With many divorcing couples facing the competing financial demands of children, ageing parents and retirement planning, advisers are increasingly supporting clients caught in the “sandwich generation”. Samantha Woodham, barrister at 4PB and co-founder of The Divorce Surgery, explores the legal and financial implications of divorce at this life stage – and why and how good advice can help avoid unnecessary conflict and cost for your clients.
There are around 100,000 divorces in England and Wales each year. The average age of divorce is 42 for women and 45 for men.
Divorce at the height of mid-life financial pressure
So, most couples approaching divorce are doing so at a time when mid-life financial pressures are at their most acute. They may be reaching the peak of their earning potential but, for some, their lifestyle costs are heavily dependent on discretionary pay and deferred compensation. At the same time, private school fees, with the added impact of inflation and VAT, can become an increasing drain on capital reserves.
Global and national economic pressures add another layer of complexity, with unvested share options sometimes lapsing rather than vesting. Combined with the growing cost of supporting elderly relatives – whether through care home contributions or investment in living arrangements such as a “granny annex” – this can place significant additional pressure on family finances. For some, there is also the reality that careers were compromised years earlier to accommodate childcare responsibilities, with a lasting impact on earning capacity. And with retirement often less than a decade away, the focus inevitably shifts towards pensions and other assets capable of generating future income.
The key legal questions on divorce
Aside from the financial implications, these issues raise important legal considerations on divorce. Questions arise around how family investments in the former matrimonial home, for instance by building a granny annex, should be treated; whether deferred compensation received after separation should be shared; and how pensions should be dealt with, particularly if some were accrued before the relationship started.
There may also be difficult decisions around how to account for uncertain income streams, whether school fees remain affordable, and how both parties can achieve financial independence without compromising their respective needs.
Why early financial clarity matters
There is a push and pull to many of these elements. In the traditional adversarial two-solicitor approach, couples can quickly become entrenched in opposing viewpoints, seeing the other’s position as unreasonable and their own as the only logical solution. This simply fuels litigation and increases legal spend.
So how best to prepare your clients? Mistrust breeds litigation. Rather than rushing to lawyers, often the best place to start is for couples to sit down together with their financial adviser and understand the full financial picture: what’s liquid and illiquid, tax calculations, deferred compensation breakdowns, what is vested and unvested, and a full understanding of pension entitlements. Better informed people make better, more rational choices.
Once the financial picture is clear, it is best not to launch into speculative discussions about settlement outcomes. There will be a – sometimes quite narrow – bracket of what is legally fair. If couples start negotiations without a proper understanding of that bracket, they risk either reaching an agreement which later needs to be undone or, more commonly, entrenching themselves in opposing positions which both fall outside it.
A more constructive route for separating couples
Once the financial picture is clear, advisers should encourage clients to get legal advice and to consider continuing the joint approach they have taken to their finances by instructing one shared lawyer. Solicitors and barristers can give joint advice to separating couples as to what a judge would consider fair in their situation.
Models such as One Couple One Lawyer and Early Neutral Evaluation (ENE) are increasingly popular because they provide targeted, impartial expert legal advice, often for a fixed fee, while avoiding the conflict and ballooning costs of the traditional two-sided advice model.
Above all, your clients should know this: the vast majority of couples navigating divorce are in the sandwich generation. These issues arise repeatedly and, with the right advice at the right time, nothing is insurmountable. The key is preparing well with their financial adviser, ensuring legal spend is targeted and proportionate to the resources and issues involved, and keeping one eye on the ultimate goal: moving on from the marriage in a fair financial position.
About Samantha Woodham
Samantha Woodham is a barrister at 4PB and co-founder of The Divorce Surgery, an award-winning law firm and the first to enable couples to share a lawyer on divorce.
