Facing divorce during retirement can be extremely daunting. The prospect of having to separate from what is very often a long term spouse, whilst at the same time having to divide finances is never something to relish – doing it at the time when you had planned to be enjoying retirement can seem a bitter pill to swallow.
This is especially the case when the realisation hits that what might have once been an asset pool sufficient to cover the retirement needs of the couple, is not able to meet the outgoings of two divorced individuals. What happens then?
The approach that the Courts take to divorcing a couple in retirement is a little different to a couple yet to reach retirement age.
This is especially the case in relation to pensions.
Depending on the length of the marriage the Court will need to take a close look at the pension schemes of which the parties are members and the comparative benefits to which they are each entitled. It inevitably helps to have a good knowledge of the scheme benefits and the effect a Pension Sharing Order is going to have on the retirement position of both parties.
Pension sharing Order are the most common way of addressing any imbalance in pension benefits. There is often a misperception that such orders are not possible if the pension is in payment. This is not correct. In fact, we frequently advise in cases where schemes in payment have pension sharing orders made against them.
Other less orthodox means of dealing with the pension imbalance are through either pension attachment orders (sometimes referred to as earmarking) or offsetting. Whilst these tools are less common, there are situations and particular schemes where earmarking or offsetting can be a very good idea. Again, it is extremely sensible to seek advice on these particular issues from solicitors with a good working knowledge of the underlying principles.
Aside from the pension issue, the couple will be keen to resolve outstanding issues in relation to their non-pension assets – such as their house, savings, cars etc. They may have other investment assets that need to be looked at. The approach taken to these assets will likely depend on the length of the relationship, the requirements of the parties in the years ahead, and the contributions they have each made to those assets.
Above all, the couple will often wish to resolve their issues without the need for litigation, and the majority of cases we see are able to be resolved in this way. There are exceptions to this however – often where one spouse is unwilling to engage in the process or an extreme approach to settlement is taken. Again, specialist advice should be sought if you are either faced with or contemplating court proceedings. This is both to better understand the likely approach of the Court to the varying approaches, but also to ensure that the necessary preparation has been undertaken before court proceedings begin.
Our top ranked family law team advises families across the South West on the best solutions for them. If you would like to get in touch with the team about divorce or any other issue you can telephone 0345 450 5558 or email enquiries@stephens-scown.co.uk