Separating your finances when you divorce
January is often known as ‘divorce month’ with many couples finding dividing up their money and belongings one of the most stressful parts of splitting up.
Promotion: We may earn commission from links on this page.
Couples frequently decide to divorce in January following the stresses and strains of the festive season, or because they see the new year as a good time to make a fresh start.
Although the emotional fall-out from splitting up can feel all-consuming, experts recommend that separating couples try to address their finances sooner rather than later.
Ben Glassman, Financial Planning Partner and Head of Family & Divorce at leading wealth management firm Evelyn Partners, says: 'Couples should not leave financial issues to the last minute when considering separation or divorce – it’s an aspect of the relationship that can cause some grief in an already difficult process, so really it’s worth getting a handle on it right from the start, preferably with the help of some good financial advice.”
Here are a few of the things you’ll need to consider.
Cashback offers from Hargreaves Lansdown for 2025 - savings, investments and pensions
Property
If you own a home with your ex, this is likely to be your biggest asset, so you’ll need to decide whether one of you will continue living there. or whether you’ll sell the property and each try to buy somewhere smaller, or rent if you can’t afford to buy.
Mr Glassman said: “One spouse remaining in the family home - apart from minimising disruption, particularly where children are involved – has traditionally been the low-cost option as it will avoid some legal, mortgage and property transaction fees. But the spouse who stays will either have to sacrifice substantial other assets or have to find the money to buy the other’s share of equity.”
Pensions
Whilst couples usually tend to focus on the family home when separating, it’s vital that pensions don’t slip through the net, as they can account for a substantial proportion of household wealth.
Rebecca Williams, Divisional Lead of Financial Planning at Rathbones, said: “Overlooking pensions could have lasting consequences, especially later in life when there’s little time to make up shortfalls. There are three main ways to deal with pensions: sharing them outright for a clean break, earmarking income for an ex-spouse after retirement, or keeping the pension and letting the ex-spouse take other assets, called offsetting.
“Each option has pros and cons, and understanding the true worth of both defined benefit and defined contribution schemes is essential. And don’t forget the State Pension – usually this cannot be split between spouses. Women, in particular, may have gaps from career breaks, so checking your State Pension record and plugging any shortfall is crucial for long-term security.”
Savings and investments
As a general rule, any savings and investments built up during a marriage tend to be split 50:50 regardless of whose name they are held in, although there can be exceptions. It’s vital that any savings you both have are disclosed to avoid any complications later on.
Ben Evans, Family Lawyer at Co-op Legal Services, said: “If you believe your spouse is hiding information from you and direct discussions aren’t progressing, it’s important to take action. Both parties have a legal duty to provide full and frank financial disclosure during the division of matrimonial assets. Failing to meet this obligation can have serious consequences in court.”
Where to go for help
There are plenty of resources available to help couples navigate their way through the financial implications of divorce. These include the government’s MoneyHelper service and Citizens Advice.
If you want a mediator to help you, you can find one local to you on the Family Mediation Council website. If you need a solicitor and live in England or Wales, you can find one via the Resolution website. Solicitors who are members of Resolution are committed to minimising confrontation during divorce or dissolution. Alternatively, you can find a solicitor on the Law Society website.
If you live in Scotland, you can find a solicitor either on the Family Law Association website or the Law Society of Scotland website.