Reaching a fair financial settlement often takes centre stage during a divorce or separation and is key in achieving an amicable divorce. For many, a divorce marks not only a change in financial circumstances, but the start of establishing a new relationship with money. This is particularly challenging for those where their partner has previously assumed responsibility for the finances. Taking on that role post-divorce can be a daunting and overwhelming experience.
Divorce is not simply dividing assets; many financial considerations come into play. Everyone's situation is different, but common things to consider include:
The more complex, and the more time taken to reach a divorce settlement will likely lead to an increase in costs. Doing your homework so you understand from the outset what costs you will incur will help you to plan how best to manage them. For example. the average cost of sorting a divorce and financial settlement through a divorce lawyer averages at £8,000 per person. For more information on the different routes to separate and how much they cost click here.
Keep a firm hand on the legal fees and be careful about dragging things out (easier said than done!). Balance what you'll be paying in legal fees to get what you're entitled to, often fighting for more doesn't work out financially or emotionally.
Living separately typically costs more than living together. If your ex-partner has previously been responsible for managing the household budget, a priority is to get up to speed on your current spending to help inform how much you will need for day-to-day living costs. Once you have a clear view of immediate day-to-day needs, you can begin to consider important longer-term financial planning such as pension contributions, properties and savings.
It's best to eliminate any outstanding debts in joint names to simplify your finances, allow for a clean break and avoid any potential pitfalls In the eyes of the lender, joint debts remain the responsibility of both borrowers, which can give rise to problems if one person fails to keep up with payments.
Admin and paperwork are rarely anyone's favourite pastime, but it is important to update accounts and financial and legal documents, such as title deeds on home and cars, changing pension beneficiaries and account authorisations.
If you are married or in a civil partnership, the law sees your finances as a joint pot. Therefore, when you divorce or end your civil partnership it's worth getting a consent order in order to legalise your financial arrangements and end the possibility of claims in the future. You can get a consent order at the same time as divorcing / formalising your dissolution, or after, or not at all (not recommended!).
Whatever your level of knowledge or means, from modest to millionaire, financial coaching can help you to manage your relationship with money as separate and divorce.