Divorcing at any age can be an incredibly stressful time. However, being over 50 can complicate the matrimonial finances and how they should be divided.
- You may have significant savings, assets and pensions (which could be in draw down)
- You may be planning for retirement, be semi-retired or retired
- You may have increased needs
Divorcing in England and Wales is now a fairly straight forward process and is the same for all ages. Spouses can divorce without apportioning any blame (no fault divorce), or having to “prove” that the marriage has broken down, and can apply on a sole or joint basis, making the process more amicable.
The process takes six to 12 months. There is a mandatory 20-week cooling off period to allow meaningful reflection after which the parties can apply for the Conditional Order (previously known as Decree Nisi). The parties then have to wait six weeks and one day until they can apply for the Final Order (previously known as Decree Absolute) which formally dissolves the marriage.
In practice, most people wait until the finances have been resolved before proceeding to Final Order as certain rights are lost upon divorce and there can be significant tax and other implications.
Finances are usually the focus in divorce and can take the most time to divide/resolve. If going through the Court route, it can take one–two years to resolve the finances. However, the process can be quicker if you are able to negotiate directly, through solicitors or via mediation. Any settlement that is agreed must be put into a Court order to be binding and negate any potential claims from a spouse in the future.
The starting point in dividing finances is an equal split of all matrimonial assets. All property, savings, investments and pensions go into the “pot”. However, how assets are divided is ultimately a question of “need” and there are many factors which might tip the balance in the favour of one spouse. For example, the capital or income available to the parties, the parties’ financial needs, the respective contributions of each party, their conduct (although only in exceptional cases) and any benefit either party will lose as a result of the divorce.
Can you protect certain assets?
If the marriage is of substantial length (10+ years), the likelihood of equality is greater. If it is a short marriage, or there has been a substantial period since separation, a spouse could potentially look to ring-fence certain assets, such as assets acquired pre and post marriage, or personal assets that have not been intermingled with matrimonial funds (for example, an investment property where the income went to one spouse only and was used by that spouse only). Whether ringfencing arguments will be successful depends, again, on the needs of the parties.
The parties would need to provide statements and details of any asset they are seeking to ringfence, together with evidence as to why it should be ringfenced (i.e. accounts to show the asset has not been intermingled with matrimonial funds).
What could happen with the family home?
The court will be looking to house both spouses in properties that are sufficient for their needs. If one party has greater needs (for example, they cannot work, they are unable to earn as much as the other spouse, have dependents or have a disability), they may need a larger housing fund.
If there are insufficient funds available to meet the housing needs of both parties, the family home may need to be sold immediately or the spouse remaining in the home may need to buy-out the other spouse, now or in the future.
The parties would need to find examples of properties local to the family home which they consider to be appropriate for themselves and their spouse (called “property particulars”). These particulars are then used to aid discussions to divide the overall pot.
What could happen with your pension?
‘Defined benefit’ pensions, or ‘final salary’ pensions, are more common in the over 50s and are generally more valuable than the alternative – ‘defined contribution’ pensions.
With the recent financial market instability, there has been a decline in defined contribution pensions, but defined benefit pensions/public sector pensions have remained largely unchanged. Pensions are often the largest asset in the pot other than the family home, and it is always very important not to overlook them.
A pension is considered in the same way as any other asset and the starting point will be equality. However, it will be important to instruct a pension actuary who can carry out a detailed assessment of both parties’ pensions and look at how they would need to be divided to achieve:
- Equality of income on retirement (depending on the age of retirement anticipated)
- Equality of capital on retirement
Instructing an expert is particularly important when some pensions are in drawdown and others are not, or only one party is retired.
How we can help
Our award-winning family lawyers are experienced in dealing with clients of all ages and are ready to listen to what matters the most to you on divorce. Get in touch today to have an initial consultation with one of the family team.