In this special guest blog, financial advisor Mary Waring examines the issues commonly faced by women going through a divorce.
If your husband has dealt with the family finances during your marriage then you may end up feeling fearful and overwhelmed when considering the financial issues surrounding divorce.
Let’s examine a few of the commonest myths surrounding divorce and money.
Myth: You aren’t entitled to a fair share of the assets
Don’t assume that if you have earned less than your husband that this will impact on your settlement. Women often earn less; either because they are a stay-at-home mum, or maybe the family finances don’t require them to work, or they do a lower paid/part time role due to child care issues.
Frequently women believe that if they haven’t contributed financially to the marriage that they will be entitled to a lower share of the joint assets on divorce.
But this is not the case. The court will base the settlement on the financial needs of both parties, especially the one looking after the children.
If it’s a short marriage, typically you will leave the marriage with what you brought in. But in a longer marriage all assets (and in fact all debt) are pooled and the aim is to divide this equally, as much as possible. This applies regardless of who owns which assets.
Myth: Your husband will be financially penalised
Don’t assume that if your husband wants to end the marriage, or perhaps ended it with an affair, then the law will in any way punish him financially to your benefit. I often hear women saying “I want him to pay” for what he’s done.
But the law is not there to punish one or the other spouse. Its aim is to split the available assets according to each party’s needs. The court does not consider moral right or wrong:
If your husband has left the marital home, he will need to be rehoused. If there are children, he will need an appropriate sized property so that there is sufficient room for them to stay when they spend time with him.
Myth: You will always be able to maintain the same lifestyle after divorce
If you divorce, it’s very likely you will want to maintain the same lifestyle as you enjoyed during your marriage.
If there are sufficient funds to go round that’s likely to be possible. However, consider what will happen if there isn’t enough money. The same income that was being used to support one household during the marriage will now be used to support two households following divorce.
On this basis, maintaining the same lifestyle just may not be possible.
You must consider the joint finances. If there is not sufficient money for you to stay in the family home, the law will not support your desire to keep on living the same lifestyle.
Listen to what your family solicitor tells you. They have years of experience and can predict the likely outcome with some confidence.
Work closely with your financial adviser to see if it is possible to stay in the family home. Look at the various options, budgets, and what you can afford.
Myth: Keeping the family home is the best option
In my experience the wife often wants to stay in the family home and the husband wants to keep his pension intact. He views the pension as “his” money, compensating him for all those hours he put in at the office.
Staying in the family home can often be an easier option for the wife. In a period of extreme upheaval and uncertainty it can be really comforting to have some stability. It causes the least disruption and upheaval, not only for the wife but for the children too.
However, before you decide this is the outcome you want, you must consider the wider implications of being awarded the home and therefore potentially receiving no pension share.
Consider the income will live on when you retire, especially if your maintenance will cease at that point. There may be an option to downsize at a later stage, but do you know for sure that will release enough money for your needs?
Myth: Thinking you are a “common law wife
Frequently women who live with their partner without being married think they have the same protection as a wife.
Although we often hear the term “common law wife”, there is in fact no such thing in law. It is a myth, and this is the case regardless of the period of time you have been living together and applies even when you have children.
After a separation your partner will need to provide financially for any children but there is no legal requirement for him to provide for you or provide a share of the wealth created during your relationship.
What should you do?
Getting to grips with finances during this very difficult and emotional time will often be challenging. But you only have this one chance to get the right settlement for you and your children. Work closely with your professional advisers to ensure you understand the implications of each of the financial options and choose the one that’s right for you.
Mary Waring is a Chartered Financial Planner specialising in advice to women going through divorce. She is also the author of “The Wealthy Woman: a Man is Not a Financial Plan”, due to be published on the 15th January.