Divorce and your money – what you need to know
6th January 2012
With an estimated 150,000 divorces in the UK each year, understanding your rights in these situations is vitally important. Whilst some divorces may start out amicably, tensions might become strained when finances become involved.
Understanding your entitlements with regards to the law is, therefore, essential and you will need to consider a number of aspects relating to your finances.
Assets
The division of assets is perhaps one of the most common financial elements associated with divorce proceedings. The main asset is usually properties which are shared by the individuals. Income and any money which is stored in a shared bank account may also be classed as assets and these will usually be split equally between the two parties.
A number of important elements must be considered when doing this, however, and the age and employment status of the individuals will be considered, as will whether there are any dependents. In cases involving children, maintenance payments will be required. These costs are determined and controlled carefully and changes to how they were calculated were introduced in 2003.
A generalised view of maintenance payments is as follows:
Absent parents are required to pay 15% of their net income for a single child, 20% for two children and 25% for three or more children. The maximum income taken into account is capped at £2,000 net weekly income.
Fees
The other major financial issue during divorce proceedings is that of legal fees. It is advisable that both parties take independent advice from a solicitor before beginning proceedings. This will help you to understand your position more clearly and will ensure the divorce can be processed as quickly as possible. Usually, each party will be required to pay for their own legal costs during the case.
Personal finances
An individual’s personal finances are also taken into account during divorce proceedings, meaning that individual assets, bank accounts and other financial products will all be taken into account.
Any wills or other legal documents will also need to be amended in light of the change in marital status and important insurance policies will need to be considered.
This is because a change in marital status will affect a number of things, such as the relationship between you and your dependents. Investing in the correct life insurance product is essential in protecting the future finances of your family.
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