5 top tips on managing financial arrangements during divorce
- Credit: Getty Images/iStockphoto
Sue Bailey and Laura Clay-Harris from FM Family Law offer their advice on dealing with financial arrangements when getting a divorce.
1. Don’t make big financial decisions in a hurry.
It is generally best to hold off making any major financial decisions such as transferring or selling property whilst you are both in the process of agreeing the overall finances.
You may not know the full picture at that time which would make it difficult to assess the options available and what might be best for you. It can often take time to resolve the overall finances, so try to maintain the essential family outgoings as much as possible as this will help provide you and your family with some financial stability in the meantime.
Be mindful if the rent or mortgage re-payments are repeatedly missed, this could negatively impact your credit rating and, in extreme cases, your ability to remain living in your home or purchase/rent a new home.
2. Get your financial documentation in order.
Gather all relevant financial documentation to evidence your income, assets (including pensions) and liabilities. It can sometimes take weeks or even months for some organisations to provide this documentation. The sooner this is requested the better.
You both have a duty to provide financial disclosure to each other so that each of you has a full understanding of all the assets and liabilities which exist. It is only when all this information is available that you are both able to make fully informed decisions about your financial future.
It is important to be transparent during the financial disclosure process because failure to disclose assets or deliberately concealing assets can lead to serious repercussions.
3. Establish a wider support network.
Separation can be overwhelming at times, which is why it is important to establish a support network to help you make the best decisions at each stage.
Everyone’s circumstances are different and there is no replacement for specific advice tailored to you. Consider whether you need financial advice on the assets you currently hold or your future financial position.
Depending on your financial circumstances, you may need to consider the tax implications of transferring assets between you, or speak with a pension expert if you or your spouse have pension assets.
You may also wish to consider approaching a counsellor for emotional support as separation can be a stressful time and it is important to have an all-encompassing support system around you.
4. Set your financial priorities.
Dividing assets will often mean an adjustment in spending habits. Think about your financial priorities, including what it costs to run your life and your family's life now. Consider the financial needs of your family that may change and anticipate future expenses.
If there is a possibility you may need to rehouse, spend time familiarising yourself with the housing market to see what is available and affordable which will help you form a plan for the future.
5. Understand the options available to you and your partner to help make decisions about the finances and your future.
Many people worry that sorting out financial matters on separation will involve conflict and large legal bills. It doesn’t have to work this way. If you are able to discuss matters amicably with your ex, you may only require legal support to formalise what you have agreed.
Mediation is an option available to provide a constructive and cost-effective way of supporting you and your ex to discuss matters and reach an agreement. Most family lawyers are also members of Resolution and comply with a code of practice to resolve matters amicably and constructively.
At FM Family Law, we have a team of Resolution-trained family law specialists and mediators. We understand separation is not easy for anyone and we support our clients sympathetically. The first step is to book an initial advice consultation so we can talk you through the process, the options available and help you understand the possible outcomes.