The introduction of no-fault divorce laws on April 6 across the UK is aimed at simplifying the process of legally separating.
It marks a long-awaited change that could see couples divorce within around six months of first applying, with neither party being held accountable for the split and the process mainly done by email.
However, some experts are warning that the introduction of no-fault divorce could make the splitting of financial assets such as pensions more challenging. Here’s what you need to know.
If your relationship is ending, and you need help dividing your money and property or making arrangements for your children, amicable is a trusted legal service for separation and divorce. Unlike solicitors, amicable works with couples and offers a fixed-fee service that includes VAT to help manage all aspects of separation so that you can agree on the best way forward for your family and your finances. Get in touch to explore how they can help you separate in a kinder, better way.
What is no-fault divorce?
Prior to these new laws coming into force, you had to state one of five possible reasons for applying for divorce: adultery, unreasonable behaviour, desertion, living apart for at least two years, or living apart for at least five years (if only one party wanted the split).
It goes without saying that marriages can break down for any number of reasons. Plenty of marriages end by mutual agreement, but the old rules meant that these couples would usually have to live separately for at least two years before they could officially divorce without apportioning blame. This could be both stressful and expensive, not to mention time-consuming.
The new rules, as the name suggests, allow couples to apply for divorce without citing a particular reason for the split. No-fault divorce can be sought by one or both members of the couple, and carried out entirely by email. No-fault divorces will also be uncontestable, meaning that neither the other party (if only one member of the couple is applying) nor the court will be able to challenge an application (except if the marriage itself is considered invalid). The process is far speedier than previous divorce proceedings, and should be completed within six months of first applying.
Some of the more antiquated wording in the divorce process has also been changed. The person applying for the divorce is now called the applicant, rather than the petitioner, the ‘decree nisi’ (the document stating the court sees no reason why you can’t divorce) will be called the ‘conditional order’, and the ‘decree absolute’ (legal document ending your marriage) will be called the ‘final order’.
The above also applies to the dissolution of civil partnerships.
What does no-fault divorce mean for your finances?
In some ways, no-fault divorce is expected to make divorce much cheaper by simplifying the process. By taking out the need to blame one of the separating parties for the split, it’s assumed that couples won’t have to spend as much on expensive divorce lawyers.
However, some experts warn that speeding up the process could mean that couples fail to plan ahead and consider their long-term financial futures.
Under the new law, financial matters will still be settled in a separate process, which runs alongside the divorce proceedings and can extend beyond the divorce being finalised. The government is currently considering reforms to this part of the process too.
Financial orders, which lay out how finances will be managed between the separating parties moving forward, are only made in about one in three divorces. Fewer still include plans for how pensions will be divided. What’s more, research shows that divorced women tend to end up with particularly small pension pots, even when taking into account that women’s pensions are disproportionately lower than men’s on average to begin with. Read more about this in our articles Women and the gender pension gap and How are pensions shared in a divorce?
There are concerns that the faster new divorce process could make this issue worse for separating couples who fail to make proper pension plans. If both parties want to end things swiftly and without too much fuss, it’s possible that they could neglect the finer details of complex matters such as pensions in the rush to sort out their split. One partner might underestimate how much their pension is worth, for example, or remain focused on their short-term finances rather than considering their retirement income. The partner with a smaller pension pot might be more likely to consider their living situation or securing financial support for children, rather than pension planning.
The potential issues around what happens to pensions when you divorce under the new law could also be made worse if one partner knows more about pensions than the other, or has been responsible for handling joint finances.
How can you protect your finances in a no-fault divorce?
More separating couples than ever are looking to split amicably, without getting in a fight through lawyers. But even if nobody is to blame for your marriage ending, you shouldn’t rule out getting professional advice. If you have children, pensions, property, savings or investments, then it could be in your interests to speak to a lawyer and/or adviser about what they recommend for your personal situation
In particular, it could be really important to seek advice on what happens to pensions when you divorce to find the right resolution for you, and make sure that your retirement income doesn’t suffer from the fallout.
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
If you expect your financial situation to suffer significantly from a divorce or dissolution then you could consider benefits as an option. Read our article Am I entitled to any benefits if divorcing or separating? for more information.
For more guidance on handling your finances at the end of a relationship, read our articles Sorting out your finances when a relationship ends and Joint bank accounts: what happens if you split up.
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