Going through a divorce or dissolution in later life? If you’re one of the growing number of ‘silver separators’
Going through a divorce or dissolution in later life? If you’re one of the growing number of ‘silver separators’, it’s important to know about the key legal points. This can help you to plan effectively and minimise the stress involved. Separating in later life means separating decades of financial co-habitation, property, assets and possibly debts. Where to start?
Its always worth getting some expert advice – this could be from a specialist family law barrister and independent financial advisors can help with your finances. Separation is always difficult, and mediation can be a way to help you minimise the stress of doing so as well as being very cost-effective. You and your spouse could work with a qualified family mediator to agree how to divide up your assets as well as dealing with any other issues. Even if your children are adults, you’ll still need to talk to your ex about them and a mediated resolution can help where the courts can’t. You can always get legal advice at any point during mediation, and a skilled mediator can be a valuable independent resource. This can also help you deal with the emotional impact of separation after a long marriage.
The court’s objective is to achieve a fair outcome. One of the factors the court will look at is the age of the parties and how long the marriage lasted. The court will also consider the parties’ income and earning capacity, including future income. This may be particularly important for women who may have a shorter working history than their husbands and so need to retrain to secure their income. You may want to think about ways to fund this, perhaps by a larger lump-sum to provide a ‘cushion’ whilst you retrain. These are all issues to discuss with your advisers as well as in mediation.
Please remember that legal aid is usually not available for divorce cases unless there are exceptional features; such as if there’s been domestic abuse.
For most couples, their biggest asset is their home. There are essentially two ways of dealing with this:
- one party buys out the other party’s share in the property. You may want to stay in your home if you work nearby or if you have caring responsibilities. You could use your interest in other matrimonial assets, such as a pension, to off-set your spouse’s share in the house. Remember to factor in the running costs - can you still afford to live in the same house?
- selling the property and dividing the proceeds. This could be part of a ‘clean break’ settlement or order and could enable both of you to buy your own separate homes. It can also benefit a partner with reduced earning power by eliminating or avoiding mortgage costs.
Its vital to get at least 2 or 3 valuations as well knowing what mortgage is left to pay as any other debts secured on the property.
A pension is also likely to be a significant asset and its important to get pensions valued. If the fund is not currently paying, the pension holder can ask for a free valuation called the Cash Equivalent Transfer Value (CETV). This is the actuarial calculation of the figure necessary to purchase the equivalent benefits in another fund. If the pension is already paying out, ask for the Cash Equivalent Benefit (CEB), you may have to pay for this.
Pensions can be dealt with in three ways:
- Offsetting – this means adjusting other assets to take account of the value of the pension. As mentioned earlier, this usually means the matrimonial home.
- Attachment – this is ‘earmarking’ some or all of the pension payment(s) to be paid to the other spouse at a later date, usually retirement.
- Pension sharing – this means dividing up the benefits of the pension into two separate funds which will provide separate pensions in the future. Its based on the CETV.
Its important to bear in mind that one party may need to build up a pension pot or be in a better position to do so than the other party. This could affect the proportions in which the pension is shared out.
Investments and other assets
All other assets, including investments, will also be included in the divorce settlement. This is why its vital to have a clear idea of your individual and joint worth. This includes all bank accounts, joint and individual, PEPs, ISAs and shares. It also includes property such as cars and paintings. Courts expect the parties to make full financial disclosure – no hiding assets! You should also get advice on any debts or other liabilities.
It’s worthwhile reviewing whether you want to change your will to reflect your new situation. This is particularly important if you might go into a new relationship to avoid unfortunate conflicts between your ex and your new partner/spouse. It’s best to get professional advice from a wills specialist. Think about updating any Lasting Powers of Attorney too – your ex might not be a suitable person, and so you should consider an alternative.
This is a settlement which cuts the financial ties between the parties. A court has to consider whether a clean break is possible in each case. There has to be enough capital or income for each of you to be financially independent immediately. An advantage is that it can help both of you to move on to new lives, this could be beneficial if you want to remain friends or at least leave the possibility open.
Going into a new relationship can be relevant to what happens on separation. For example, a court order might enable a party to live at the former matrimonial home until remarriage or cohabitation. If you’re receiving ongoing maintenance payments, your ex could ask the court to review these if you start living with a new partner. Remember, the court aims to achieve a fair outcome.
Simon Robinson - Family & Relationships Barrister with myBarrister