Focus on: the practicalities of splitting up

Life is complicated and a family’s financial affairs are no exception. People often find themselves having to make big financial decisions and deal with a raft of practical matters at the point of separation or divorce, which is difficult enough without the added complexity of unravelling the family finances. 

The situation can be made more manageable if the various elements are broken down into a list. No list, however, could deal with every possible issue to be faced by a couple who are getting divorced or dissolving their civil partnership. In a perfect world, there would be so many things that one could do to make the process straightforward, but it is not always easy to cooperate when you and your partner are sad, angry, hurt, or all of the above. 

Try your best and focus on what is most urgent first. Here are some starting points.

The bills

It is easy for household utility bills and mortgage payments to cause problems, particularly in the early stages of separation where joint accounts may be being moved around and divided.  Educate yourself about how much you need to find each month.  Find out which account(s) the direct debits come out of and which companies need to be paid. Make a list! Is there enough in the relevant accounts for the direct debits to be paid? If not, can you and your partner agree an arrangement to make sure everything gets paid on time?

If one of you is moving out, find out about transferring the accounts into the name of the person who is staying put.

The house

If you rent, in whose name is the tenancy?  If you are both moving into new places, what notice do you need to give? If one of you is staying put, do you need to contact your landlord about transferring the tenancy? 

If you own your property, what is going to happen to it after you separate? Can either of you afford to take on the mortgage and find a lump sum to buy out the other person? Talk to an independent mortgage advisor about how much you can borrow, and think about how much the house might be worth.  Talk to an estate agent and ask for an informal appraisal to get you started. 

Would you be happy for your share of the house to pass automatically to your ‘soon-to-be’ ex if you died before things were sorted out? If not, talk to a solicitor about options for severing a joint tenancy and making your will.

If you are going to sell, when will the house go on the market? Does anything need to be done to put the house into a sellable condition? Can you and your partner agree how this will be funded?

Savings and investments

Find out what you are worth. Get up to date statements for all your accounts and investments and encourage your partner to do the same. Try to draw up a family balance sheet and see what’s there so that you can then consider how to divide it.

Debts

Find out what you owe and include it on the family balance sheet. Can you agree on who should pay off what and when? Make sure that debt repayments are not overlooked in the process as this could damage both your credit ratings and compromise your ability to borrow money in future.

Living expenses

How much do you need each month and can you afford this from your income? If not, are you and your partner going to have to come up with an arrangement for money to be transferred from one to the other to keep things going?

If you have children, have you thought about how you will meet their expenses? Will either one of you be paying some form of maintenance to the other for the children? 

Pensions

What pension provision do you have? Make a list of all the funds you might have paid into over the years and request up to date valuations for each one. Encourage your partner to do the same, and think about how you might deal with your pensions. This is a complex area and expert assistance is almost always required.

 If you would like more information please do not hesitate to get in touch. 

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