Divorcing late can leave you with bigger headaches down the road.
According to recent research by Hargreaves Lansdown, in 2019, the number of divorces grew by 18.4%, to 107,599 – the biggest spike since 1972 and the highest number since 2014.
And the divorce surge may be far from over. 2020 has seen many couples stretched to breaking point.
Almost a third (29%) of people said the crisis has put a strain on their relationships. A combination of money worries and spending far more time together has meant huge numbers of people realising their marriage is over.
Here are some potential issues with delaying any separation.
1. You have spent more of your life building your assets – so you have more to lose
There’s no getting around the fact you will have to divide your assets in a divorce. However, it’s well worth getting good advice to make sure you understand anything you’re giving up. This can mean speaking to a financial adviser as well as a divorce lawyer.
2. You have more in your pension, so more to lose on splitting it
There are a few options to consider, so you need to be certain you choose the best one for your circumstances. Typically offsetting and pension sharing have been far more popular, but since the decline of legal aid and the growth of couples representing themselves in court, the number of attachment orders has grown too. It’s vital that whatever approach couples take, they understand the pros and cons.
3. You don’t have as long to build assets up again
A divorce won’t just split your assets, it will cost a fair bit too, so you need to focus on getting back on track when the dust settles, say advisers at Hargreaves Lansdown. They advise paying into an emergency savings safety net and rebuilding your pension. They also highlight the importance of insurance. If you’re relying on maintenance payments, you need to insure the life of the person paying them.
4. You risk paying more tax
If the divorce is completed in one tax year, when you pass investments between you and your ex, there’s no capital gains tax (CGT) to pay. If you go into a new tax year, you may be liable. Older couples are far more likely to have more investments, so are more vulnerable to CGT.
5. You’re more likely to have received an inheritance – and therefore to lose it
An inheritance is usually treated as joint property even if you inherit the day before the divorce. The court may even adjourn a divorce if a rich relative is about to die.
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