I'm a divorce expert, and these are the top financial considerations that could shape your divorce settlement

Amar Ali, managing director at Reiss Edwards, says that rushing financial settlements during divorce can lead to money troubles and potential regret down the line.

“Rushing through divorce proceedings, especially with emotions involved, could mean you miss critical details. These could be pensions, shared debts or tax implications go overlooked.”

Dividing up assets

Advice from the government states that divorcing couples need to agree on how to divide their pensions, property, savings, and investments when ending their marriage.

Dividing up property and assets can cause financial battles in divorce proceedings. Ali reports that many people don't know fully what they are lawfully entitled to.

"Disputes can come about when one party doesn’t realise they have a legal claim to certain assets until proceedings have passed. When dividing assets in the event of a divorce, you should consider not just the current market value of what you have but also potential future value, as well as mortgage concerns and any issues that may arise with tax," he explained.

Sorting out paperwork properly

Ali also states that paperwork should be dealt with suitably and carefully so that it complies with the law.

"Divorcees may make arrangements when it comes to money and property, but these arrangements may not be legally binding. If this is the case, it leaves the door open for disputes down the line and can lead to claims being made from either side of the divorce even years after the divorce is complete," he warned.

Ali also emphasises that written agreements, such as consent orders, protect both parties in the divorce from surprises down the line.

"Without a consent order, one member of the party could make financial claims against the other decades after a divorce, even if your financial situation significantly improves by then," Ali said.

Considering pension rights

Furthermore, Ali says that pension rights should also be considered, as the value of these can be higher than you think, and if not considered one party could be at a big disadvantage.

"Many people assume that pensions are untouchable in a divorce, with them likely being tied to an employer. However, pension funds that are amassed during marriage can be shared or split through things like a pension sharing order. Although with this one of the parties may see their annual income fall after the divorce, making it harder for them to save into their own pensions." Ali explained.

Thinking about tax

For couples with vast assets, tax should be something major to think about, as it can lead to expensive shocks.

"Tax consequences when transferring assets can be huge.

Capital gains tax, inheritance tax, and income tax considerations need proper thinking out during the divorce process. In the UK, any spousal maintenance payments made are not tax-deductible for whoever is paying and are also not taxed as income for the recipient." he advised.

Full disclosure of financial information

It's important for all couples to fully disclose financial information in proceedings, as this is something matters more than you might realise. Courts are known for not taking lightly to assets that are hidden during court procedures, as this might affect settlement calculations or child support arrangements.

"Both parties must be transparent about their financial situation. Hiding assets may not only affect your legal rights but can result in settlements being reconsidered if and when the truth emerges," Ali stated.

Planning for child maintenance

Parents may require specific financial planning beyond the basic needs of their children.

"Child support represents just one aspect of financial planning for children in a divorce. Costs for things like education, university fees, as well as costs for healthcare should all be considered when looking at a large settlement where children are involved," Ali said.

Ali believes that in a big divorce where expensive assets may be involved, legal help should also be accompanied by proper financial advice.

"Getting proper financial advice during divorce from a financial specialist could save you up to around 15-30% more on your assets in the long run. The decisions made during difficult times like this can impact your financial situation for years to come, and this accompanied with a proper divorce lawyer can ensure you have the best support you need." he concluded.

This story was provided by https://reissedwards.co.uk/family-law/divorce/