Splitting from your partner is never easy, especially if you have kids, but separating your finances can also be a challenge.
Whether you've seen the signs of divorce coming for a while, or the split came on quickly, the end of a relationship is never easy. And if you have decided that it's the right time to walk away from a relationship, there will be a lot of practicalities to deal with, from how you talk to your kids about divorce, how you'll manage co-parenting, and how you will navigate resolving your finances.
To help guide you in handling your finances in the event of a split with your partner, money experts from wealth management firm Arbuthnot Latham, share their helpful tips.
1. Check that your sole income covers your lifestyle
When you split from your partner, you'll need to have a clear idea of what your own income will be and whether it will be enough to cover your expenses. It can help to establish a budget - writing down all of your essential outgoings, from mortgage or rent, utility bills and loan repayments to insurance policies and any contracts you have, like your mobile phone bill.
You may find you need to reduce your outgoings, or find ways to earn some extra money if your expenses are larger than your income.
2. Set up a new personal bank account
The next step is to open a new bank account that is solely in your name. You'll need to speak to your employer about getting your salary or wages paid into this new account, which you can use for everyday expenses, while you sort out the joint finances with your ex.
This is a really good idea as it enables you to keep things separate and track what should be paid for out of the joint account (for the time being), and what you can pay for yourself.
3. Determine which assets you share with your ex
It's also important to have a clear understanding of what you and your former partner own together, whether it is cash, stocks and shares, property, pensions, or protection policies. It's also important to have a clear idea of the debts you are jointly responsible for, such as a mortgage. It can be helpful to list all assets and debts in your sole or joint names, including bank account balances, investments, and retirement accounts.
One of the main assets many separating couples have to discuss is their home, and there are a few options available to you:
- Both you and your former partner moving out, before selling the property
- Arranging for one party to buy the other party out
- Parents with children may choose to keep the property and not change who owns it
- Transfer part of the value from one partner to the other – the partner who gave up their share would keep a stake of interest in the property for when it’s eventually sold
4. Don't forget about joint bank accounts
You'll need to let your bank know that you and you partner are separating and the bank may then freeze your joint account until they receive instruction from both you and your ex on how the joint account should operate. This is to protect both you and your partner and make sure money doesn't leave the account without joint consent. Your bank can also help advise about any standing orders and direct debits on the account.
If there are any outstanding debts on the joint account, for example if you are in your overdraft, you and your ex are both responsible for repaying the money until the debt is cleared.
If your split is amicable, you could always visit your bank in person with you ex to resolve and close the joint account in person. This can help to avoid any misunderstanding or miscommunication about the balance on the account and where the money should be moved to. Make sure you have a photo ID, such as your passport or driving licence, and a recent utility bill to use as proof of address. This can help you get the account sorted as smoothly as possible.
It's worth being aware too that closing an account and opening a new one may temporarily affect your credit score. It can also be useful to check your credit score to make sure your former partner hasn't incurred any debts in your name since your split.
Wat to read more? Research reveals that money is the biggest co-parenting worry for divorced parents, while another study shows that grandparents are a vital buffer for children whose parents divorce. We also share what adult children of divorce wish they could tell their parents now.
