If you are involved in a divorce, it can sometimes have a dramatic impact on your personal finances.
The fact that over 40% of marriages in the UK end in divorce, means that many of us will at some point need to negotiate a finance divorce settlement, so here is a look at some ways to survive the process, from a financial perspective.
Your biggest financial asset
If you have children to care for, that is always going to be an important topic of discussion when negotiating the terms of your divorce but from a financial point of view, your home is likely to be your biggest asset, and you therefore want to try and protect that if you can.
Much will depend on what agreement for ownership you currently have in place.
What this means is how the ownership of the property is officially recorded. Most couples are likely to be joint tenants, which is referred to as joint owners with survivor destination, if you live in Scotland.
If you are joint tenants, this means that when the property is sold the profit will be divided equally between you. It also means that your share of the property automatically passes to your partner if you die.
If you are currently joint tenants and getting divorced, you might to consider getting professional advice about changing the ownership arrangement to tenants in common as part of the divorce or dissolution arrangements.
This would be an important consideration if the marital home is not being sold as part of the divorce arrangements because your share would still be passed on to your ex-partner if you die before them.
Moving forward with your finances
If you have a joint mortgage you should remember that you are both jointly liable for the debt regardless of whether one of you has moved out of the property.
It would be a prudent move to contact your lender and let them know that you have separated, especially if you believe that your ex-partner might fail to continue making payments. If there are mortgage arrears on the account as a result, this will affect your credit file and could give you problems with getting credit or another mortgage in the future.
The same rules apply if you are renting your property and both names are on the agreement, although the implications for your credit rating are not so immediately severe, unless you are taken to court for arrears.
If you currently have joint bank accounts and credit cards, you will need to speak to your bank and card provider about how to change the arrangement and set up a suitable arrangement.
Some couples agree to pay just enough money in to the existing joint account to cover all the monthly mortgage and bill payments but if you can’t agree an amicable and workable financial solution on this aspect of your separation, you ask the bank to freeze the account.
Divorce is always a challenging and difficult situation to deal with, but you need to protect your finances so that you have the chance to move forward with the minimum of disruption to your financial standing, which is why you might need to seek some professional divorce advice.
Michael Kerr is a divorce mediator. He enjoys sharing his insights by posting on the Internet through blogging. Look for his articles on many relationship blogs and websites.