How to Handle a Divorce During a Recession
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Handling a divorce during an economic recession can be very complicated and often requires a different approach. While considering the instability of the housing and job markets, there is also added financial pressure when looking at the division of pensions and taxes.
Divorce can be financially detrimental. The current downturn of the economy means it is increasingly important to consider external concerns such as childcare and the split of the family house and other assets.
Matrimonial assets consist of all the financial belongings that a couple has acquired during their marriage. These assets can include the family home, pensions, investments, and savings. When applying for a divorce, these assets are subject to being divided between both parties.
During economic downfalls, the value of these assets can rapidly change. However, expert evaluations can provide an accurate account of what your assets are worth in the current market.
In the current financial climate, it is important to consider evaluating any joint assets when filing for a divorce. When drafting the settlement, these decisions should be thought about carefully, and you should ensure that the split of the belongings is carried out fairly.
It can be worth asking what assets can be considered a ‘risk’, both personally and financially. By guaranteeing that these assets are shared equally, the ‘risk’ for both parties could be minimised, ensuring that neither partner is placed with extra financial pressure.
In previous recessions, couples who filed for divorce were encouraged to transfer the property to one party, leaving the other share payable for when the market improved. Although this solution was not ideal, it did allow couples to separate sooner despite the financial instability.
When two people take out a mortgage, both parties agree to be equally liable for the debt until it is paid off. There are many solutions for mortgages when getting a divorce, one of the most common is to sell the house. Alternatively, both parties can continue to pay their share of the mortgage or one party can buy the other out.
The current recession has undoubtedly caused the economy to struggle, consequently affecting the value of pensions. Most divorce settlements rely on the Cash Equivalent Value (CEV) . However, the current economic stance has had a negative impact on CEV causing dramatic changes to Pension Sharing Orders.
If a couple agrees to offset the value of their pensions against other assets, it is important to consider the increased risk of not having a reliable indication of the asset’s market value.
A divorce is already an emotionally difficult procedure. However, with the added pressure of a financial recession, the process can appear even more daunting.