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January is “divorce month”, according to the marketing departments of family law firms, traditionally around the line of couples' Christmas break-ups leading to the break-up of marriages in the new year.
Is this true? I had a press release from a law firm claiming that March actually marks the “highest divorce rate”, according to their analysis of 20 years of court data. Regardless, the announcement that Hollywood superstars Brad Pitt and Angelina Jolie ended their separation after eight years of legal negotiations ensured that the divorce was over in the new year's news.
Regardless of the month the petition is filed, divorce has high emotional and financial costs – even more so when it's done honestly. One dreads to think what Jolie and Pitt's legal advisors have earned in fees since 2016. So when a 50-something couple I'm dating playfully announced in a pub that they were considering divorcing for financial reasons, I was intrigued. .
To keep their anonymity and the spirit of the movies, I call them Mr. and Mrs. Smith. Marko is the breadwinner, with a good salary and pension worth over £1mn. Meanwhile, Kirsty is just blossoming into retirement after giving up her career in finance to raise their two children.
The miracle of the chancellor Budget day goes to make money for the pension subject to inheritance tax it makes them less powerful as a tax planning tool after the death of wealthy families. In the future, using the money or giving your children an early inheritance will be more tax efficient.
However, any pension withdrawals above the tax-free amount (which is usually 25 per cent) will attract income tax, for disadvantaged couples such as the Smiths who have a single pension between them. That's why their madcap plan to file for divorce and use a pension sharing order to split the pot between them, allowing Kirsty to cash out at a much lower tax rate.
Mark said that if their second home by the sea became Kirsty's main residence, they could avoid the newly imposed 200 per cent council tax on it. After he retired, he would sell in London; The couple will get back together, live by the beach and remarry to capture the inheritance tax benefits between the couples. So what did I think of their plan?
Ignoring questionable morals, I wondered if the hassle and legal costs would justify the savings. When Kirsty announced that she would only go ahead if she could spend a lot of money on the couple's big wedding and a lavish honeymoon, their tax avoidance plan was really weird.
But our pub conversation shows how important your marital status is in the world of financial planning. Rather than divorcing over money, it would make more sense to the millions of British couples who live together to marry.
Proposed pension and IHT changes makes marriage and civil partnerships more attractive, as assets can be transferred tax-free between spouses on first death. This avoids potentially life-changing tax bills if one of you dies.
As tax benefits shrink, it is vital for spouses or civil partners to maximize both their Isas and the benefits of saving interest, dividends and capital gains tax, says Lisa Caplan, chartered financial planner at Charles Stanley.
If Mark were to pay £20,000 a year into Kirsty's stocks and shares Isa, for example, this would give the Smiths tax-efficient flexibility with their future retirement spending.
After the budget, to give money has become an increasingly important feature of tax planning. Yet even if their own marriage is strong, wealthy couples who make large gifts often worry about their older children. Advisors report increased interest in using trusts to protect gifts when older children divorce, as well as use cohabitation agreements if a spouse moves in, it prevents them from making any future claim to the property.
Prenuptial agreements may not sound romantic, but they are to be normal. These couples allow couples to define what's mine (and yours) before they get married in the event of a divorce later. Law Commission you just suggested – again – they must be legally binding.
It's not just the Bank of Mum and Dad that focuses on these; the tendency to marry later in life means that more couples will have to build up their own assets that they will need to maintain. Lawyers tell me that pre-nups are more common in second marriages; Couples often want to ensure that a share of assets passes on to their children.
Of course, all of these relationship insurance policies have significant legal costs attached. Even now if I were a law firm writing a document for the month of January's divorce, I would insist that it may be small compared to the value of the assets at risk.
Claire Barrett is the FT's consumer editor and author of 'What They Don't Teach You About Money'. claire.barrett@ft.com Instagram @Claerb