More people file for divorce in January than any other month of the year, probably because the stress of being together for an extended period over Christmas and New Year brings any cracks in a relationship bubbling to the surface. Or it could be that people want to start the New Year afresh and were reluctant to start divorce proceedings in the months leading up to Christmas. Either way, January sees a considerable spike in contact with family lawyers and divorce proceedings starting.
However, interestingly this year it seems that a lot of people are delaying their divorce because of the cost-of-living crisis, which is making it hard for them to afford to split. Around 272,000 couples have delayed their decision to divorce this year, according to research from insurer Legal & General. It is little wonder, given nearly half (48%) saw their incomes shrink by an average of 31% in the year following their divorce, leaving people around £9,700 worse off.
The importance of a Clean Break Order
The research also found that just under one third (31%) of couples signed what is known as a Clean Break Order, preventing future claims from their spouse. This means that 69% of couples are open to future claims from their exes, something most people wouldn’t want to contemplate, and which could become costly further down the line.
Paula Llewellyn, Managing Director (Direct), Legal & General Retail: “When people divorce, money is always an important factor especially during the challenges of the cost-of-living crisis. However, as our research shows a separation can have long-term implications for people’s finances. Many couples have not even sorted the necessary paperwork to ensure they have a clean break from their financial obligation to one another. By consulting a financial adviser people increase the likelihood of a divorce being fair and equal. While the number of people seeking out this support has increased in recent years, we need to encourage more couples to take this step.”
All your assets are up for grabs
Remember, it isn’t just your everyday assets that are considered when a couple decides to split. Any pension entitlements you have could be part of the deal too, so if one partner has a much larger pension pot than the other, then that spouse might have to offset that pension pot with another asset, such as the house, or give a share of that pension to their ex-spouse as part of the divorce.
This is something that is often ignored or actively waived by divorcing spouses, according to the Legal & General research, but it could be a considerable part of the settlement if it is taken into consideration.
You need to be open and honest about your assets during any part of the legal proceedings, as hiding assets could lead to problems further down the line. Divorce is a highly emotional time, but if you can try to be amicable about the split, the chances are it will be less painful, less drawn out, and less costly for all involved.
