Protecting Your Children’s Financial Future During Divorce

According to the latest official estimates, around 42% of marriages in the UK end in divorce. Divorce is a profound emotional transaction that reshapes family life, and when children are involved, every decision you make carries greater weight. If you’re concerned about protecting your children’s financial future during divorce, you’ll need to think beyond just their immediate needs, and consider how you can safeguard their financial stability and opportunities in the future.

Our divorce financial advisers at Piercefield Oliver help parents navigate these decisions with confidence. In this guide, we explore the essential steps to protecting your children’s financial future during divorce – from budgeting and savings to pensions, insurance, and more. 

Why You Need to Protect Your Children’s Financial Future Early On

The earlier you begin planning your children’s finances, the more control you retain over the outcomes. Delaying key financial decisions, such as arranging future housing or structuring ongoing child maintenance, can lead to unbalanced settlements or gaps in provision that only become visible later on in the process.

Children thrive on consistency. If you proactively make these decisions early on, you’ll be more likely to maintain predictable routines for your children, secure suitable housing, and ensure they can access the same schools. These factors will help your children feel more emotionally secure during what can be a highly disruptive period.

Early financial planning for divorce also gives you clarity on complex matters such as pensions. Only 13% of divorcing couples consider their pensions when dividing assets, but they’re actually one of the most valuable assets in a marriage, and can have a significant long-term impact on your family’s financial security.

Key Financial Risks Children Face During Divorce

Reduced Household Income

Most families experience a reduction in disposable income after separation, and the financial adjustment can feel particularly challenging for the parent who takes on the majority of day-to-day childcare. This shift can affect your accommodation choices, childcare arrangements, and the extracurricular activities your children are able to access. 

Conducting a detailed review of your income, benefits, maintenance payments, and future costs can help you prepare for these changes in advance and ensure you’re not caught off guard. 

Unprotected Assets and Savings

Children’s savings are often held across a mixture of accounts – Junior ISAs, Premium Bonds, or even long-standing savings accounts opened by their grandparents. If you fail to document these funds during your divorce negotiations, they could be unintentionally absorbed into your general marital assets and left unprotected from tax inefficiencies. 

Ensuring that these assets remain solely for your children, and that they continue to grow appropriately, is a key step in safeguarding their financial future.

Lack of Long-Term Planning

It’s easy to just focus on the immediate concerns like housing and childcare arrangements during your divorce, but you still need to consider your children’s major future expenses. These could include university tuition and living costs, driving lessons or first car expenses, deposits for your child’s first home, and future inheritance arrangements.

For many parents, this is where difficulties begin to surface. Your university funding may fall short, or your children may struggle to get onto the property ladder. By addressing these priorities early, you give your children a stronger financial foundation for adulthood.

How to Protect Your Children Financially During Divorce

Create a Detailed Post-Divorce Budget

The first step to planning finances during divorce is creating a realistic post-divorce budget. You’ll need to distinguish between essential and discretionary spending, and consider how the costs will be shared between households. Factor in school fees, childcare, extracurricular activities, and any unexpected costs that might arise to ensure your budget reflects your real-life needs.

A well-structured budget can also strengthen your position during negotiations, making it easier to demonstrate the true costs of raising your children.

Review and Protect Your Children’s Savings and Investments

Next, you’ll need to clarify which savings your children have, who controls them, and how they will be managed post-divorce. Make sure you take into account:

• Junior ISAs and their ongoing contributions
• Bare Trusts and how they are administered
• Long-term investments earmarked for education or first-home support
• Pension contributions for children, if applicable

Ensuring that these funds remain protected and tax-efficient will help them grow meaningfully over time.

Review Your Pensions and Future Provision

Your pensions might not feel immediately relevant to your children, but they play a significant role in your long-term financial stability. Pension sharing orders, offsetting arrangements, and future contributions will all influence your ability to provide ongoing financial support to your children.

A professional pension on divorce report can help you understand the true value of your pension assets and prevent costly mistakes, ensuring your children’s long-term welfare is not compromised.

Update Your Life Insurance and Critical Illness Cover

Protection policies are often overlooked during divorce. You’ll need to ensure that your life insurance, critical illness cover, and income protection policies are correctly assigned and that they reflect your new circumstances. Make sure you update your children’s beneficiaries so that they remain financially protected if the unexpected happens.

Secure Your Children’s Future with Divorce Financial Planning from Piercefield Oliver

Divorce brings together a whole host of financial decisions that can feel overwhelming. Housing, income needs, pension division, savings, insurance … and not to mention the longer-term provisions you want to make for your children. Financial planning for divorce helps you see how these pieces fit together, giving you clarity and control at a time when uncertainty can easily take over.

At Piercefield Oliver, we offer specialist divorce financial advice and planning to help protect your children’s long-term stability. We’ll help you understand how different settlement structures, maintenance arrangements, and asset divisions may affect you and your family’s future, so you can make decisions that support both your immediate needs and the long-term security of your children. 

Book your free consultation today and take the first step towards securing a stable and confident future for you and your family.