Financial Divorce and Hidden Poverty: What You Need to Know.
As a Divorce and Will Writing Solicitor with over 30 years of experience, I have written before about the need to protect yourself financially when you are divorcing. I often find clients wish to take a lower settlement than I think they could obtain because they think that things will work out okay in the future. They may assume that they will meet another partner who will look after them. It may be because they are being bullied by their spouse into taking a lesser settlement now in order to save on legal fees. It may also be because they are simply quite kind people who do not wish to rock the boat.
Imagine I am conducting a divorce on your behalf and your husband or wife says this is all I can afford to give you now and the court will not give you any more money. It may be that you are part of a business that they are in with their family, you will find yourself under enormous pressure from that family. They will want you out of the business as soon as possible.
What skill set do you have if you gave up work to look after your children or you took a role in your spouse’s family business?
What are you now going to be left with, have you thought about how much it would cost to build up a decent pension, how much will it cost if the roof of your home needs repairing or if the boiler blows up? Can you afford to fix your car in two years time based upon the settlement that you are considering? Could the business which you are being asked to leave be sold for millions in the next 5 to 10 years?
A lot of my clients have come from very good backgrounds and have been used to a certain level of economic stability as children. And yet when I see them 10 to 15 years after a divorce, they are often living in poverty.
Many of these parents will have scrimped and saved to allow their children to go to private schools as they did. They do not wish to admit to anyone that they are short of money, and it would certainly be beyond them to sign on for state benefits, they would see this as embarrassing.
I also see this generally amongst the self-employed, they are so used to making their own way in life that it would never occur to them to seek state benefits when the chips are down This could be an offshore worker, his contract ends after 15 to 20 years earning very good money. They have paid high taxes. They have contributed their national insurance but there is no way on this earth that they would consider applying for state benefits to support them. Nor would they wish to admit to their ex that they have run out of money. So they go on borrowing perhaps against property or on credit cards in order to pay the maintenance of their children or even their ex spouse.
If this is you, you are not alone. In my practice, I see this every day. Life throws curveballs at everyone, it is not something to be embarrassed about. You should seek extra funding at the point of a separation of divorce. You should renegotiate a deal that was reached for maintenance.
So how can you avoid some of the traps that I see my clients are falling into?
- Do not accept the first offer that is put on the table by the person from whom you are separating. Pensions should not be overlooked, you may have a very low pension entitlement compared to your spouse. If for example they work in the NHS at a high level or the police force they will access a very good pension at the age of 55 or 60. You can share some of this pension by way of a Pension Sharing Order. This means that part of their pension is ring fenced and is transferred into your name for your use later in life.
- If there is disagreement as to whether School fees should be paid, this is worthy of a proper discussion. School fees are extremely expensive. Could it be that your child attends private school for only part of their education, rather than all of it? Have you thought about asking the school for a bursary? Could you apply for scholarships?
- You both need to sit down and work out exactly how much money you will need to live. This includes everything from mortgage payments to haircuts. You should include the cost of car repair, car, tax, car insurance, school uniforms, school trips school lunches pocket money…
- Have you claimed all welfare benefits to which you are entitled? If you are on a low income, you should apply to the government for child benefit, even if you are self-employed. You should apply for universal credit and council tax benefit. Your embarrassment about being on these benefits should be weighed against the needs of your children. It can be very stressful for them, and you, to go without because their absent parent is not paying their way
I see my role as being to support my clients to seek the best deal possible for now, for their future and for their children.
It is for this reason that I have set up our “Next Steps in Divorce” advice sessions. The aim is to give you an overview as to your entitlement and to help you prepare your case. 95% of our matters settle without our clients having to go through a contested court hearing.
If you need help with your divorce or separation, then why not contact us for a Next Steps Divorce Advice Session and to see how we can help you. We can be contacted on:
Divorce Solicitors Newcastle: 0191 284 6989
Divorce Solicitors Sunderland: 0191 567 6667
or email us: enquiries@emmersons-solicitors.co.uk
Or complete our Online Enquiry Form