Navigating divorce: key financial insights from Martin Lewis’ ITV special

On the latest episode of The Martin Lewis Money Show Live (ITV, February 13, 2025), financial expert Martin Lewis tackled the often-overlooked but crucial financial aspects of marriage and divorce. While many people focus on the emotional toll of a separation, Lewis highlighted the practical steps individuals should take to protect themselves financially before, during, and after divorce.

For anyone considering divorce, this episode served as an eye-opener.  It answered some interesting questions and would have left many people with further questions and concerns.

Here’s a breakdown of the key takeaways and how they can help you make informed decisions during this challenging time.

1. The financial benefits of marriage—and what you lose in divorce

Many people don’t realise that marriage comes with financial perks, some of which disappear upon divorce. Martin Lewis pointed out several benefits that married couples enjoy, including:

• Tax-free asset transfers: spouses can transfer assets between each other without incurring Capital Gains Tax (CGT). Once divorced, these transfers may trigger tax liabilities.

• Inheritance tax perks: a spouse can inherit their partner’s assets tax-free, while unmarried couples may face substantial inheritance tax bills.

• Spousal benefits for pensions: some pension schemes allow spouses to receive benefits upon the other’s death, but ex-spouses may lose access.

• Marriage allowance: couples earning below a certain threshold can transfer part of their personal allowance for tax savings—this is lost after divorce.

The key lesson? Divorce is not just an emotional decision – it has lasting financial consequences that must be carefully considered.

2. Prenuptial agreements: a safety net for your future

Martin Lewis stressed that while prenuptial agreements (prenups) are not fully, legally binding in the UK, courts often take them into account during financial settlements (if done properly with independent legal advice and disclosure).

A prenup can be particularly useful for:

• Protecting inherited wealth or family assets (from a previous marriage or from assets that have been passed down before the marriage)

• Safeguarding business interests

• Defining how property and savings should be divided in case of divorce

If you didn’t sign a prenup before marriage, a postnuptial agreement is still an option. This can be drafted after marriage to clarify financial arrangements in the event of a divorce.

3. Pensions: the often-forgotten asset in divorce

One of the biggest financial mistakes people make in divorce is overlooking pensions. Many focus on splitting property and cash savings, but pensions can be worth more than a family home.

Lewis outlined three main options for dealing with pensions in a divorce:

1. Pension sharing orders – a court order that gives a share of one spouse’s pension to the other, creating a separate pension pot.

2. Pension offsetting – instead of splitting the pension, one spouse keeps it while the other receives a different asset (e.g., a larger share of property or savings).

3. Pension attachment orders – The ex-spouse receives a portion of pension benefits when they are paid, rather than getting a separate pension pot.

Pension division can be complex, and failing to address it could lead to financial hardship later in life. Seeking professional financial advice is essential.

4. What happens to your joint debts and mortgages?

Divorce doesn’t erase financial responsibilities—especially when it comes to joint debts. Many assume that if they stop using a joint credit card or move out of the family home, they’re no longer responsible for payments. This is a dangerous misconception.

Key takeaways from Martin’s advice:

• Mortgages: both partners remain legally responsible for the mortgage unless one party takes full ownership or the property is sold. Lenders will still pursue both of you for missed payments.

• Joint loans and credit cards: if your name is on the account, you’re liable for the debt, even if your ex is the one who accumulated it. Contact lenders to discuss options for restructuring or separating debts.

• Credit score implications: a financially linked ex-partner can affect your credit rating. Once separated, apply for a financial disassociation through credit agencies to prevent their financial behaviour from impacting yours.

5. Divorce and children: financial considerations for parents

For divorcing couples with children, child maintenance is a major financial issue. Martin Lewis highlighted how the Child Maintenance Service (CMS) determines payments, which depend on:

• The paying parent’s income

• How many children they have

• How much time they spend with each parent

Beyond legal obligations, Lewis advised parents to budget realistically for post-divorce life. Costs like childcare, school fees, and extra-curricular activities can add up. Creating a fair and sustainable financial arrangement is key to ensuring stability for your children.

6. Emotional costs and practical planning

While the financial side of divorce is crucial, Martin Lewis also acknowledged the emotional toll. Many people make rash financial decisions because they’re overwhelmed, angry, or desperate for closure.

Here’s how to avoid common pitfalls:

• Take your time: rushing into financial settlements can lead to regret later. Seek legal and financial advice before making big decisions.

• Consider mediation: court battles can be costly and stressful. Mediation can help couples reach fair agreements with less conflict and you could still have the assistance of a family solicitor in the background.

• Think long-term: a divorce settlement should not just address immediate needs but also plan for the future, including retirement and financial independence.

7. Practical steps for a secure financial future

To ensure a financially stable transition after divorce, Martin Lewis recommended:

Short-term actions

✔ Gather financial documents: list all assets, debts, pensions, and sources of income.

✔ Open a separate bank account: ensure your earnings and expenses are under your sole control.

✔ Check your credit report: identify any joint financial obligations that need addressing.

✔ Update your will: divorce doesn’t automatically remove an ex-spouse from your will—update it to reflect your new wishes.

Long-term planning

✔ Reassess your budget: your lifestyle and expenses will change, so adjust your budget accordingly.

✔ Secure housing: whether renting or buying, ensure your home is affordable based on your new financial situation.

✔ Invest in your future: consider retraining or career growth to boost your financial independence.

Final thoughts: divorce is a financial reset, not just an ending

Martin Lewis’ ITV special highlighted that divorce is not just about emotional closure—it’s a financial reset. Making informed decisions about assets, debts, pensions, and future financial planning is crucial for a secure and independent future.

If you’re considering divorce, seek professional legal and financial advice to navigate this transition smoothly. The more informed you are, the better prepared you’ll be to move forward with confidence.

For more details, you can watch the full episode on ITV’s website.

Here at Gepps, we deal with all aspects of a divorce and can assist and help you navigate your way through this.