Ending a relationship is always tough, even an amicable separation, divorce, or dissolution. Knowing how to prepare for divorce or separation is crucial during these tough economic times when money may be tight and choices you make now may have a significant impact upon your emotional and financial future.
Here is our guide to help you “get your ducks in a row” to prepare for a divorce, dissolution or separation and the things you should consider and do.
How to prepare for divorce emotionally
Decide how you want to separate or divorce
Separation
If you are going to separate, how will you do so? Will you separate informally, formally by entering into a Separation Agreement or legally by commencing proceedings for Legal Separation?
Do you intend to separate under the same roof, or will one party move into another property?
If the latter, you will need to decide who will leave the joint home and where your children or pets will live.
If one party leaves and the other remains living in the family home you need to make arrangements for entering the family home.
Will each of you retain a key?
Will notice be given if the party not living in the property wishes to enter?
It is better to discuss these details in advance to prevent any misunderstandings.
Divorce
Who will be responsible for commencing the divorce/dissolution and when?
Will it be a sole or joint application?
The benefits of making a joint application for divorce or dissolution include:
Easier and quicker – By applying for a divorce/dissolution jointly, a couple can navigate the divorce process together. With mutual cooperation and agreement, a couple can achieve a divorce in about 6 to 7 months.
Less acrimonious and traumatic – As both parties are jointly involved and have chosen to file together to reach a peaceful resolution, they can focus on the future, and not on the past. This encourages couples to cooperate constructively when considering important issues such as financial arrangements and arrangements for the children.
Far cheaper – By using the same divorce professional for a joint application there is only one legal cost involved (instead of the need to pay two separate legal fees by using two lawyers).
Have you considered receiving joint legal advice?
The last thing you want is a long Court battle which is likely to cost tens of thousands of pounds and last years. The key is to compromise. Sometimes you will have to give up ground, to gain ground. Consider joint divorce legal advice to reduce conflict and keep costs down.
Joint divorce legal advice is guidance, support and advice on the law given by one person to a couple who want to end their relationship amicably and without conflict. The advice is given to the couple on a jointly beneficial basis to assist them to find the best way to end their relationship and can help resolve issues such as children and/or financial matters.
Decide how to care for any children and/or pets
If you have children together, you will need to agree on how to co-parent the child or children.
Do not leave children in the dark about your separation or divorce. As a guide give your children about a week’s (for teenagers up to two weeks’) notice to prepare them for the shock of the change, give them time to absorb the news, and ask any questions they may have.
Consider entering into a Parenting Plan. A plan can include the following:
- Who will the children live with?
- What arrangements will there be for the other parent to see them?
- How will you arrange Christmas, Easter, birthdays, holidays, and other special occasions?
- How will you arrange weekends and holidays, handovers, and travel arrangements?
- How will you arrange the children’s medical needs or concerns?
- Guidelines for decision-making and dispute resolution.
- Guidelines about communication. Should communication be by phone, or via email or text message?
- Back-up arrangements in case your child needs to stay home from childcare or school.
- How will you arrange the child’s education and school events?
- Arrangements for reviewing the parenting plan at intervals as the child grows up.
- Financial arrangements and agreement as to who pays for what.
- If there are school fees, how will these be paid?
- How will the grandparents of the non-resident parent see the children?
If you have a pet together you need to agree the following:
- Who will the pet live with?
- Who will care for it?
- Who will pay the vet bills?
- Who will pay for food and other expenses?
- Who will look after the pet when you go on holiday?
It is important to reflect on what is in the animal’s best interests. If one of you goes out to work all day and the animal is left on its own, then it might be fairer for it to live with the person who is around the home more. All these arrangements can be included in a document called a Petnup or Co-Petting Agreement.
You could adopt a ‘shared care’ approach. For example, a pet dog can regularly be taken for walks by the party with whom the pet no longer lives, or they can provide free pet-care whilst you are on holiday. Make sure that both of you have the time and resources to care for the animal if you decide on shared care.
Notify third parties of the change in your marital status.
You should notify the following third parties of the change of your marital arrangements if you are going to separate or divorce:
- Your local council
- Mortgage lender
- Utility companies
- Tax office
- Bank or building society.
- Credit card provider
- House insurer
- Life insurer
- Pension provider
- GP and dentist
- School or nursery
How to prepare for a divorce financially
Start getting your documents together.
For a divorce or dissolution, you will need the original marriage or civil partnership certificate.
To resolve financial matters, you should start getting together the following documents for financial disclosure:
- Matrimonial home valuation
- Matrimonial home mortgage statement
- Valuations and mortgage statements of any other properties
- Personal bank, building society and national savings account statements.
- Details of other investments such as stocks, shares, trusts.
- Evidence of any loans or liabilities.
- Life insurance policies
- Details of any business interests
- Up to date Pension valuations
- Details of employment income & self-employment or partnership income such as wage slips, P60’s and tax returns.
Keep valuing assets, and review your current and future spending.
Keep valuing assets until the case is resolved, especially if it’s taking time. Know the full value of what you are settling for, particularly pensions.
Put in the time to research what outgoings are currently costing you as opposed to guessing and create a Schedule of monthly outgoings.
Also research your outgoings post separation and divorce. Be realistic and recognise where certain items have increased due to the costs of living crisis and cut the outgoings that you really do not need.
Get support and advice.
This is an important step. Decide who and what you want to say, but also find family and friends who truly are supportive and can offer you helpful guidance. Consider finding a therapist or divorce coach if you don’t already have one.
Where necessary talk to an Accountant and/or Independent Financial Adviser. They can help to review your budget and debts and suggest ways to improve your situation.
Also talk to your mortgage provider to see if they can assist in delayed or reduced payments until the house is sold or transferred.
Make interim arrangements for bills, and close any joint bank or building accounts.
Even if you agree to a joint divorce, it will be months before a final financial settlement. Do not ignore bills and debts. Create a budget and agree in advance who and how essential outgoings will be paid.
When deciding to separate or divorce it is a good idea to close any joint accounts and decide how to separate the funds in the joint account(s). Also stop using any joint credit cards.
Sever a Joint Tenancy and make a new Will
If you both own the property as Joint Tenants (which is the case for most couples), it may be sensible to consider changing ownership from ‘Joint Tenants’ to ‘Tenants in Common’. By taking this step you could leave your share of the property to other family members or friends in your Will in the event of your unexpected death before financial matters are resolved. If you fail to sever the Joint Tenancy your spouse or partner would automatically inherit your share of the property upon your death.
In England and Wales, getting divorced can alter the terms of your Will. Although it remains valid, your ex-partner is no longer able to benefit from it, unless you have expressly stated that they should do so if you divorce. They are also no longer able to act as an executor or trustee for the will.
It is therefore important to take proper advice and make a new Will, if necessary.
Register Matrimonial Home Rights with the Land Registry
Where a home is in one person’s name only, you may want to consider registering a Matrimonial Home Rights with the Land Registry. This will protect a non-owner’s interest in the home until the divorce or dissolution is concluded. Home Rights protect a party from having to leave a property where they have not been able to contribute to the property financially.
It is important to get specialist advice about your property rights and options.
Claim benefits and tax credits.
Ending a relationship may result in you becoming entitled to benefits and tax credits that you were not entitled to as a couple, or the amount you receive might increase based on your new circumstances.
Save, don’t spend.
Don’t begin spending money wildly as a form of “payback”, or because you want to keep it for yourself. A Court has power to add back monies spent, so you may be left worse off in the long run.
Recognise where you are being tempted to spend extravagantly whether on individual purchases – a new car, motorbike, an expensive holiday – or day to day expenditure. Try to stick to a budget.
Cash is king in tough economic times, but remember, other assets can go up and down in value.
Get your timing right.
If at all possible, don’t separate just before the end of a tax year, as you will have little time in which to consider the most tax-efficient arrangements. For example, you may incur a bill for capital gains tax at a time when your finances are particularly vulnerable. In the eyes of HM Revenue & Customs, transfers of assets such as property and company shares result in no immediate capital gains tax liability, as long as they take place in the tax year during which you separate.
It is worthwhile seeking tax advice from an Accountant or Tax Expert to find out when is the optimum time to separate or divorce.
If you are going through a divorce, dissolution or separation and would like expert legal advice and assistance, please visit our services pages for details of how we can help you.
Does a divorce revoke a will? by The Private Office, Chartered independent financial advisers.
Joint Tenants and Tenants in Common explained by NatWest