When a married couple decide that they will separate, the finances of the marriage will need to be divided. The law of Divorce in Scotland contains certain principals. The first principal is that there will be a fair sharing of the matrimonial property. The matrimonial property is everything that has been acquired by the parties in either parties’ sole name or in joint names between the date the couple married and the date they separated. Such assets will often include the family home, bank accounts, cars and pensions.
Pensions are often the most underrated item of matrimonial property. It can easily be forgotten about by the parties or thought of to be an asset with a low value and so not worth considering. Many couples will have formed a view that as they both worked during the marriage, their pensions are likely to be worth similar amounts. This is not always the case. It is important to ensure that a correct valuation of each pension is obtained to allow a fair sharing to take place.
Some people will also be concerned that their pension will be worth a lot as they have paid into it for many years. The full value of the pension is not always taken into account. We only look at the period the couple were married. Therefore, if a person has paid into a fund for thirty years but was married for ten years, the pension valuation will be apportioned to only the period of the marriage. However, this can include pensions schemes that are now closed or the person has stopped paying into, the pension scheme either before or during the marriage, therefore it is extremely important to take advice to ensure that the correct value is used in negotiating a fair share and settlement.
The pensions can also be useful in deciding how the assets should be divided. A person’s pension can usually be “shared”. This means that a portion of a pension is taken from one party and passed to the other party on divorce. It is important for both parties that they consider taking independent financial advice to help them decide what is best for their future.
These matters are not straightforward and we would suggest that those separating consult a solicitor quickly to consider and fully understand the importance of their pensions. The longer parties are separated without resolving financial matters, the more difficult it can become. A solicitor can also assist in putting you in touch with a financial advisor to help you consider your options fully.
If you are separating or have separated, and would like further information and advice regarding the issue of pensions on divorce, why not come along to our free divorce clinic on 29 August 2019? Our will be on hand to provide advice – call 0141 375 1222 to reserve your free 20 minute consultation.
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