Separation enquiries have shot up 136% since the start of 2021 – with costs also rising due to a sluggish housing market and stalling economy

Divorce enquiries have skyrocketed in the UK – but separating couples are finding it difficult to fund the split in such a challenging economy.

Figures show that lockdown pushed thousands of couples to the brink in 2020, with queries to divorce lawyers jumping by 42 per cent compared with the same period in 2019.

This year’s figures are even higher – with June 2021 seeing a staggering 136% rise in separation enquiries compared to the beginning of the year (itself traditionally a peak time for divorce).

According to Sarah Havers, a senior associate in the divorce department at Stewarts law firm, lockdown has played a big role in driving the national divorce rate up.

“Even the strongest of marriages have been severely tested by the overall stresses of the pandemic – financial, emotional and physical,” stated Havers.

“Having been forced to take a long, hard look at their partners, the much-heralded promise of ‘freedom day’ took on a whole new meaning.”

42% of marriages end in divorce, and for many separating couples, the process is among the most painful of their lives. It can also be one of the most expensive – costing £14,500 on average. For those who need to sell property, or contest a settlement through the courts, the costs can amount to tens of thousands of pounds – with an average couple spending £30,000 on solicitors’ and court fees, £35,000 on rent and £144,000 on a new property.

When properties are valued in the millions of pounds, the difference between selling in a bull or a bear market can run into six figure sums. Equally, when selling a business, market cycles, interest rates and banks’ lending appetites have a huge impact on valuations. In 2012, the TopShop and Topman fashion brands were valued at $3.2 billion. In 2021, they were acquired for around $300 million.    

For high net worth couples, the combination of pensions and investments can lead to complex calculations of value and future worth. Financial experts and lawyers may be required to reach a fair resolution – both of which are expensive to hire. 

Extra financial pressures have been created as a result of the pandemic, with factors such as reduced income on furlough, stagnating work prospects in harder-hit industries (e.g. travel and hospitality) and reduced working options due to childcare or illness.

The divorce process can also be lengthy – with a high backlog of court cases resulting in long waits for any couple that cannot agree on division of assets.

Whilst divorce rates appear to be rising during the pandemic, options for many couples are limited due to a sluggish housing market, stalled economy and rising prices.

Stephen Clark at bridging finance company Finbri said: “When a couple decide to divorce, they often need to find large amounts of money at short notice.

“This could be to buy a new property, or to buy out their partner’s interest in the family home or business.

“Bridging loans can provide a solution. By using bridging finance – often secured on the value of a property – a couple can divide their assets without the disadvantages of a forced sale.

“It can be very useful in smoothing the path towards an amicable separation and allowing people to get on with their lives.”

Four ways to minimise costs during divorce proceedings include:

1. Having an ‘uncontested’ divorce

Beyond the basic legal costs of divorce – around £1,000 for the ‘petitioner’ (the person who initiates the divorce) and around £300 for the ‘respondent’ (the other spouse) – there are no other inevitable costs. If partners can resolve financial and logistical issues, they can retain full value of assets. The UK government’s online MoneyHelper website offers free advice.

2. Choosing mediation over court

Using a mediation service costing between £50 and £120 per session can save a great deal of money and aggravation compared to a lawyer. The best-known UK organisation offering mediation services is Relate.

3. Choosing arbitration over court

Qualified arbitrators listen to evidence from both sides to make a decision. Arbitrators can be found on the Institute of Family Law Arbitrators website, with costs averaging around £3,000 shared between a couple.

4. Doing research

Research is vital. The government’s child maintenance calculator can provide an idea of figures, based on your income and expenses.

• ENDS –

About Finbri

Finbri is a UK-based financial specialist offering residential and commercial bridging loans, development finance and refinancing to individuals and companies.

Drawing on an expert team of finance brokers, Finbri brings the market’s most competitive rates for secured loans from £26,000 to £250 million, repaid over 1 to 24 months.

With Finbri, customers can save money and time on finance loans – getting the best deal possible in the process.

Find out more online: https://www.finbri.co.uk/

We all have financial goals that we want to achieve, but some may be more complex than others. And planning for these objectives isn’t always so straightforward.

This can be the case when it comes to your retirement, and on this occasion, it may be the best option to seek financial advice. With the expertise of the professionals, you have the potential to set your goals for your future finances, and put strategies in place to ensure you have the funds to live the lifestyle you want, in the later years of your life.

What is financial planning?

Let’s go back to basics first of all and explore what financial planning is. It involves an assessment of your finances, identifying your financial objectives, and then putting a plan in place to achieve your goals. You can do a simple version of this type of planning yourself, but it is best done with the advice from a professional financial adviser, and therefore can be catered specifically for retirement planning.

For example, if you were to visit www.closebrothersam.com/financial-planning/ or any investment management or financial planning firm, you can access a specific option for planning for retirement and consultation from an expert in that field.

When considering financial planning surrounding your pension, you must note that the value of investments can go down as well as up, and you may get back less than you invested.

Each individuals’ tax and financial circumstances and goals will be different, as well as their risk level, and as such, so is their financial plan. Therefore, any strategies put in place by a financial advisor will likely be tailored to meet your specific requirements, and should be flexible to respond to changes in tax legislation and your own circumstances.

Assessing your present financial situation

One of the main benefits of seeking pension financial advice, is the extensive evaluation that an advisor can apply to your current finances and circumstance. This can include calculating how much you need or wish to save for your retirement, based on your income, and the different aspects if or when your income is expected to change.

A financial evaluation for retirement can also take into account the level of risk you are willing to take, when it comes to investment, and how long your life expectancy is.

This can then determine the strategies and plan to put in place to achieve your goals, and what you class as a ‘comfortable’ retirement. A financial planner can help to calculate how much you need to save and possibly invest, with the right asset classes and types of investment to achieve this.

Changes in retirement

With the help of a financial planner, the transition into retirement can be much smoother. It can be a significant moment in your life, and so knowing you have a thorough financial plan, created by an expert, can give you peace of mind.

Furthermore, having built a relationship with your adviser, continuous reviews of your plan can ensure that your investment strategy is flexible, and can involve adjustments over time, as you come nearer to retirement age and move through the later years of your life. This flexibility can help you to structure your finances, if or when you wish to spend more in retirement, or reduce the level of risk of investments.

Being tax efficient

Finally, another benefit of financial advice from a professional, is the help you can receive on tax regulations when you are saving for your pension, as well as when it’s time to withdraw from your pension.

A financial plan can help you make the most of tax allowances, and remain tax efficient when any changes come into place. They can help you navigate the complexities that are inevitably alongside planning your retirement.

This can involve helping with the issues surrounding the Lifetime Allowance (LTA), for example. The LTA is the total amount of money you can save in pension accounts without paying further tax. If you exceed this amount, then you’ll pay tax on the excess. A financial advisor can help plan for this and perhaps implement other avenues to save for retirement.

You can explore more sophisticated strategies, with an expert financial plan, which can help reduce the tax burden and effectively build your wealth to reach your retirement financial goals.