Divorce and your finances

Generally speaking the typical impact of divorce on an individual's wealth is to divide the family's previous wealth status in half with financial impact most severely being felt in future planning given a much reduced financial that then becomes available to both parties involved in the divorce process. When it comes to the family house lenders will consider the financial capacity of the individual that is looking to take ownership of the house, this could be much more difficult given the reduced financial position of the individual which ultimately could lead to the sale of the family home in order to distribute assets between the parties. Pensions may have been split to balance out the overall distribution of the families wealth so one parties pension in retirement will be reduced from what was originally envisaged leading to different retirement plans. When it comes to business, our advice would be to not to take a share of a business in a divorce settlement because it is likely to be a minority interest which could leave that person being involved in a hostile business arrangement and the party with a greater control could effectively manage the minority interest out of the business through a business restructure. After all of that, it is possible to gain wealth back following a divorce, with hard work and planning you could see wealth restored in as little as 5 years. Pensions are the most difficult to regain as they are linked to movements in financial markets. We hear often of long drawn out divorce processes which are caused by disagreements by both parties on what they believe they are entitled to. Crucially agreeing the financial settlement early on in the process can mean both individuals can look forward and begin to regain their own wealth quicker.

"Unfortunately a families wealth is usually split four ways upon divorce: 25% to each spouse and 25% to each solicitor. It can be hard for the divorcée to find a suitable property to purchase as they have to rely on their sole income rather than a joint income, which means being able to borrow less on a mortgage. It can mean that their is less disposable income each month to put towards savings and investments, which can impact on future standard of living. With some sensible decision making, realistic expectations, and advice where appropriate, plenty of divorcees are able to get themselves back on a strong financial footing and prosper."