B
eing trapped at home with a partner during lockdown has clearly proved hellish for many couples. The number of people inquiring about a divorce rose by 42% between 23 March and mid-May, according to Co-op Legal Services.
“Concerns about finances, employment, coupled with the fact that households are having to spend an increased amount of time together can add strain on relationships,” says Tracey Moloney, Head of Family Law at Co-op Legal Services.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
If you are emerging from lockdown with divorce on your mind there is much to consider. “Negotiating a divorce at times of economic stability is difficult enough. As asset values fluctuate in the wake of the coronavirus crisis, the task of figuring out a fair split is made harder still,” says Lucy Warwick-Ching in The Financial Times. “Whether you are simply contemplating divorce or have come to the end of the road in your relationship, there are numerous financial and practical aspects to be considered in deciding to untie the knot.”
One main issue is splitting what you own. In most divorces all assets accrued during a marriage are divided equally. The easiest way to proceed is to agree to divide assets by percentages.
“For example, cash from the sale of the family home can be split as a percentage of the sale proceeds rather than a fixed sum of money to ensure both parties share in the upside or downside of the property market,” says Warwick-Ching.
When splitting your assets don’t forget about your pensions. “Pension pots are usually the most valuable asset, apart from the family home, yet only seven in ten divorce settlements take them into account,” says Kate Palmer in The Times.
This means women typically pay a huge price for their divorce when they retire. The average 65-year-old divorced woman has a pension plan worth £26,100, compared with £103,500 for a divorced man.
“Women contemplating divorce must ensure that they are aware of their own and their husband’s pension savings and likely outcomes in retirement,” says Philip Way, a partner at law firm Mills & Reeve. “Many women have found that, in keeping the house and not looking carefully at pensions, they have put themselves in a poor position for the long term.”
Weighing up the value of the family home versus pension savings is particularly difficult at present. Stockmarket falls may have affected your pensions, but on paper the family house is still holding its value. You could wait in the hope that the pension will recover, but in the meantime the value of your house could fall.
“Not being able accurately to predict the future makes it impossible to identify the perfect time to start divorce proceedings,” says Sarah Coles from Hargreaves Lansdown in The Financial Times.
If you do decide to go ahead with your divorce, then Covid-19 shouldn’t cause any delays. Throughout lockdown “divorce proceedings have been going ahead over video conferencing calls while the courts have been closed”, says The Daily Telegraph. Most proceedings don’t need a court hearing, however, and the Ministry of Justice has not noted any slowdown in the time taken to process divorces.
-
‘I installed a heat pump in my home – here are five things I’ve learnt’From the size and noise of a heat pump to how much it costs to run one, Ruth Emery reveals what she’s learnt after installing one in her home six months ago
-
3 ways to work out if a stock is good valueThe only thing you can really control in investing is the price you pay for an asset – but how can you tell if you’re getting a good deal when it comes to the price of a stock?
-
A new wealth tax is a terrible idea. The rich are already being hit by sneaky taxes – Merryn Somerset WebbOpinion Ideologues want to squeeze more tax out of the rich with a wealth tax. They’re already wrung dry, says Merryn Somerset Webb
-
What MoneyWeek writers read and watched in 2024Here's a roundup of MoneyWeek's favourite books, films and TV shows in 2024
-
Parents face £1,000 'nanny tax' – how to afford itHiring a nanny is about to become even more of an expensive hassle for families, especially those in London. Here's how to cut costs
-
Is it cheaper to be a sole trader?It might be cheaper to be a sole trader due to changes to the tax system
-
The best fintech apps on the marketFrom digital banking to investment platforms, here are the top fintech apps on the market right now, according to David C. Stevenson
-
What pension providers don't tell you about your retirement moneyCheck the small print from your pension provider or risk losing thousands.
-
Britain’s stifling tax burdenChancellor Jeremy Hunt's Autumn Statement will see the tax burden rise in each of the next 5 years.
-
Brace for a year of tax risesThe government is strapped for cash, so prepare for tax rises. But it’s unlikely to be able to squeeze much more out of us.
