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Count the cost of divorce before it happens

May 22 2006

It's not just celebrities who face painful losses when a marriage breaks down. Jeremy Gates reports

Daily Post, Liverpool Echo

 

IF IT really costs Sir Paul McCartney more than £100m to end his four-year marriage to his wife, Heather, are the rest of us - with much less to divide if things go wrong - paying enough attention to the financial implications of getting married?

When divorce happens early in life - the average age of divorce in England and Wales is 42.7 years for men and just over 40 for women - there may not be a great deal of assets to dispute.

A survey by the website MoneyExpert.com reckoned that 160,000-plus couples who divorce each year are splitting assets which average £165,000.

Less than half this sum (£76,300) is accounted for by bricks and mortar, which means many couples struggle to create two separate households out of one.

However, that MoneyExpert figure does not include pension benefits, an increasingly significant factor as more couples decide to break up in middle age or even later.

Says financial advisor Keith Churchouse, of Guildford, Surrey-based Churchouse Financial Planning: "I find that the over-50 year olds are doing much more divorcing.

"People who have spent the last 30 years with the same person often want to spend the next 30 with somebody else as a way of changing their lives.

"Typically, the husband works in the City, with a very good final salary pension, and the house is worth £750,000. There are various ways of splitting this up: the wife takes the house, husband takes the pension.

"There may be a sharing order, but when the pension fund is a good one, it makes sense for the wife to take shadow benefits, which means an order is placed against the pension fund to ensure that half is paid to her. This is usually a better option than a wife starting her own pension."

As the McCartney case underlines, however, plenty of people embark on second or third marriages with a very unequal division of assets. In that case, are pre-nuptial agreements a sensible precaution at the start of any marriage, even if they are not legally binding in Britain?

 
 

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