Divorce is one of the most difﬁcult subjects to talk about. When relationships come to an end there are so many things to consider. Children, home and support are naturally the ﬁrst things you focus on.
When you begin the process of separating a shared life the sheer number of things to deal with is daunting and naturally you will want to surround yourself with people you can trust and who have your best interests in mind. Whilst this is important, I believe it is also important to seek an unbiased, balanced view when it comes to understanding your ﬁnancial position and options. The cost of divorce can have a major impact on both your immediate ﬁnances and plans for later in life. In the ﬁrst of this 3-part series I will outline what I consider to be the foundations for your ﬁnancial future, your home and protecting your long-term ﬁnancial position.
Your Family Home & Your Mortgage
In some cases, it is very straightforward, and the home can be sold with an equal split of equity taken from the property allowing you to go your own way and buy your own home.
However, it can often be the case that deposits and/or contributions to the household ﬁnances have been made in unequal proportions, especially when you have had children, which can lead to a sense of unequal entitlement. If you ﬁnd yourself in a situation like this, I believe it is important to ﬁrstly assess your options and understand the practical implications of your options.
Once you know the options available to you and your preferred outcome, you will need to get the property independently valued and understand how much you can borrow whether you wish to buy out your ex and stay in the property, sell to your ex and ﬁnd a new property or you both agree to sell and buy new properties. If you choose to stay in your current home, you may need to investigate your options with your existing lender to understand the implications and if you choose to buy elsewhere you may want to secure a Decision in Principle before you start house hunting. Whichever path you take, it is always wise to search the market to ﬁnd the best mortgage for you in terms of cost and suitability.
A Stable Financial Position
Divorce represents a major a change in your personal and ﬁnancial status. Your ﬁnancial security should certainly be a focal point of any negotiations and a full review of your ﬁnancial protection arrangements should be completed.
This is because you may wish to cancel joint policies, or policies that are written for the beneﬁt of your ex, or because you may lose protection provided via your ex’s employer.
Conversely, there may well be good reason to maintain some of your existing policies, especially where maintenance payments or other ﬁnancial support arrangements are involved and you will rely on your ex’s income to meet your day to day living cost and/or the upbringing of your children.
Alternatively, your ex and your children may be relying on you, as such you should ensure that you and your ex hold appropriate cover written on the correct basis that ensures you can continue to receive/provide ﬁnancial support should you fall seriously ill or die.
Writing insurance under legally binding trusts and ensuring appropriate trustees are appointed could be considered essential planning