The first week of January sees a spike in the number of break-ups, as the stresses and strains of the festive season take their toll.
Last Monday was dubbed “divorce day” by lawyers, as disillusioned couples made a beeline for their offices, as they do every year.
Money is a major factor with more than a third of separating couples citing financial pressures as their biggest challenge, according to law firm Slater and Gordon.
Divorce will only add to that pressure, so do your sums carefully before deciding to split.
Divorce and separation now costs more than £14,561, up 17 per cent from £12,432 just three years ago, according to research from Aviva.
This is per person, so the total cost for couples is nearly £30,000.
Couples can easily spend £2,679 each on legal fees, plus another £5,671 in the event of a child custody battle.
Potential recurring costs include £4,605 a year in child maintenance payments and £5,808 in childcare costs, with thousands more spent running separate cars and homes.
Those who become tenants spend on average £7,519 a year on rent, while buying a new home costs on average £144,600 per person.
Paul Brencher, Aviva UK health and protection director, says this is significantly below the average UK house price of £226,185, which suggests many downsize: “Some find themselves priced out of the property market, others have to raid savings or seek support from friends and family.”
DEBT DO US PART
Sarah Coles, personal financial analyst at Hargreaves Lansdown, says your first priority is damage limitation: “It makes sense to draw up an emergency budget to cut your expenses as much as possible during the first difficult months.”
You will also need to make decisions on joint financial arrangements: “Banks can freeze assets in joint accounts, or make arrangements so that you both have to agree to any money being withdrawn. They can place controls on debts to prevent either of you from abusing joint arrangements.”
If you are paid directly into a joint account, arrange for your income to be paid elsewhere: “You may also need to arrange an alternative way of paying bills, rent or the mortgage.” Try and agree what you can without a lawyer in the room.
Coles adds: “As soon as lawyers get involved, you could be paying more than £200 an hour for their services. The less they do, the less it will cost. Mediation through an independent third party could be cheaper than going through the courts.”
Many couples divide and offset their assets. For example, one might get the property and the other the pension.
She says make sure you understand the value of what you are trading: “It may be worth speaking to a financial adviser as well as a lawyer.”
Divorce nullifies any existing wills, so make a new one as quickly as possible to ensure your estate will be divided according to your wishes.
“If getting remarried, consider a prenuptial agreement laying out what will happen to your assets following any future split,” Coles adds.
This is particularly important to protect the financial position of existing children: “Prenups are not legally binding in the UK, but as long as they are reasonable, and everyone has been legally represented, courts may take them into consideration.”
Zurich head of strategic partnerships Peter Hamilton says you should examine any life insurance or other policies held in joint names: “Some include a ‘joint life separation option’, so the contract can be amended to cover both parties individually.”
You may need to buy more cover if you are taking on a large mortgage or other debts.
He adds: “Finally, make sure you are fi nancially separated from your partner, so they cannot run up debts in your name, which could affect your credit score.”