Money: How to cope when two become one

Women need to know their financial rights after separation, says Kathleen Hennessy
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The Independent Online
PATSY KENSIT may be sticking with Liam Gallagher for now, but speculation that their marriage is in trouble is hardly surprising. The odds aren't good even for non-celebrity couples: more than a third of UK marriages end in divorce and one in five families is headed by a single woman.

It sounds unromantic, but all women need to know where they'd stand if they were to divorce. Once you know what you could lose, you can plan ahead so you wouldn't be left in financial ruin.

This also goes for men: a man with fewer assets than a higher-earning partner is entitled to claim in exactly the same way as a lower-earning wife.

If you and your spouse separate you'll probably be in a highly emotional state. "Stay level-headed and don't make any financial changes because one isn't always thinking straight," says Fiona Price, managing director of Fiona Price and Partners, independent financial advisers. She advises an immediate trip to the lawyers and a financial adviser to work out exactly what's at stake and how much you need to live on. Once it's clear you aren't going to get back together, do not agree a settlement without legal help (see box).

If you've split up acrimoniously there is a fair chance your ex may try to avoid joint financial responsibilities. For example, you are both responsible for a joint mortgage: you can't pay your half and expect the lender to accept that. If you don't make full repayments you could end up with a poor credit record - the last thing you need when starting out on your own - so keep lenders informed. You also need to discuss joint credit cards and bank accounts - again, you are both responsible.

If you divorce you'll only get maintenance from your ex-husband if his standard of living is substantially higher than yours. You may get nothing if you are working. Children from the marriage have to be provided for and their parents have to pay jointly for their upkeep until they are 18. The Child Support Agency can pursue an ex-husband for support. Maintenance payments are assessed by the court based on the needs of the applicants (you and your children) and the ability of the other party (your husband) to pay. Many maintenance awards are lower than ex-wives had hoped for.

If you haven't dealt with finances and tax in your marriage, get helpful publications from the National Council of One Parent Families (0171-267 1361) and One Parent Families Scotland (0131 556 3899). They run local support groups and can guide you to counselling services.

Most pension schemes, including the state pension, are based on a society that expected men to provide for their wives in retirement. So married women have to wait until their husbands retire before they can draw a pension. Before July 1996 divorced women had no claim on ex-husbands' pensions. There was scope for the court to increase the ex-wife's share of assets - the house, for example - to compensate.

But this does not make up for the loss of a guaranteed income in retirement. Now the court can order pension schemes to "earmark" part of the pension for an ex-wife. The problem here is that the ex-wife has to wait for the husband to retire before she gets her share. A better solution is to split the pension at the time of the divorce: this should become law by April 2000.

Having your own pension is impossible if you are raising a family because you can only pay into a pension if you work. You need to make other savings, which could go into a pension if you go back to work or if the law changes: the new stakeholder pensions may allow this.

You may well need to look for work, and retrain, after you divorce. Some funding for this may be available from your local education authority (LEA) or training and enterprise council (TEC): contact your local authority for details. The Women's Returners Network (0171-839 8188) provides information and advice.

There are no automatic state payments for women who divorce but you may qualify for Income Support, Family Credit, Council Tax Benefit, Housing Benefit and help from the Social Fund.

Don't rush to divorce if you think your marriage could be saved, but bear in mind that the Family Law Act 1996, which comes into force next year, will make "quickie" divorces harder to obtain.

q Kathleen Hennessy is assistant editor of `Moneywise' magazine.

What to do when you separate

q Find a solicitor who specialises in family law. The Solicitors' Family Law Association can give you the names of firms in your area: tel: 01689 850227 for details.

q If you have joint bank accounts and credit cards and worry that your ex may try to run up debts, inform the companies of what's happened right away. Ask the banks and building societies only to accept joint instructions from both you and your ex.

q You can often arrange to suspend payments into regular commitments such as a pension or unit trust savings plan. Try to keep paying into any life insurance you have, especially if you have children.

q Don't forget to pay for the buildings and contents insurance on your home.

q Fiona Price & Partners publishes a `Divorced Women's Survival Guide'. It costs pounds 2.95 including postage. Send cheques payable to Fiona Price & Partners to 33 Great Queen Street, London WC2B 5AA.

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