Whatever the reason, this will be a time of much emotional turmoil particularly if one of the spouses did not wish to end the marriage or had no idea that the other had been considering this. Parties have often been married for a long time so it is a big upheaval and change. One of the parties may have been reliant on the other to deal with all the finances so they will have a lot to learn when living on their own. There is also going to be a change in the standard of living that had been expected on the parties’ retirement if they had stayed together. Parents divorcing can also often cause more emotional upset for adult children than younger children.
When you separate and are over 50 it is a lot harder to resolve the financial settlement because there is less time for the parties to get back on their feet again. If you are close to retirement or have already retired the possibility of a mortgage may be out of the question and there is no time to save up for a pension.
Property v Pensions
It may seem a good idea to receive more equity from the sale of the former matrimonial home or to keep the property rather than making a claim against the other party’s pension simply to ensure that your housing needs are met. This is not always the best option. When you reach retirement age your former spouse may then have a reasonable income from their pension whereas you will be left living off State pension.
It is wise to fully consider making a claim against a pension even if that pension is already in payment. Expert advice may need to be obtained.
The problem with dividing a pension later in life is that there is no time to build it back up again. That income is now having to pay for two households rather than one so it may be worthwhile getting an expert report to work out how to equalise the income from the pension rather than just splitting the capital equally between you. This does not always provide an equal income so one of the parties could still find themselves much better off than the other. State pensions also need to be taken into account.
A lot of marriages are still based on the traditional family where the husband will go out to work whilst the wife sacrifices her career to raise the children and look after the house. However, the pensions that either of you have accrued during the marriage are meant to have been there for both of you on your retirement. The same view is taken if you divorce so it is important to know that you have a right to make a claim and fully consider that option.
What About A Home?
The former matrimonial home will usually have to be sold and one house now has to be split into two. The house may be large enough to provide for two homes albeit of a much smaller size but if the house is already a smaller property this may not be a possibility. Practicalities need to be considered as well as the financial split in theory. It may be that your homes will have to be rented and the capital that you receive from the sale of the former matrimonial home can be invested to provide further income for that rent.
Is There Enough Income?
If you are both still working then you may only need to look at your income upon retirement. Some will still find that they have to continue working longer than they had originally hoped in order to try to “catch up” and early retirement plans may no longer be an option. If one of the parties has not worked throughout the marriage then some form of spousal maintenance may be appropriate and this could either be lifetime spousal maintenance or just until retirement at which point pensions will take over as being the source of income.
If there is capital available either from savings or sale proceeds from the former matrimonial home which haven’t been used to purchase another property, investment advice may be useful to consider providing further income.
Separating later in life can be an emotional struggle as well as a financial struggle but for some it is better than spending their next 20 or 30 years living in an unhappy marriage. Whatever the reason for your separation, it is always advisable to get legal advice to consider all of your options and what is best for you. For further information, please contact us on freephone 0800 011 6666
