How to split your finances in a divorce

Esther Shaw / 10 March 2016 ( 13 January 2017 )

A guide to the things you need to consider when dividing your assets.



While divorce rates generally have fallen, with a total of 114,720 divorces in 2013, according to the Office for National Statistics (the latest year for which data is available), the older age group is bucking this trend, with the over-50s the only age group to show an increase.

While breaking up is always difficult and emotional, no matter how old you are, “silver separators” often face more complications as they have more assets to divide up, including pensions, property and investments.

How to protect your assets during divorce

The good news is, there are steps you can take to help the process go more smoothly, and to avoid a financial meltdown.

Calculate the value of your assets

If you do decide to sever the knot, the first thing you need to do is to calculate the value of net assets held by each party – and what they are worth.

To do this, you need to bring together all the paperwork relating to your cash, investments, property and pensions.  This will help you get an understanding of what you have to share out.

Generally speaking, for older couples who have been married for many years, the courts are likely to split assets equally. That said, working out the value of assets is not always straightforward.

How much does a divorce cost?

The marital home

During a divorce, one of the big decisions you will need to make is who gets the house.

If you own the property jointly and one of you wants to remain in the property, that person will need to take on the existing mortgage (if there is one) – and will also need to buy out the partner who is moving out.

As this can involve some tough decisions and detailed calculations on affordability, professional advice is essential.

Don’t underestimate the value of pensions

While many people assume that the family home is the biggest asset to consider in a divorce, the value of pensions should not be underestimated.

Women need to pay particular attention to this area, as many have typically built up smaller pots than their husbands after taking a career break to have children.

The good news is, the pension freedom reforms introduced last year – which allow the over-55s to cash in their pots – have made it easier to split pensions. That said, you do need to tread carefully, as this could mean an unexpected tax bill.

At the same time, careful planning is especially important when it comes to pensions that come with guarantees, such as final salary schemes.

Pensions can be dealt with in a number of ways to reach a fair result. For example, the capital value might simply be split, or shared to give each partner a certain income.

Equally, the value of the pension may be offset against other capital, such as one partner taking a reduced share in the matrimonial home to keep their pension. 

As before, expert advice and guidance is vital.

What you need to know about divorce and pensions

Sort out the liabilities

In addition to dividing up assets, you and your partner need to account for debts. As well as the mortgage, this may include credit cards and loans.

If your partner has run up debts in their name, the money to settle these can only be taken from their share of the assets. Crucially, however, if the debt is in a joint name, both partners are liable. 

If you do have joint debts, this could have an impact on your credit report. For this reason, it is worth checking your credit report. You can do this for a cost of £2 with one of the three main credit reference agencies: Experian, Equifax or CallCredit.

How to check your credit report

Update your Will

While it may be one of the last things you want to think about, you need to update your Will after going through a divorce. This will ensure this vital document reflects your changing circumstances.

If you fail to do this, any existing Will that is in place will still apply; this could mean your ex-partner is still named as a significant beneficiary.

By getting your Will amended, you can ensure your assets go to the people you want them to when you pass away.

Equally, if your spouse was named as your executor in your Will, you will probably want to name a new executor as well.

What happens if you die without leaving a Will?

Revisit your power of attorney

If your partner has power of attorney in regard to your property and financial affairs, or to make decisions about your health and welfare, you may wish to transfer this power to someone else.

Seek advice

When going through a divorce, it is important that you make the right choices, as these decisions are likely to be irreversible.

With this in mind, it is well worth seeking advice from both financial and legal professionals to get the best guidance you possibly can throughout this process.

To find an adviser visit unbiased.co.uk and vouchedfor.co.uk. To find a solicitor visit solicitors.lawsociety.org.uk.

When can you stop paying maintenance for an ex-spouse?

Getting your finances back on track

Once the dust has settled, you will need to learn how to take control of your finances again now that you are on your own.

This will involve you reviewing what assets you still have, and your new levels of disposable income.

You will then need to plan carefully and draw up a post-divorce budget to get your financial arrangements back on track.

For more useful information, browse our money articles.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.