Solicitors often see a spike in requests during January, with the first working Monday of the year grimly dubbed ‘Divorce Day’.
The introduction of no-fault divorce in April 2022 means couples can now separate without having to place blame on their partner. But while this may avoid costly legal exchanges over the divorce itself, you’ll still need to sort your financial affairs including your property, pensions, savings and investments.
Here, Which? explain six costly mistakes to avoid if you're filing for divorce.
1. Paying for unnecessary legal fees
Since April 2022, couples in England and Wales have been able to divorce on the grounds that their marriage has irretrievably broken down without the need to attribute blame, known as a ‘no-fault divorce’.
This means couples can save money as it minimises the amount of solicitor correspondence associated with agreeing on the contents of the divorce application.
However, although you may be able to handle a straightforward divorce, if you have shared property, savings and children it may be worth speaking to a lawyer and a financial adviser to get advice.
Find out more:2. Not checking if you can get help with fees
If you do decide to do it yourself, there is a £593 fee to apply for a divorce.
HM Courts and Tribunal Service is proposing to increase these fees by 10% from March, meaning application costs will rise to £652.
If you’ve already paid the fee, you can apply to get money back if you paid the fee in the past three months and you were eligible for help when you paid it.
3. Not including a financial consent order
Couples who divorce have to sort financial settlements in a separate and parallel process.
However, since no-fault divorce was introduced there have been concerns this could lead to more speedy divorces, where spouses don’t consider all the financial remedies available to them.
A financial consent order is a legal document that confirms your agreement, and explains how you’re going to divide up assets like property, savings and pensions. It can also include arrangements for maintenance payments, including child maintenance.
To make your agreement legally binding, a court will need to approve it.
If a couple fails to obtain a financial order following divorce, either party will be able to make a financial claim against the other at any time in future (potentially many years after separation).
According to research by LCP, only around a third of divorces have any kind of financial order attached to them.
Find out more:4. Not getting legal advice for financial orders
If you have a fairly complex financial situation, you may benefit from getting independent legal advice.
Stowe Family Law said it has seen an increase in financial consent orders being rejected by the courts for reasons such as they unfairly favour one party, or there has not been full financial disclosure.
Helen Hanson, senior associate at Stowe Family Law, said: ‘Whilst it is an entirely reasonable step for couples to take to try to reach an agreement quickly and amicably between themselves to reduce time, legal costs and stress, the couple must not be mistaken into thinking the Court will simply ‘rubber stamp’ their agreement.
‘A judge is likely to refuse the agreement if it does not appear to represent a fair and reasonable split of the marital assets or if the judge does not consider the parties have provided adequate financial disclosure.'
5. Not considering pensions
Another important asset often overlooked in financial orders is pensions.
Pensions are usually the biggest asset for divorcing couples, and make up 42% of total household wealth, according to the Office for National Statistics.
But according to Interactive Investor’s Great British Retirement Survey, 67% of divorcees had not discussed pensions during divorce proceedings.
You should get a pension valuation as part of the financial disclosure, and it may be worth paying an adviser to check the numbers.
They can also help you pick the best way to share the pension.
Find out more6. Not updating your will
As a rule of thumb you should look to review your will every three years and whenever your family or financial circumstances change significantly.
Research done on behalf of Solicitors for the Elderly has found that almost half of UK wills could be out of date due to life-changing events such as marriage or divorce.
While divorce will not automatically invalidate a will, your former spouse is treated as though they are deceased, which means you won’t be able to name them as either an executor or a beneficiary unless you create a new will.
Are you making a will? If you want support, you can make your will and have it reviewed bysource https://www.which.co.uk/news/article/divorce-financial-mistakes-to-avoid-ag1eW8A5P0QW