Don’t Make Permanent Financial Decisions in an Emotional Storm

Before negotiations begin, before the solicitors are formally instructed, before positions harden, there is often an emotional storm. It may not look dramatic from the outside. You may still be going to work, running the business, managing the school calendar and replying to emails. But internally, everything feels unsettled.  

You may be experiencing shock, anger, guilt, relief and fear, sometimes all within the same hour. It is in this emotionally charged window that some of the most permanent financial decisions are made. Risk lies in acting, making decisions while dysregulated.  

When you are used to being decisive in your life and career, there can be a strong instinct to solve the problem quickly. You may want to offer a generous settlement just to make it end or agree to terms verbally to keep things amicable. This feels productive and responsible. However, decisions made in emotional intensity are rarely strategically optimal.  

Divorce settlements are not short-term arrangements. They shape your life for decades to come, your retirement security, your children’s financial environment, your capacity to rebuild and invest, and your exposure to tax and liquidity risk. This is not a time for panic generosity or defensive positioning. It is a time for clarity.  

In the early stages, many people talk about wanting something that is fair, but fairness can feel distorted when emotions are heightened. Guilt can lead to over-offering. Anger can lead to punitive thinking. Fear can lead to clinging to assets that are actually inefficient. Avoidance can lead to agreeing too quickly.  

True financial fairness is not about splitting numbers on a page. It is about sustainable outcomes.  

In England and Wales, the court’s starting point under the Matrimonial Causes Act 1973 is fairness, with equal sharing often considered where appropriate, but fairness also includes needs, income capacity, housing requirements and long-term security.  

A settlement that looks equal today may create instability tomorrow. Often one party retains illiquid business interests. In many cases, pensions are ignored or misunderstood. Capital assets are divided without considering future income. Clarity comes from modelling, not emotion.  

Early discussions often happen informally, which can feel collaborative, and sometimes they are but they carry real technical risk. Often one person is further along the road emotionally and is trying to push the other into decisions to allow them to move on, but there is no rush. Taking time to ease some of the emotional rollercoaster can enable you to make better decisions.  

Pensions not fully considered - Defined benefit pensions, in particular, can be significantly more valuable than their Cash Equivalent Value (CEV) suggests. Ignoring pensions or offsetting them casually against property can create long-term imbalance.  

Business interests - If one spouse owns a trading company, partnership or shareholding, liquidity is rarely straightforward. Agreeing to “you keep the business, I’ll keep the house” may appear simple but can ignore future dividend capacity, capital gains exposure, and ongoing income dependency.  

Tax - The tax treatment of asset transfers between spouses has changed in recent years. Timing matters. Capital Gains Tax exposure can arise depending on when transfers take place and future costs of this should also be considered. Tax advice is often needed but not often taken.  

Income assumptions - Maintenance agreements made without robust cashflow modelling can quickly become unworkable. Also, consideration should be given to the payments ceasing in the case of future redundancy, changes to retirement, long term illness or death of the spouse.  

These are not reasons to escalate conflict, but they are reasons to pause and analyse. One of the most powerful things you can do is create space. Deliberate space to understand what you actually need to live well long term, what financial independence looks like post-divorce, what level of risk you are comfortable taking, and how to protect your children without distorting your own stability.

Working with a divorce specialist financial planner allows you to see how different settlement options affect your future. They will look at your retirement, the impact of varying maintenance levels, the sustainability of retaining property versus selling, and the consequences of keeping or transferring pensions.  

The version of you six years from now may not thank the version of you who over-conceded to ease guilt, avoided difficult but necessary conversations, or agreed simply to stop the discomfort. Equally, that future version may regret entrenched defensiveness driven by fear.  

Financial planning at this stage is not about maximising gain at someone else’s expense. It is about ensuring both parties can move forward sustainably. Particularly where children are involved, calm financial structure reduces tension over time. Children benefit far more from two financially stable households than from one emotionally charged negotiation.  

You don’t have to decide everything now. Taking time to understand the full financial picture does not mean you are being adversarial, although that accusation may be made. It means you are being responsible.  

If you are in the early stages of separation and feeling pressure to just agree something, it may be the right moment to pause and understand the long-term implications before positions harden. Clarity now protects stability later.  

If you are in the early stages of divorce, with more complex finances which are going to need a long-term strategy, please get in touch and we will arrange a free initial call with you.       

Tamsin Caine
Tamsin is a Chartered Financial Planner with over 20 years experience. She works with couples and individuals who are at the end of a relationship and want agree how to divide their assets FAIRLY without a fight.

You can contact Tamsin at tamsin@smartdivorce.co.uk or arrange a free initial meeting using https://bit.ly/SmDiv15min. She is also part of the team running Facebook group Separation, Divorce and Dissolution UK

Tamsin Caine MSc., FPFS
Chartered Financial Planner
Smart Divorce Ltd
https://smartdivorce.co.uk

P.S. I am the co-author of “My Divorce Handbook – It’s What You Do Next That Counts”, written by divorce specialists and lawyers writing about their area of expertise to help walk you through the divorce process. You can buy it here https://yourdivorcehandbook.co.uk/buy-the-book