments in the event of ill health, incapacity or death.
Disturbingly, almost one in five know that their ex-partner’s finances are definitely not covered, another 30% fear this may be the case.
With many adults experiencing more than one committed relationship, any change in family circumstances can have a significant impact on financial arrangements.
Updating bank accounts and mortgage/rent agreements seem to take priority when a relationship ends, with Aviva findings suggesting that only 6% of affected adults fail to make such changes following a separation.
In contrast, almost one in five fail to update their will, potentially leading to future complications.
It is very much understandable that housing and a place a live is the main concern, this is an immediate need that requires action and attention.
Yet, it is also really important to look at and consider your all round finances during divorce and as hard as it is consider not just immediate and short term needs, but also your needs over the medium and long term.