February 2016

Money matters in your divorce

If you’re embarking on separation or divorce, or are already in the process, both you and your spouse need to understand not only what your financial situation is currently, but also what your finances will be after your divorce.

During what is more often than not a highly emotional and stressful period in your life, it’s crucial to focus on dealing with your finances dispassionately and comprehensively as early as possible.

In many relationships one spouse will have delegated responsibility for managing their joint finances to their partner, but during a separation or divorce both parties need to be fully up-to-speed with their finances.

David Bremner, a financial planner who specialises in matrimonial work with Intelligent Capital and is a member of Consensus Collaboration Scotland, advises divorcing couples to:

  1. Work out your current budget. What money do you have coming in each month and what is your expenditure? What do you have remaining after your bills have been paid? What discretionary expenses (e.g. gym memberships, television packages etc.) do you have and what is non-discretionary (e.g. mortgage payments, car loans etc.)?
  2. Begin to think about what costs you will incur during and after your divorce (e.g. legal and professional fees, the probable expense of running two households, removal costs, extra child-minding expenses etc.). If your existing savings are not sufficient, how long will it take you to save the amount you need to get divorced?
  3. Calculate what property, other assets and debts you will have to divide between you. Start by compiling a list of everything that you own and owe, both individually and as a couple. Then gather together all the documentation you have for each asset and liability.

Your property should include the value of all properties you own. If you live in Scotland, only include the value of property acquired from the date you married until the date you separated (unless the property was used as a family home before marriage).

Your other assets will include your home contents, personal belongings (such as jewellery and art), cars and other vehicles, pensions, savings (including money in current accounts) and investments, endowment and insurance policies, business interests and pets. If you live in Scotland, only include the value of assets acquired from the date you married up to the date you separated.

Your debts may include overdrafts, loans (e.g. for cars), credit and store card balances, and any tax you owe.

The total amount that you will have to divide between you will be the net value of the property you both have, plus the sum of all the other assets you have, minus the total debts.

There are many options for dividing your property, other assets and debts, potentially with costly tax consequences if you make the wrong decisions. As a financial neutral, your Consensus Collaboration Scotland financial planner will generate different options for you and bring you, your former partner and your family lawyers together to present them and explain the pros and cons of each. This will provide you with a good platform to make informed decisions.

A Consensus Collaboration Scotland financial planner’s aim is to ensure that you make good financial choices, for now and the future. Working alongside lawyers and family consultants, we seek to minimise conflict in your separation and reduce longer term emotional damage.

If you would like further information or assistance with your divorce finances, please contact a Consensus Collaboration Scotland professional.

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