PERSONAL FINANCE: Jennifer Gallagher writes on the steps you can take to lessen the financial pain of marital separation
Planning saves money
Most solicitors’ charges are time-based so use that time wisely. The costs of consulting a solicitor in person and by telephone will be billed to you so it makes sense to obtain estimates. Many law firms will offer an initial fixed-fee package but in all circumstances the solicitor should be able to provide an indication of the costs involved.
Do your own leg work
To fully advise on what amounts to a fair settlement a solicitor requires details of balances in bank accounts, loan and credit card debts and valuations of pensions and insurance policies. The figures have to be taken at the “relevant date” – a technical legal concept and your solicitor will tell you what that date is in your case. Save money by obtaining the information yourself rather than have the solicitor charge for writing to banks and financial institutions.
Whether the house is owned outright or mortgaged, the options open to couples are usually a sale with the proceeds being split or a transfer of the title deeds from one to another. In a typical situation the person transferring their share will be looking for a cash equivalent or may retain other assets such as pensions and offset these against the equity. However, this all hangs on the market value of the property being well above any outstanding mortgage and the person wanting full ownership being able to “buy out” the other with either liquid or illiquid assets.
Don’t overlook pensions
Providers charge fees for implementing pension sharing so it tends to be worthwhile only if the amounts of money involved are significant or if there are no other assets to divide. Many people prefer cash on the table so may look to offset the value of a pension against other assets, such as savings, shares holdings or the house itself. If one spouse has a much bigger pension he/she might agree to take less of the liquid assets to avoid pension sharing. In another circumstance, the wife may seek a share of the assets which reflects no longer being eligible for a widow’s pension after divorce. However this issue is often very complex and independent financial advice is highly recommended.
Legal action is the last resort
Despite the anger and hurt that surrounds separation, try and keep control of emotions by not rushing to court – the cost of which could be £8,000 and upwards – when a considerably cheaper negotiated settlement is possible. It helps to focus on the “bigger picture”, namely your longer term goals and aspirations and moving forward with your life.
• Jennifer Gallagher is a partner with Blackadders solicitors