Yael Selig Consultant
The importance of being financially savvy within the marriage
Despite the numerous changes to divorce laws, since they were introduced in the mid-19th Century, one thing remains constant - only if you are married, can you get divorced.
We are unique in the UK because our jurisdiction allows in each case the possibility for the parties to have a bespoke solution. This provides a solution addressed to specific circumstances for each individual case. The underlying rationale is always to arrive at a solution which provides a fair division and distribution of the assets.
A recent development has meant that it has now become available for parties to issue divorce proceedings online. However, dealing with the financial aspect of matters still remains the same and it is advisable for both parties to seek professional advice so they are aware of their respective entitlement.
We cannot underestimate the impact of having to deal with the practical and financial aspects of a relationship breakdown on top of the emotional fall out. Things like continuing to run the home, caring for children, and possible sale of the former matrimonial home whilst at the same time having to deal with the proceedings and all that brings with it can prove to be a steep learning curve for many.
Besides, it being National Marriage week it was Children’s Mental Health week last week. We as practitioners have a duty to those we represent as well as to the children of the family to ensure that they are supported at a time and during a process which is inevitably overwhelmingly difficult and stressful.
In some cases, spouses are not financially informed and this process can prove to be extremely challenging. In certain cases I have experienced my clients have discovered that a by-product of their divorce is a financial education for themselves; they have become empowered and have taken control of their own finances which historically they may have not had the opportunity of so doing.
Whether it is learning about your pension rights or finding a new mortgage, changing bank accounts, children’s schools , moving home. My advice to those who have not been previously involved in the finances is do not leave yourself financially vulnerable and always ensure that the financial settlement you will be receiving provides you with long-term security. Seeking advice from a financial adviser or accountant is imperative. In some cases there may be assets held offshore. There may be significant tax liabilities. All of this requires knowledge and expert advice. In relation to Pensions extensive research confirms that, typically, women build up smaller pension pots than men, partly because of career breaks and lower average salaries. Our life expectancy is now longer and it is important that parties address the income they will live on when they retire.
The message really is to take an active role in managing the family’s finances, as awareness is key and this will inevitably lead to financial stability and security.
Discussing the finances at all stages in your relationship is vital and can help set parameters. Whether this is done before you embark upon a marriage by entering into a Pre Nuptial Agreement or during the marriage when you consider having a post-nuptial agreement the message remains the same. Knowledge is power and the more aware you are of your spouse’s financial position, the better. This will also avoid arguments and unrealistic expectations, which can cause protracted litigation and unnecessary legal costs.