When your relationship is over, the most obvious course of action following separation is divorce. You want to make a clean break, you want to be able to move on with your life; and depending on the circumstances of your case, the judgements of the court will aim to allow you to do so as far as possible. Be warned however, that there may be hidden divorce costs if you don’t do things the right way.
But is a clean break the best thing for you? There are financial implications that you need to take into account before you take the plunge, especially if you or your partner have reached or are nearing retirement.
Pensions are often the biggest asset after the family home and might be your main or sole source of income. If you are younger than your partner and they are already drawing a pension, you may find that any pension of theirs awarded to you in settlement isn’t payable until you are of pensionable age. That might leave you in financial straits in the meantime, especially if you do not already have a job and find yourself needing an income at an age where it’s difficult to join the employment market.
If you divorce, you are also likely to lose entitlement to any death benefit, should your ex-spouse die prematurely; although pension schemes differ in how they view the rights of spouses who are separated too, so beware.
And then there are also implications for inheritance tax. Tax laws are complicated, but normally, if you stay married, assets transfer to the surviving partner without incurring inheritance tax – which is only payable on the death of the second partner, when assets are transferred to other beneficiaries. If on the other hand, you are already divorced, any assets that are payable to the surviving ex-partner on the death of the other would be liable for tax. When the second partner dies and assets are transferred again to children or other beneficiaries, tax may need to be paid by them too.
This doesn’t mean that you can’t or shouldn’t get divorced, but it does mean that you should proceed with extra caution and understand the divorce costs involved. It is advisable to take legal advice before you make your decision, to find out what the best thing is for you in your circumstances. For clear and practical advice and assistance on this or any other matter regarding your divorce, call Andrew Isaacs Solicitors. It might save you making a costly mistake.