E35: The cost of divorce with Lynn Beattie, Harry Gates and Lydia Hunt
The following is a transcript of our monthly podcast, The Pension Confident Podcast. Listen to episode 35, watch on YouTube or scroll on to read the conversation.
PHILIPPA: Hello! Happy New Year to you and a warm welcome to Series Four of The Pension Confident Podcast. Now new years, we know they often start with resolutions to change our lives for the better. For you, that might be taking up a new hobby, maybe even looking for a new job. For others, it might be about making a whole new start.
Every January, lawyers see a spike in inquiries about divorce. It’s such a big spike the first Monday of January is known in the profession as Divorce Day. Now, if you’ve been through it, you’ll know that one of the hardest parts of divorce is having to take lots of financial decisions at what can be obviously a really overwhelming time. But understanding all your options can make those decisions easier and better.
So we’re going to talk about that, and we’ve got three guests in the studio who are all here to help you build your post-divorce life on the best possible financial foundation.
Lynn Beattie, old friend of the podcast, she’s Author and Founder of the personal finance website Mrs Mummypenny. Harry Gates is Co-Founder at The Divorce Surgery and our PensionBee guest this time is Lydia Hunt who is Head of First Line Compliance. Hello, everyone.
Usual disclaimer before we start, please do remember anything discussed on the podcast shouldn’t be regarded as financial advice or legal advice. And when investing, your capital is at risk.
I’m going to start by asking the obvious question around the table. Have you been through divorce? I have.
LYNN: I have.
PHILIPPA: Lynn, you have.
LYNN: 50% of us have.
PHILIPPA: How long ago?
LYNN: It was finalised in 2020.
The fundamentals of divorce
PHILIPPA: You’re a money person. Did you know what to expect? Or was there anything financial that really took you by surprise?
LYNN: I really didn’t know what to expect, and because divorce is so unique to your own situation, it was really difficult to find any information out there to actually work out - what are the stages I have to go through. So my first go-to place was - I had a friend who was a solicitor and I spoke to her about it.
PHILIPPA: OK.
LYNN: And also it’s a subject that people don’t generally talk about.
PHILIPPA: Yeah, it’s true. I mean, Harry, you see a lot of people getting divorced?
HARRY: I do. I’m a Barrister, so the day job is very often spent representing a husband or a wife in the Family Court. So although I haven’t been divorced myself, I’ve certainly seen a few, so to speak. And I completely agree with what Lynn was just saying. Lots of couples find it very hard to know where to start, and there really is a problem there, I think, that we need to address in terms of getting the right information to people when they need it.
PHILIPPA: Lydia, I mean, obviously, I’m really hoping you’re going to be able to give us the nitty gritty on dividing assets and that sort of thing when we get to that point in the podcast. I think it would be good to get a few of the basics out of the way with Harry first, though. So we’re going to hear quite a lot of legal stuff here. But let’s crack on with, can you get divorced straight away, or do you have to wait a set period of time after you’ve got married?
HARRY: If you think you’ve made a terrible mistake, I’m afraid the bad news is that you have to wait at least a year, which in practise means a year and one day before you can lodge your application for a divorce. So yes, there’s a minimum time limit, I’m afraid.
PHILIPPA: I think it was until 2022, wasn’t it? To get a divorce, you had to provide specific grounds, didn’t you, to show that the marriage had broken down. But that’s gone now?
HARRY: That’s absolutely right. In April 2022, the last government brought in what we now call ‘no fault divorce‘. So previously, you had to prove your entitlement to a divorce, and you had to plead one of the grounds on which a divorce could be granted. But now we’ve really moved to a system of essentially notification. So you can just tell your former spouse that you want to get divorced and there’s no effective defence to it.
PHILIPPA: OK. What if they don’t want to get divorced?
HARRY: Tough, in a word.
PHILIPPA: Really?
HARRY: Yes.
PHILIPPA: So you can just divorce them? No grounds? No nothing. That’s it?
HARRY: Yes. It takes a little while. So, for example, once you’ve issued your application for a divorce, you then are obliged to wait 20 weeks until the court will give you what’s called a conditional order of divorce, and you then have to, once that’s been granted, wait another six weeks until the divorce is made final. But that’s it. That’s that’s the process now.
PHILIPPA: OK. We’re here to talk about money. Does it cost you anything?
HARRY: Yes. I’m afraid to say that there’s quite a chunky fee to pay to the government for this. To HM Courts and Tribunals Service (HMCTS), to the court service, £593, which is a huge sum of money.
PHILIPPA: That’s a lot of money, isn’t it?
HARRY: It really is. And this is a controversial issue, as you’d imagine. I mean, why should, on the face of things, people have to spend £593 to change their marital status from married to divorced? Lots of people think that’s quite unfair.
PHILIPPA: Lynn, I mean, once you’ve told your spouse, you and I have both been through this, everyone talks about getting a lawyer. Did you get a lawyer?
LYNN: Yeah, because listening to what you just said there, I didn’t actually appreciate there was a sort of simple, just form-filling online solution. So I immediately went to a solicitor, and appointed him because I didn’t feel I was able to resolve my divorce without a solicitor. Where I did try to reduce some costs back, which my solicitor gave me really good advice on, was for us to use a mediator to start off with, which I’m sure we’ll go on to a little bit more detail about, but that was about half the price of the solicitor.
PHILIPPA: Let’s just clear this up. Do you have to have a solicitor in order to get divorced?
HARRY: No, you absolutely don’t. But we need to be clear what we’re talking about here. So the business of actually getting a divorce, the simple business of changing your status from married to divorced, is expensive because you have to pay the fee to the government that we’ve just been talking about. But it’s not generally where money gets spent. Where money gets spent in a divorce is when you’re sorting out the money and possibly in relation to the children if you have them.
PHILIPPA: OK, this sounds like a bit of a foolish question in some ways, but can you share a lawyer?
HARRY: You absolutely can, and this is a new thing that’s been around since about 2018, and it’s proved very, very popular. I think there’s a feeling out there that you can’t share solicitors or a barrister because you have a conflict of interest.
PHILIPPA: Yes, and you may be on very bad terms.
HARRY: You may be, and it’s right to say that it won’t be right for absolutely everybody. So if you’ve got an ex, for example, who’s trying to do the dirty, so to speak, and is trying to hide all the assets and you can’t cooperate at all, then absolutely, sharing a lawyer is unlikely to be right for you. But for everybody else, and this is the vast majority of people, the couples when they separate, simply want to know what’s fair. And for those couples, appointing a shared lawyer whose job is to tell you what a court would do in the event that you went to court to argue about your money or your children, is absolutely the right thing to do, because you’re only paying for one lawyer rather than one each.
PHILIPPA: Yeah, well, it sounds good to me because, as you say, it’s all about cutting costs, isn’t it? Every penny you spend on getting divorced disappears out of the joint pot, doesn’t it?
LYNN: The thing that was always sort of said to me was “the more you spend on the solicitors costs, it’s more money you’re taking away from your kids at the end of the day, so try to keep it as minimal as possible”.
PHILIPPA: And as Lynn said, and actually I did the same thing, we went to mediation to keep the costs down on lawyers. What’s your feeling about that?
HARRY: Mediation is a wonderful thing in lots of cases. Just be careful though, that mediators can’t give legal advice - that’s the important distinction. Whereas all a shared lawyer is doing is giving you legal advice. So if you don’t know what the answer is and you want to know, and you want to know how a judge would approach your case in the event you went to a court, then sharing a lawyer is the way to do it. And then you take the advice that you’re given and take it into mediation.
PHILIPPA: OK, so this sounds like a rational, minimal, expensive way of getting to the point where you can start talking about dividing your assets and of course, your liabilities, because we’re not just talking about dividing up what you’ve got, are we? We’re talking about dividing up any debts you might have.
HARRY: Very true.
Is it worth getting a prenup?
PHILIPPA: So assuming couples got to that point, let’s just get prenups out of the way. Everyone always talks about prenups. Do they mean anything, do they have any value?
HARRY: They very much do have value. Prenups aren’t formally binding, but they’re very likely to be persuasive. So they’ll be the starting point essentially, for anybody who’s looking at how to sort your finances out afterwards. There are certain things, however, that a prenup can’t do. It can’t prejudice the needs of any children that you’ve had, so their needs must be considered separately. If they’re not appropriately provided for in the prenup, then tough.
And likewise in relation to needs. So if the prenup provides for an outcome in which one party is left in, and the phrase is, ‘a predicament of real need’ then it’s absolutely right that the court would interfere and would make whatever additional top up provision is necessary.
PHILIPPA: Yeah, because we’ve talked about this on the podcast before and obviously if you sign a prenup and I think it’s only about one-in-five couples [who] have one. I mean, it’s obviously more than it used to be, isn’t it, Lynn? But I mean, I didn’t. Did you have one?
LYNN: No.
PHILIPPA: No, I never even thought of it.
LYNN: I do think though, if I got married again, that’s a very small ‘if’, I think I’d want something in place to give me a bit more safety and security.
PHILIPPA: I mean, if there isn’t that are you free to just negotiate between you about how things are divided?
HARRY: I mean, even if there is a prenup, you’re free to negotiate freely between you. Assuming there’s no prenup, then you’re starting from the ground up, as it were, as to what a fair outcome might be. Whereas if there is a prenup, you’re starting from the first floor, so you might have less to negotiate if there’s a prenup, but not nothing.
Divorce and pensions
PHILIPPA: So, Lydia, I’m sorry we haven’t heard from you yet because it’s all been about legal stuff. But this, I’m guessing, is the point at which maybe you hear from couples?
LYDIA: Yes, indeed. So when couples are going through divorce negotiations, they’ll often reach out to their pension provider, and indeed they should reach out to their pension provider, to obtain a valuation of any pension that they hold at that time.
That pension valuation will be incorporated with valuations of any other assets that you and your former spouse hold. Those assets could be a range of things, some people don’t understand what that would include. Some things are fairly obvious, such as properties that are co-owned, bank accounts, savings. But equally I think the best way to describe it is any asset with financial value attributed to it, so you might need to include high value items. So [say] you’ve got some artwork or jewellery that’s particularly high value that would be disclosed as well.
PHILIPPA: What would a high value item be?
LYDIA: For example, say you’ve got some collectables that are of a high value and you would be able to sell that on for a significant sum of money. There’s other things to bear in mind as well. So you might have assets that are based overseas. The best thing is to be as transparent as possible about everything that you have that has value. Otherwise it could just cause delays later on down the line. You don’t want to go back to the drawing board if you’ve forgotten something significant.
What’s included in negotiations?
PHILIPPA: I remember this, Lynn, do you? It’s this great long list of trying to work your way through everything.
LYNN: So painful and getting all the paperwork. It took so much time. When you say like, ‘significant value’, like a painting worth £10,000 or something, is that a significant value?
HARRY: I can answer that.
PHILIPPA: OK, there’s Harry.
HARRY: So the duty of full and frank disclosure extends to anything that you have, which is worth more than £500. When you fill in the document, which is called a Form E, which is what the court -
LYNN: Oh I hated that form!
HARRY: It’s 28 pages of agony for most people.
PHILIPPA: It’s tough.
LYNN: And I had to print out so much stuff, like all my bank accounts, like 12 months and all my accounts.
HARRY: Yes.
PHILIPPA: It’s a big job, you don’t do it in five minutes. It really is a big task.
HARRY: It’s a big job. It’s not just the assets that you have now that you have to disclose, it’s those that you anticipate having in the foreseeable future.
PHILIPPA: What’s ‘foreseeable future’?
HARRY: Good question. If you know it’s coming in, then you need to disclose it.
PHILIPPA: If you know about it, you have to say. And just to be clear, if you don’t say, this is hiding assets and that’s a very bad idea indeed.
HARRY: It’s a very bad idea and if you read the Form E, you’ll see that it comes complete with all kinds of terrifying warnings on the front page about offences under the Fraud Act. But in the family law context, it might provide a route to your former partner to undo the deal that you’ve done, if it turns out that you haven’t disclosed what you should’ve.
PHILIPPA: Have you come across people hiding assets?
HARRY: Very much so, yes, but only because I tend to work in the courts. And that’s where those difficult cases end up. For the vast majority of cases, people are playing with a fairly straight bat in my opinion.
PHILIPPA: How do they tend to come to light if they’ve been trying to hide them?
HARRY: Well, teams of lawyers pore over the disclosure that each has given, as Lynn was describing earlier, and what then happens is that you’re in a position to ask questions of the other side about aspects of their disclosure, which you don’t understand.
PHILIPPA: OK. So your husband or wife can say, “yeah, but what about this and what about that?”.
HARRY: Yes. “You haven’t explained where the Picasso above the fireplace has gone. I’d like to know that, please.” Those are very rare cases, though, and I wouldn’t want people to think that this is at all common.
Pension splitting
PHILIPPA: Yeah. So obviously honesty is absolutely the best policy here. But Lydia, pension splitting I wanted to ask you about I think a lot of people will have heard the phrase, what is it? How does it work?
LYDIA: So of course pensions can be a very valuable asset and indeed for some, their most valuable asset. Pension splitting, the most common method of doing that is a Pension Sharing Order. So effectively when you’re going through your marriage negotiations, you obtain a valuation of your pension, and it might be agreed to split a proportion of that pension with your former spouse. Effectively, what that means is the final settlement order will confirm that a Pension Sharing Order will be put in place, and there’s an annex attached to that confirming the terms. That’s submitted to the pension provider. The pension provider will then take steps to implement the split. That usually involves obtaining a transfer instruction from you. So you need to decide, if you’re the receiving party, you need to decide where you want that money to go. Effectively, the provider will value the plan as at the date of implementation and send that proportion over to your chosen pension.
PHILIPPA: OK, so in layman’s terms, they’re looking at the size of a pension pot. It might be yours, it might be your spouse’s. They’re saying what’s it worth right now, today. And splitting it according to whatever formula?
LYDIA: Exactly.
PHILIPPA: And then you get the cash [in your pension]?
LYDIA: Yes.
PHILIPPA: And that’s the end of it, you then have no call on that pension later?
LYDIA: For a Pension Sharing Order once it’s been implemented that’s what’s called a ‘clean break’. That money is yours.
PHILIPPA: And that’s the most common arrangement?
LYDIA: There are other ways of considering your pension. There’s Pension Offsetting effectively that’s looking at the value of the pension, looking at the value of other assets and then deciding to award a different asset to either side to balance out.
PHILIPPA: So you’re trading basically?
LYDIA: Basically trading.
What happens to assets from before the marriage?
PHILIPPA: One other question, Harry, on this, I think I do want to talk about what happens around children. But I’ve got a couple - one is about assets and before the marriage, if you had your Picasso before you got married, is it still yours?
HARRY: This is a really hot topic in family law at the moment. So what you’re talking about is what the lawyers would call non-matrimonial property. So that’s all property that you have when you divorce that you haven’t generated during the course of the marriage through your combined efforts, different as they may be.
PHILIPPA: I mean presumably this could be a house or a flat?
HARRY: Could be a house. It gets complicated where, for example, you bring a house into the marriage, one party brings a house into the marriage, it becomes the family home.
PHILIPPA: OK.
HARRY: On divorce, the party who didn’t contribute the house in the first place says, “well, this was the home, I think it ought to be divided equally”. And the person that contributed the house says, “well, hang on, I brought it into the marriage, don’t I get some credit for that?”.
There’s a case that’s about to go to the Supreme Court at the moment called Standish v Standish, which will be coming up shortly, which is looking at these principles. But the short point is you get to keep your non-matrimonial property unless the other spouse needs some of it - and by ‘needs’ I mean in order to house themselves properly or to put food on the table, as it were.
PHILIPPA: OK.
HARRY: That’s the basic principle.
PHILIPPA: That was your experience, Lynn?
LYNN: Yeah, I was in the situation where I brought a lot of assets into the relationship and everything was just split 50/50, so I felt a little bit hard done by. The biggest problem for me was I had some inheritance from my parents who’d died, and he’d never met my parents, and he got half of my parents inheritance, and I know a lot of people that have had that. That’s a really tough one to swallow.
PHILIPPA: This is just about negotiation. Yeah, Harry, this is how it is. You can argue one way or the other, but in the end you have to come to an agreement.
HARRY: You can argue one way or the other. I’d say, just to come back to my earlier point, this is a classic example of the situation where it makes sense actually to share a lawyer because you get a steer early doors from somebody who has no skin in the game, who is able to deal with essentially what is a legal question and say to you, “whatever you may feel about it, whatever the other side may feel about it, this is the approach that the Family Court judge will take”.
Are liabilities included in negotiations?
PHILIPPA: We haven’t talked much about liabilities, so this might be, I don’t know, bank loans or credit card debt or whatever. I mean, they presumably have to be divided up too?
HARRY: Very much so, yes. So assuming that these were liabilities that are, this is a bit of a pompous phrase, but ‘referable to the marriage’. So let’s say you exit the marriage with credit card debts, which are essentially in being because of the standard of living that you were enjoying during the marriage, then those would be regarded as joint debts, and they’ll need to be taken into account. If you separated five years ago, let’s say, and one of you has gone off on a jolly and spent recklessly in the period since then, you’ll have a tough job persuading a court that those ought to be taken into account.
PHILIPPA: OK. Suppose your spouse, the reason you’re divorcing them is their appalling gambling habit, and they’ve run up colossal debts that have got nothing to do with you. Do you still, you’re still liable for half of this?
HARRY: That’s such an interesting question. The answer is it depends.
PHILIPPA: OK.
HARRY: And again.
PHILIPPA: Classic lawyer’s answer.
HARRY: Exactly. But it depends - there was a very famous case a few years ago now, where a husband had spent lavishly in a big money case on gambling.
PHILIPPA: OK
HARRY: The wife said, “well, hold on, all of that money ought to be notionally added back onto the husband’s side of the ledger”. In other words, the court should treat him as still having those resources when it comes to working out what a fair outcome is.
PHILIPPA: What did the courts say?
HARRY: The court in that case, in a judgement that raised some eyebrows, it has to be said amongst the legal profession, said “I’m afraid you have to take your husband as you found him”.
PHILIPPA: Wow.
HARRY: And “I refuse to add those back in”.
PHILIPPA: But it does raise the point, doesn’t it, that the court isn’t there to punish your partner, however badly they’ve behaved towards you. So you may loathe them, you want to divorce them, but even if they’ve been very, very unpleasant to you, that’s not reflected in the court’s view, is it, when they come to financial settlements? It’s just about what’s equitable.
HARRY: I think it’s right to say that in the vast majority of cases, all the judges are doing is trying to divide what there is in order to meet needs on both sides so that you can both go off and live an independent life. There isn’t the luxury or the headroom in over 90% of cases, I’d suggest, to get into these more arcane arguments about whether someone has behaved in a certain way -
PHILIPPA: About blame.
HARRY: - to reflect and conduct, as it’s called in the Family Courts - blame - put another way, is a very hot issue at the moment, particularly, I should say, in the context of domestic abuse. So where somebody has been domestically abused over the course of a marriage, how should the court reflect that in the outcome when it comes to the finances? That’s not settled at the moment, and there’s a lot of discussion going on about it.
Children and divorce
PHILIPPA: That brings us to children, because you can agree pretty much what you like, can’t you, as a couple without children about the money you can negotiate. But children, if there are children involved, still living in the marital home, there are rules, aren’t there, around them?
HARRY: Money wise, yes, absolutely. You can’t contract out of providing for your children. So we have an organisation which we used to call the Child Support Agency (CSA), which everyone will have heard of, I should think, which was a byword for dissatisfaction, I think, amongst separating parents. It’s now called the Child Maintenance Service (CMS). I’m not sure people are any more satisfied because of that particularly. But essentially, if your income is under a certain threshold, the Child Maintenance Service and not the courts is the body responsible for sorting out your child maintenance.
Can an agreement be amended?
PHILIPPA: So we assume you’ve reached agreement about your assets and liabilities, and maybe any support that’s going to be given for children. My next thought is how binding is all this? Can anything change the agreement?
LYNN: The agreement you come to with your children often then links to the agreement you end up with your finances. So we split our children 50/50 back in 2020, so the finances were split 50/50. Five years on, that situation has changed where they mostly live with me. Where do I stand?
PHILIPPA: OK, so that’s interesting.
LYNN: It just feels like it’s very complicated to go back and change it, so where I stand is, we did a clean break, so I’ve got no right to any money. But with children, things change.
PHILIPPA: People’s lives move on, don’t they? We divorce, people get remarried, they have more children, children grow up and leave home, life goes on. Can you change your divorce settlement to reflect any of those changes later or not, Harry?
HARRY: It depends how you’ve recorded your divorce settlement. So if you’ve just agreed between you and you haven’t taken the final stage of getting it into what’s called a ‘consent order‘ and submitted to a court and signed off by a judge, then yes, absolutely you can change things. If it’s been approved by a judge, it’s binding. And as far as it goes to the capital elements of the deal - so that’s to say what you’ve done with your houses, what you’ve done with your pensions - you’re very, very unlikely to be able to do anything about that after the event. When it comes to maintenance, though, if there are ongoing links, for example, there’s what’s called spousal maintenance - that’s money paid between spouses for the spouse rather than for the children - that’s always variable.
PHILIPPA: So you’d have to go back to court to change that, would you?
HARRY: Only if you couldn’t agree, that would be the last resort, you should try very hard not to go back to court, but you might have to.
Thinking long term when negotiating
PHILIPPA: Ultimately, what should you be thinking about long term in those negotiations? Because presumably the best thing to do is to imagine your future life, isn’t it? And think, “what might crop up, what might I need?” and try and build that into the talks you have?
HARRY: Very much so, I think the thing that people under think about are pensions.
LYNN: Yeah.
HARRY: There was an interesting statistic I heard on a podcast the other day that there were 110,000 divorces, roughly in 2023, in England and Wales, and only about 40,000 of those had a financial order from a court, which means that all the rest of them, the 70,000 odd, did not have a financial order, and that means they can’t, as a matter of law, have had any pension sharing. So that tends to suggest, crudely, that about two thirds of people aren’t getting the Pension Sharing Orders that they might be.
PHILIPPA: I mean, Lydia, that’s really a very important point to make, isn’t it? Because I’m guessing, given that men tend to earn higher and have bigger pension pots, we know there’s a big gender divide on pension pots, that it’s women who aren’t doing so well because of that.
LYDIA: Yes, exactly, and I’m always surprised working within PensionBee that we don’t see more Pension Sharing Orders. We get a lot of inquiries from customers asking us for the value of their pensions. But I’d say a significant proportion of those then don’t transpire -
PHILIPPA: Really?
LYDIA: - to a Pension Sharing Order and the value of pensions can be underestimated as well. It may be worth a certain amount now, but they’re designed to be invested long term. They’ll grow -
PHILIPPA: So if you’re young -
LYDIA: - if you then continue to contribute to it, they’ll grow. And ultimately they’re there to ensure that you can lead a happier life later on.
PHILIPPA: I think we’ve landed on something here, haven’t we, Harry? Because I hadn’t understood just what a gap this was in divorce settlements, but the numbers you gave us are really significant. Lots and lots of people aren’t splitting their pensions.
HARRY: You’re absolutely right. And you’re also absolutely right that this is disproportionately affecting women. I can’t remember the statistics off the top of my head, but there was a report by the University of Manchester which came out with some, and I’m going to slightly make this up now, but it was something like 90% of pension wealth was held by men. So if people aren’t doing enough about pensions, that’s disproportionately affecting women in a huge way.
PHILIPPA: Well, PensionBee’s done a lot of work around this, haven’t you? Over the gender gap on pension pots and how women are under pensioned even before you get divorced.
LYDIA: Yeah, that’s right. So the Pension Landscape data indicates that women tend to retire with 38% less than men on average.
PHILIPPA: 38% is a huge gap.
LYDIA: Yeah, it’s a big gap.
PHILIPPA: It’s a big issue. So certainly a big one to think about if you’re contemplating divorce, think about pensions, even if you don’t have one, think about your husband or wives.
HARRY: Absolutely right.
Life after divorce
PHILIPPA: More positively, shall we move on to what happens after. I was thinking about this, and obviously your agreement is finalised, you’re divorced, it did seem to me that when you start out on your own again, there’s quite a shift to make. Lynn will understand what I’m talking about here, about your financial mindset. Because before you thought as a couple and you thought long term as a couple, and obviously you didn’t visualise yourself not being a couple. When you divorce, you go back to being a single person - you might have kids, you kids, you might not - but you do need to shift your financial mindset, don’t you? To being one person, not just about how much money you have to spend, but how you spend it. Did you find that?
LYNN: Yeah, but it’s actually a really positive thing because you have sole ownership and control over everything. So something as simple as, I’ll quote something petty, but the electricity bill, if your ex wanted to always have the electricity on, I obviously don’t because I’m a personal finance expert.
PHILIPPA: Frugal person.
LYNN: I’m a frugal person with my electric blanket! But I then had control over that. So immediately the electricity bill pretty much halved as soon as he left. I love the sort of independence of that. I can reflect now five years down the line, and I put something out on social media recently, my net worth has increased significantly since I got divorced because of the equity in the house that’s now just sole ownership rather than double ownership. My pension value has gone up loads because that wasn’t actually split in the divorce, because it was quite small when I got divorced. So in the short term, when it’s slightly stressful, very stressful, you can sort of think that everything’s really difficult and I can’t see when it’s going to end. But I can really assure people down the line, when you have that whole ownership, it feels amazing.
PHILIPPA: There’s two ways to look at it aren’t there, because obviously when you’re first on your own, if you’ve perhaps not been the person who’s dealt with financial stuff, then I’m guessing it feels pretty daunting to a lot of people. But you can just set yourself up, educate yourself and then be in charge of everything again.
LYNN: It’s ultimate, sort of, empowerment that you’re then in control of your future.
PHILIPPA: So more practically, I’m going to come to some downsides, I’m sorry. I did think about things that you have to factor into your financial planning because money can be very tight after a divorce. If you have children, things like factoring in [that] you used to get effectively another person helping out with childcare and now you don’t - so it’s after school clubs or breakfast clubs.
LYNN: Something that I’m thinking about a lot at the moment, which is stressing me out a little bit, is university costs. I have a 17 year old, 17, 15 and 12. So if my eldest goes off to university, who’s paying for that?
PHILIPPA: Yes, you do have to do a bit of future gazing, don’t you? You have to kind of imagine your life and how it might turn out.
HARRY: You do and it’s quite difficult to look forward to a time when your children might be at university, when you’re just enrolling them in their first school. It can be quite hard to persuade Family Court Judges to make orders if they’re not agreed, for example.
PHILIPPA: Really?
HARRY: In relation to university education, because it’s just so distant.
LYNN: Yeah.
PHILIPPA: So to sum it all up, it’s all about planning, isn’t it? It’s a tough ask because it’s a really emotional time. It’s a very difficult time. But it’s a time when you need to be at your most - I’m going to use that word again - rational and plan ahead. Presumably a good lawyer or a good mediator should be sitting down with you and telling you all this stuff.
HARRY: Well, I think unless you’ve got so little money that it doesn’t matter, or so much money that it doesn’t matter, then you’re going to need some legal advice at some point, because these are life long decisions with real consequences for the next decades and possibly, the rest of your life. So you do need to get this right. Just do it in a way that doesn’t inflame the tensions, doesn’t bankrupt you, and puts you on your own two feet, ready to look forward to the future with confidence.
PHILIPPA: I’m going to wrap it up there. It was such a good conversation. Thank you all very much indeed. Really, I find it all pretty empowering. If you’re going through this, I think that’s a good conversation to hear.
I hope we have made some of those financial negotiations and decisions maybe feel a bit clearer, a bit less overwhelming if this is what you’re going through right now. We always talk on the podcast about how vital it is to understand what’s going on with your money and of course, understanding where you’re at financially, if you do divorce, well, that can play a big part in helping you feel really ready, as Harry said, for a happier future.
Thanks for being with us. If you found this episode helpful, please rate and review us, we really appreciate it when you do. Before we go, the usual disclaimer again, please remember anything discussed on the podcast shouldn’t be regarded as financial or legal advice and when investing, your capital is at risk.
Thanks very much for listening. See you next time.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Period | Market Event | FTSE World TR GBP (%) | 4Plus Plan (%) |
|---|---|---|---|
4Plus Plan’s inception – 6 Sept 2013 | QE Tapering, China Interbank Crisis and its aftermath | -5.44 | -2.41 |
3 Oct 2014 – 15 May 2015 | Oil price drop, Eurozone deflation fears & Greek election outcome | -5.87 | -1.77 |
7 Jan 2016 – 14 Mar 2016 | China’s currency policy turmoil, collapse in oil prices and weak US activity | -7.26 | -1.54 |
15 June 2016 – 30 June 2016 | BREXIT referendum | -2.05 | -1.07 |
