A phrase commonly associated with marriage is “Until death do us part.” Unfortunately, that’s not always the case. Even though you never expect for your marriage to end in divorce, for some couples, it’s a sad reality. While divorce can be a difficult time, there are things you can do to make the process go more smoothly. Learn what you can do to prepare for the financial aspect of divorce.
This does not constitute advice and advice should be sought in all instances before acting on it.
Last year, when no-fault divorce came into effect, it changed the divorce game. Now you no longer have to prove grounds for divorce, with the ability to cite that your marriage has “irretrievably broken down” as the reason for the dissolution of the union. If you find yourself on the middle of divorce, here are a few things to consider to help make the process go smoother.
Partner with professionals
Of course, you’ll want to seek out legal representation, but you should also obtain professional financial advice as well. Your adviser can help you create a list of joint and personal assets and valuations so the legal advice you seek can take into account accurate information and make your meetings with them quicker and more cost-effective. During the divorce process, you’ll need to draw up a list of assets (first or second homes, pension pots, investments, value of any businesses etc) with details about when they were purchased and if they qualify as a marital asset. You’ll also be required to list all your joint and individual outgoings.
On that note, make it a priority to cancel financial commitments that have been undertaken jointly. If terms aren’t exactly amicable, you’re preventing any unseemly actions concerning your jointly shared responsibilities. Cancel any cards, accounts, loans, or even overdrafts that aren’t solely in your name and set them up again on your own.
If you can, find the right time
Not many people realise there are some times that are more optimal to commence divorce proceedings than others. So, if you can choose the timing, there is a certain time of year that could have a huge financial impact. During the divorce process, there is a window where a spousal exemption for Income Tax and Capital Gains Tax applies before it ends. If your tax position is important to you or your ex-partner, it’s worth considering holding off (or speeding up!) so you make it in the window.
Prepare for the future
However your divorce turns out, one thing you can count on is that your life post-divorce will be incredibly different from before, so it’s best to decide what kind of life you want to live so you can plan accordingly. Get a current full financial picture, including obtaining your credit report, as it will be required to have a good score for a new home, and odds are high you’ll be in the market for one after a divorce. Plus, your credit report will also detail any joint lending you or your soon to be ex-spouse are liable for.
What do you need to know about financial planning for divorce?
Obtaining professional financial advice can be invaluable in guiding you through the myriad financial decisions from valuing and splitting pensions, financial disclosure and income planning, to valuing investments, managing tax and implementing court decisions to get your finances back on a sound footing. To discuss your options, please contact us.