How can I take control of my finances after a divorce?

Key takeaways

Prioritise pension equality: Divorce often exposes significant gaps in retirement savings, particularly for women, so it is vital to assess and protect your pension assets early.

Evaluate international assets: Cross-border separations create unique risks regarding assets. Ensure you are fully aware of what happens to these assets during separation.

Clean up your bank account: It’s important to look at what’s coming in and going out of your bank account during a divorce. Cancel any old payments you no longer need.

Get an expert to help: Talk to a financial adviser who can help you build a new plan to stand on your own two feet.

Divorces often last a lot longer than marriages themselves. The way a divorce is finalised can dictate someone’s financial situation for the rest of their life. Along with the painful emotional impact of separation, the substantial financial upheaval can leave some seriously disadvantaged when it comes to their wealth and prospects.

The chances of married couples going their separate ways these days is a lot higher than it used to be. The divorce rate in the United Kingdom is today estimated at around 42% so the spotlight is increasingly falling on how fairly family wealth is divided after a separation.

Awareness of the potentially damaging effects of pension inequality is rising as some find themselves worse off than they planned after divorce. Traditionally, men have tended to have larger pension pots than women, which can place a divorced woman into a difficult financial situation. Thinking about pensions as early in life as possible and making sure you are equipped for any eventualities is a wise move.

Those that are separating from somebody who is a different nationality to them could be particularly vulnerable to post-marriage financial inequality. Deciding to leave a country where you have built up significant assets with your partner may mean you have less chance of retaining them. For example, a U.S. national that has married someone from the U.K. may face having to leave property or other assets behind and argue over ownership from abroad. The departing partner may also have a significant professional network that is lost through moving from London to New York, for instance, and this may mean additional financial strain down the line.

Taking the right advice

Seeking advice from a qualified and trusted adviser can be invaluable. Once a separation agreement has been finalised, an adviser can assess your financial situation. Adjusting to life after divorce isn’t easy but developing a financial plan to regain independence is a big part of the process.

For some in a vulnerable position, this can go a long way to improving wellbeing as well as financial security. An assessment can range from something as simple as a review of incomings and outgoings and looking at where savings can be made. It could also mean uncovering any overlooked sources of income or cancelling unnecessary direct debits. More complex matters such as arranging investments, organising tax returns or reviewing pensions could also be included. Financial planning is an ongoing process but taking the first step and engaging with the right advice can be vital.

At W1M, we have deep experience of helping clients get back on their feet after a divorce. Our advisers take time with our clients, fully answering their questions and helping them create and implement financial plans that work. If you’re in the midst of a divorce or have just finalised a separation and don’t know where to start, our team is ready to help.

Glossary of key terms

Pension: A fund that has built up during your working life to be paid to you in retirement.

Assets: Owned property, investments, or valuables.

Separation agreement: A formal document outlining the division of a couple’s finances.

Direct debits: Automatic bank payments requiring review post-separation.

Financial plan: A strategic, expert-guided approach to build personal financial security.