Separation can be the start of financial woes

The number of couples splitting up tends to go up at this time of year, so it's important to look after yourself financially. Roz Sanderson reports

Unfortunately, the end of the summer holidays also brings with it a rise in the number of people getting divorced, and many people find themselves facing huge, seemingly unavoidable costs.

Protecting yourself financially before, during and possibly after your marriage is critical even if it seems unromantic.

Christine Northam, a counsellor for relationship support charity Relate, says: "The summer is a time for families to go away, and couples tend to put their feelings on hold, but problems in their normal routine become highlighted. Upon returning home some couples will start to realise that the only solution to their problems is divorce."

But, with the Government's recent plans to cut family legal aid, a whole host of financial problems will be aggravated even further, according to Nigel Shepherd of the advice centre Resolution.

"This is a disastrous retrograde step. The only option available to those who currently qualify for legal aid will be mediation," he says.

And if mediation fails to resolve their problems, Mr Shepherd predicts more and more people will be representing themselves in court. "This is a nightmare. Some of these situations are difficult enough to understand for trained lawyers."

However, avoiding the courts can help you save a huge amount in legal fees, and the best way to go about this is by communicating with your partner. "Communication is key," says Mark Penston from Bluesky Independent Financial Advisers. "The best outcomes in divorce cases are those where the couple stay in contact and approach the situation rationally." Naturally this isn't always a feasible option. If the situation is acrimonious, and solicitors start to get involved, then the whole thing can get hugely expensive.

Getting a financial adviser to help you work out what your finances will be like after your divorce may also make some couples think again.

In fact, another way to lower the legal costs and avoid a long drawn-out process is to decide together before you get married what to do with your financial assets in the eventuality of a divorce. Mrs Northam emphasises the need for a premarital agreement. "It makes financial sense and shouldn't be seen as mercenary or unromantic," she says. "It's just common sense."

This is especially true if you have assets that you bought before your marriage that you want to keep separate, although Mrs Northam advises: "Although they are a good idea, premarital agreements might not be right for everyone."

Mr Penston said: "Very few of the people we work with have premarital agreements, as, in the throes of passion, they can appear to be a negative thing. However, if they are sensibly drawn up and rationally thought through they are a good idea."

Many couples who are not legally married but have been cohabiting for a number of years believe they still have the rights of a "common-law marriage". However, no such rights exist and the division of assets is based on legal ownership. So the financial implications can be even more worrying.

Financial expert Jasmine Birtles, founder of Moneymagpie, suggests setting up a legal agreement. "It's particularly important for cohabiting couples, and although it's not a formal legal document it would probably stand up in a court of law," she said.

The effects on women

The costs of divorce can fall pretty heavily on women, especially if they are no longer working and rely on their husband's income. Ms Birtles said: "It takes men about five years to bounce back to their former financial state after a divorce, whereas women often never recover.

"It's a good idea for women with children to go for as much maintenance support as they can, and it's in their interest to get as much as they can in settlement to save for the future."

Mr Penston says: "On balance women do come off worse, but they are far more likely to do well if they seek financial as well as legal advice."

He also advises that although maintenance support is important, if the maintenance payer dies, loses their job or falls ill, then you might suddenly find yourself in a financially compromised position.

To balance this, Mr Penston suggests setting up a bespoke insurance policy to protect against any eventuality.

Deferring divorce

Once the financial implications have been considered, divorce may not seem such an attractive prospect. In fact, Mr Penston says: "Although we normally get a wave of enquiries in September, it might not be the case this year as a lot of people are deferring their divorces in the hope that their assets will recover."

Mrs Northam advises couples not to give up immediately and explains that seeking counselling can often be a good first step. "It might be that it's not as bad as it seems," she says. "It's just that they don't have the ability to sort it out. A lot of people feel as though they've failed if they go to counselling, but relationships are one of the hardest things you have to do."