Recession leads to divorce settlement renegotiations

Wednesday, 09 September 2009 02:54

A third of solicitors have been asked to renegotiate divorce settlements because of the recession.

The falls in property and investment values have led many people divorcing to look again at what they are really worth.

David Elms, chief executive of Unbiased.co.uk, said: "The credit crunch has affected everyone in different ways, but those going through a divorce have been put in a difficult position due to the value of their combined assets decreasing over the period of the financial settlement being agreed.

"Many going through a divorce aren't aware that financial settlements may be renegotiated if the value of the items change, therefore it is vital to seek professional advice to ensure you and your assets are protected."

A poll of solicitors by Unbiased found 84 per cent thought the first area to look at when aiming to re-evaluate your wealth is property.

For example, Halifax puts the average house price at £159,623 - a drop of 12.1 per cent in the last year and down from £197,244 at the beginning of 2008.

The drop in assets have also hit pension funds and other investments - with two-thirds of solicitors urging those going through divorces to reassess their values.

Other areas to keep in mind include: future earnings; mortgage repayments, which may have fallen with low interest rates; education and childcare costs; and the value of high value possessions such as works of art.

"A family solicitor will help you through the divorce process to ensure you get everything you are entitled to from the final settlement and are not losing out because the value of major assets have dropped," Mr elms said.

"A discussion with a local IFA may also be beneficial as they can advise you on how best to evaluate your wealth and also how to manage your new financial situation once a settlement has been made."

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