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Ask an Expert – Will a divorce financial settlement affect my benefits?

Howells Solicitors

22 Oct, 2020

“I receive Tax Credits and other benefits and allowances, will a lump sum settlement from my divorce affect what I can claim?”

Whilst the full answer to this question is dependent on a number of factors, the short answer is likely yes.

It’s important to note that a divorce financial settlement can impact both your current entitlement and future entitlement. The law governing benefits has changed in recent years following welfare reforms and this may mean that the benefits you are currently claiming have changed their entitlement criteria. It is always best to seek professional advice if you are unsure about the impact a settlement could have.

If you have instructed a Solicitor to deal with your divorce they will already have your financial best interests at heart. They can work with us as specialists to ensure your interests are protected and you are fully informed to make the best decision for your future.

How will my divorce financial settlement be treated?

Government allowances and benefits are categorised in different ways but generally speaking those that are means tested are affected by the income and savings you have. Most income replacement benefits including Universal Credit, Jobseekers Allowance, Income Support and Employment and Support Allowance would be affected by a settlement.

As all financial settlements are different they will affect individuals differently. Your divorce financial settlement may see you receive assets such as property, cars and other possessions. It may see you receive a lump sum or you may receive a regular maintenance payment.

divorce financial settlement

As with all benefits there are a number of exemptions and disregards that may be applicable. It is always helpful to know your rights so that you can make the most informed decisions and better plan for your future.

Separating from a partner will often see a reduction to your household income. Often certain types of income can be disregarded and being separated may mean that you find out you are entitled to more than you were previously. It’s always best to seek professional advice.

Separations can also raise other issues including your housing situation and where you will live after the separation. You may already own a property or you may rent a property. If you do not receive property in the settlement or do not agree on who will remain in a rental property, you will need to consider your housing options.

If you require housing after a separation it is important you deal with this straight away. You should approach the Council and local housing schemes as soon as possible to find out what support is available to you. They can help guide you through social housing and private rented accommodation.

If you find yourself in a situation where you are homeless or at risk of becoming homeless you should obtain specialist housing law advice.

At Howells we know that going through a separation is difficult. There are many factors to consider and planning and understanding your finances for the future can seem overwhelming. We know that it’s important to seek support with all of this and we are able to offer specialist advice so that you know all the facts when agreeing to a divorce financial settlement.

Marie Busfield Howells Solicitors

If you require any assistance with benefits, credits or housing matters please do not hesitate to contact us to see how we can help you.

Written by Marie Busfield, Benefits, Credits and Housing law specialist

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