It can sometimes be helpful to think of the financial side of divorce as an audit – a thorough assessment of your overall financial situation: incomings, outgoings, assets and liabilities. And while none of us would particularly look forward to an audit, when it comes to divorce, it’s an essential part of the process if you are to emerge on the other side with a stable financial outcome.
Finances are often the main point of contention for separating couples, since they relate to almost all other aspects of the process, such as property, living arrangements, children’s maintenance, and pensions. With this in mind, it’s worth taking your time to take a proper look at your current and future needs to make sure you can reach a fair and realistic financial settlement.
Here are the main considerations to take into account when dealing with the financial side of divorce:
- Get professional legal advice: Find a solicitor you trust, and use their guidance and experience to help navigate the process, every step of the way. Divorce can be daunting enough without trying to go it alone. Your solicitor will be able to help you make a plan of action, decide on an approach that best suits your circumstances, and deal with any unexpected issues.
- Budget – before and after: Take stock of your existing budget, income and outgoings, and think about how that might change after divorce – the cost of running two separate households, the cost of selling property, changes to lifestyle and income, and any outstanding debts and financial commitments. This will give you a good idea of what your priorities are and what your requirements will be following separation.
- Financial and practical needs: With your budget in mind, you’ll then need to consider the needs of you both when it comes to living arrangements, children’s arrangements, and how to handle the division of your assets and liabilities. It may be that one of you remains in the family home while the other receives a greater portion of other assets to compensate, or that certain aspects or possessions are more of a priority to one party than the other. If you’re able to come to some preliminary decisions about these issues, the earlier the better.
- Earning capacity and household contributions: Things won’t always end up being 50/50, and certain asset divisions might seem unbalanced, but it’s important to consider the earning potential and financial position of both parties post-divorce. If one of you has given up work and stayed home to look after children, they may need more financial assistance to get to the same level of stability as the other.
- Full disclosure: Never hide or undervalue assets. Non-disclosure is an act of fraud and it’s very unlikely you’ll get away with it. Moving money around, trying to ‘gift’ lump sums away, or keeping accounts secret are all red flags and if you are found out you may be fined, penalised, and/or ordered to pay your spouse’s legal fees. There are, however, certain instances where personal finances such as inheritance may be kept out of the marital pot, but you will still need to declare these assets in full before entering into financial negotiation.
- Cost and duration of divorce: There are several different methods of separation available – some of them taking place entirely outside the courts – and your options will largely depend on how complex your case is and how well you’re able to cooperate with one another. The more you work collaboratively, the faster, cheaper and less stressful your separation is likely to be. Try to keep the emotional side of things separate from the legal process, and work together as much as possible to come to a mutually beneficial agreement.
The best place to start is by meeting with a solicitor and discussing your circumstances, your options, and your intentions for the future. We know it’s not always possible to work collaboratively or amicably with your spouse, but even if cooperation is impossible, having a clear view of your financial situation is a good way to work towards a fair and stable outcome. For more advice on dealing with financial issues during divorce, speak to one of our friendly, down-to-earth family law solicitors or book a free consultation at our offices in Maidenhead. Taking that first step can feel overwhelming, but we’re here to take the weight off your shoulders and help you find the right solution for your situation.