The financial implications of divorce: what a marital split could mean for you

January may be a time to start afresh with New Year resolutions, but it is also a common time of year for marriages to end.

Solicitors report seeing a surge in divorce applications from the first working Monday of January – known as Divorce Day – and while nobody would rush into it after "one bad Christmas", said Hargreaves Lansdown's personal financial analyst Sarah Coles, "a fortnight of one another’s company can be the straw that breaks the camel's back".

The January spike in enquiries to divorce lawyers could be explained by the "pressures of family, time spent together and money worries" during Christmas, said Stowe Family Law. It can be a stressful time of year, which can "exacerbate pre-existing problems" and lead to a marital break-up.

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Government family court data shows there were 28,865 divorce applications between January and March 2023 compared with 24,624 between April and June of the same year.

However, the cost-of-living crisis may delay many people from filing for divorce, said The Guardian, which reported Legal & General research suggesting "financial pressures" have delayed 19% of divorces in recent years. 

Getting a divorce is an emotional and stressful time but there are also financial implications to consider.

How much does a divorce cost?

There is no "one-size fits all" price for a divorce, explained Stowe Family Law.

There is a standard fee of £593 to process an application but that is before solicitor fees. If there are financial or child arrangements to resolve, this can range from £2,500 to £25,000, added the law firm.

Divorces can be done without legal and financial advice, especially if you file for a 'no-fault' divorce. But you may benefit from professional support, said Which? if you have a "fairly complex financial situation" such as if property, investments and children are involved. 

You don't have to stay friends, added Coles, but the more you can agree on, "the less you'll spend with and on lawyers".

The family home

The home you bought and shared with your ex is likely to be "shaken up" by divorce, warns Investors' Chronicle. If no agreement can be reached, a court has the power to transfer the home to one party or the other, order the property to be sold or keep the home, and not change who owns it.

A property has "immediate emotional and practical importance" in divorce proceedings, said ThisIsMoney, especially if children are involved.

Additionally, higher mortgage rates have "narrowed options" for those who need to buy a new home after separating.

Don't forget about pensions

Pensions account for 42% of household wealth on average, according to the Office for National Statistics.

But a survey by interactive investor found three-quarters of divorced women didn't discuss pensions as part of their settlement, compared with 56% of divorced men. 

This could lead to women "missing out on future income which probably should have been theirs".

Pensions are often "neglected" during a divorce, added ThisIsMoney, despite their value.

Ultimately, pensions should be valued "as part of the financial disclosure, and it may be worth paying an adviser to check the numbers", said Which?

A judge could decide that the money has to be shared, given to one partner later or the equivalent money taken from other assets.

Prepare your finances for the future

Annual incomes drop by an average of £9,700 in the year after a separation, said FTAdviser.

So it will be important to start "rebuilding your finances" after this big life event, added Coles.

This could include making emergency savings, getting insured to protect yourself and your loved ones, and contributing to your pension for retirement as soon as possible.