If you think a separation is on the cards, considering your finances should be one of the top priorities. The timing of your separation really does matter where money is concerned.
‘Many of my clients take advice well before any separation. Usually their spouse does not know, and no decisions had been made’ says Fiona McLeman. ‘They want to know what to expect and the practical steps they can take to best protect themselves. They may well not have considered tax issues. It’s then quite usual to see those clients again 6-12 months later. That’s when, not only are they emotionally ready for divorce, but also better prepared in practical and financial terms’
Here are some important factors to consider well before you walk away.
Tax tax tax
When you are married you can make tax free transfers between each other without attracting Capital Gains Tax. Once you separated, you have until the end of that tax year to make tax free transfers. This is particularly important where assets such as property are concerned. “Even if you continue to live under the same roof, you may be ‘on the clock’ if you have taken formal legal steps towards a separation. I always advise my clients to exercise caution and consider delaying a separation until after 4 April if that is feasible” says Karen Fox.
If you’ve got a buy to let, don’t assume you can move into it on separation. Check the mortgage terms. Many mortgage companies won’t agree to this. ‘Many clients make the mistake of thinking that they own the property and can just move in, but it may be a serious breach of the mortgage terms that usually prohibit landlords from occupying their own property’ says Christina Hale of FM Family Law.
Maintain spending patterns
You will need to produce a budget as part of the disclosure process and it’s important to show your usual spending, especially if maintenance is under consideration. Although it may feel counterintuitive to maintain your outgoings when finances are most likely to be under pressure, it’s necessary to help assess the correct level of spousal maintenance. Don’t significantly decrease your spending or your quality of life to save money in the short term.
Get financial advice
You’re going to be making some important decisions about your money. We recommend advice from experts in their field such as Fiona Sharp and Stephanie Clark at www.vervefinancialplanning.co.uk “if you need help with your post separation budgeting or clear direction through a pensions maze then I can guide you” says Fiona Sharp.
You’ve got joint banking?
The Money Advice Service suggests that if you have joint accounts or loans with your ex-partner, you should contact your bank or loan provider to explain what has happened. This is especially important if your break-up isn’t amicable. However, warns Sue Bailey, ‘be wary that banks can freeze joint bank accounts if they consider there is a dispute between you and your spouse. This can be hard to undo, as well as potentially costly in the legal costs of unravelling a frozen bank account and reorganizing finances’
Watch out for the credit cards / overdraft
You are each jointly and severally liable for any joint debt. If your partner plunders the joint account and it goes overdrawn, you will be liable for it all.
Prepared to be full and frank?
As part of your divorce process, you will both be expected to give full and frank disclosure about your finances. You should not be able to keep assets, investments or funds hidden. Typically the financial disclosure process looks back only over the last 12 months when your bank statements for that period will be disclosed. Is there anything there you might not want disclosed? Watch out though as in some cases, a longer period of financial disclosure may be ordered by the court.
Don’t assume that you can go on a forensic fishing exercise. There are strict rules about how to deal with financial papers you’ve got hold of that don’t belong to you. Take advice and deal with the disclosure process properly.
FM Family Law are experts in giving pragmatic and sensible legal advice about the law, but also how best to prepare for separation: legal and financial.
24thJune 2016 – The day I learned a separation was inevitable.
I knew, when I woke up that day that things had changed forever. Sure, we hadn’t separated legally or financially at that time but I knew our relationship was over. I had no choice than to leave you. It was over.
I also knew there was so much to sort out. What was that feeling? Bewilderment? Fear? Regret? Excitement? A new future…almost in reach? Confusion? Sadness? All of it…
Sure, our relationship was far from harmonious – some people didn’t even know we were on the rocks. When the end did finally come, we were as shocked as everyone else. [Guardian, UK votes to leave after dramatic night divides nation]
Initially perhaps I was still in denial. Couldn’t we still make it work? What about all the good times – all the things that we have in common. Our fisheries! Our agricultural policy! Maybe it was just a phase. Maybe we could still change our minds [BBC News, Brexit Ruling: UK can cancel decision, EU court says].
Maybe with third party help, we could get through. We did try to renegotiate our terms, to fix what was broken. But you just couldn’t change. [The Independent, What Cameron wanted – and what he really got]
It’s tough that only one of us made the call to break up, and it’s fair to say that this has made reaching a divorce agreement a slow and painful process. Our lives have been intertwined for so long that it’s hard to picture going it alone. I’m scared. I don’t have a choice now as I’ve made the decision. I can’t turn back. I’m nervous yet I’m making myself feel better with thoughts of a clean break, new opportunities, and a fresh start. No more shared responsibilities… the freedom to make new relationships – it’s all in sight! Or is it?
We are still so entangled. We live and work so close to each other that we’ll still have to be neighbours, and cross each other’s paths a lot. Sure, we’ll put the kids first and share custody. Our financial responsibilities to each other still have to be fulfilled [Financial Times, Brexit Divorce Deal]. We’ve made contributions to each other in different ways over the years. It doesn’t end just because I have stopped loving you
But maybe it’s better this way. Staying at arms’ reach. Over time, perhaps our relationship will flourish with a new mutual respect for each other. We’ll have space. We can spend time with other people. After all, I’ve always considered myself a ‘free trade agreement’ kind of a guy [David Davis in Conservative Home].
Yet I worry that this isn’t going to be the clean break I thought I wanted. We like the same things. I stopped loving you but we like doing a lot of the same stuff. What if we still want to go to the same places on holiday? Can I still use your parents’ house in St Tropez? Can we make these things work even if we are not together? [Independent, Brexit Travel Advice]
Perhaps we should let the lawyers sort it out. I feel safer letting them take control, but it is expensive and I am worried I won’t be fully in control of the decision making process. I’ve heard such good things about dispute resolution options. It doesn’t have to be hostile. We can learn a thing or two about @ResFamilyLaw (www.resolution.org.uk) approach to conflict resolution. Should we mediate (www.familymediationcouncil.org.uk)?
Okay. So now we’re talking. We are looking at options and we are striking a deal. The negotiations have been long and hard. I feel worn out. I started out so tough yet now… everything you’re asking for… maybe you should just have it. Okay, I’ll admit it. I do feel a sense of culpability, leaving you like this. When we initially sat down and wrote a budget together, I was part of the household [Financial Times, Brexit Divorce Deal]. I know my responsibilities and I am prepared to deliver. For the next few years I’ll still have to contribute my share as if I had never left. And I’ll give a lump sum too, just for good measure. I have to make amends. I feel it’s all my fault.
But now there’s a backlash. My family aren’t happy. They say I’ve given too much away! Everyone is rejecting our deal. My Irish family are threatening to walk out, [The Guardian, DUP Threaten Sabotage] even though I’ve paid their bills for the next 5 years. But the house will fall down without their support… I need them to keep up the numbers, or it’s just me and the kids [BBC, Hung Parliament].
My financial planner says I’ll be poorer without you, and there’s much uncertainty ahead [Evening Standard,Britain will be poorer]. But there’s no turning back: I’ve made up my mind.
Time has passed. It is taking too long, we couldn’t come to an agreement and asked the court to decide. It’s cost me so much so far and I know there is more to come but we just don’t seem to be able to come to an agreement. I’m told this is the ‘only’ way if we can’t agree and yet I am still so scared. I feel helpless and at sea. I’ve taken a path and I have to follow it.
The day of final judgment looms. If we don’t reach an agreement by 21stJanuary [Financial Times, Brexit Timeline] the court will decide. I’m told that neither of us are bound to be happy if we have to get someone else to decide for us. No one said this was going to be easy [BBC News, EU Trade deal ‘easiest in human history’ says Fox].
I feel we have to get back to the negotiating able. Is it too late? Could we try another face-to-face meeting to try and salvage something? [CNN, EU tells May the deal is not up for renegotiation] That’s got to be a lot better than someone making a final decision for us.
Is it too late to try another process like arbitration www.ifla.org.uk? My advisors tell me it’s the future of conflict resolution when all else has failed. So much more efficient than court, all the technical skills, nowhere near the cost and a speedy decision that we both have to abide by. Why didn’t we try that sooner to save all this pain and cost?
I’m a mess. I’m broke. It’s cost me so much. I felt in charge and now I don’t know which way to turn.
Why won’t you answer my calls?
Divorce solicitors tend to report an increase in new enquiries in the New Year.
You may be considering the end of your marriage but don’t know where to turn for good legal advice. How do you decide which lawyer to represent you if you end up on the path to relationship breakdown? The best place to start is to ask those you trust. Friends and family may have used a solicitor
The best place to start is to ask those you trust. Friends and family may have used a solicitor before or may have friends and family who can give their personal seal of approval.
The national family lawyers’ organisation is an excellent website where you will find lots of helpful information about family law and family lawyers. Central to Resolution’s philosophy is to help clients in relationship breakdown in an amicable and constructive way. This is how any good family work will do their job. The website contains a ‘find a lawyer’ resource, as well as details of those lawyers who are accredited as specialists in certain specialist fields.
Have a look at the firm’s website. Does it give you the right feel? Does it look as if you will feel comfortable with the lawyer and how they say they work?
Call the lawyer for an initial chat. A good lawyer will be prepared to have an initial chat with you at no cost. Meet a couple of lawyers before making a decision. Most lawyers offer a free initial meeting or a fixed cost for the first meeting. This is an excellent opportunity to get some practical and sensible advice, as well as meet the lawyer for the first time without the anxiety of being presented with a big bill before you have made a decision about your future and any work has got under way. The lawyer should also be able to give you a good idea at that stage about the work involved and the costs and help you weigh up your options. Prepare for that first meeting by drawing up a list of questions, and perhaps email details of your situation to the lawyer ahead of time. This will also save valuable time and allow you to use the meeting to focus on the main issues, rather than treating it as a fact finding session. www.legal500.com and www.chambersandpartners.co.uk are also widely used directories that survey lawyers nationwide and rate the lawyer in geographical and
Prepare for that first meeting by drawing up a list of questions, and perhaps email details of your situation to the lawyer ahead of time. This will also save valuable time and allow you to use the meeting to focus on the main issues, rather than treating it as a fact finding session.
www.legal500.com and www.chambersandpartners.co.uk are also widely used directories that survey lawyers nationwide and rate the lawyer in geographical and specialist sectors. Using these directories is a good opportunity to back up what you have seen and heard before making your final decision as to who to instruct.
Your lawyer is going to support you as you move forward with your life. As with making any choice about important things in life, it’s just as critical to do the research before making the right choice that will affect you and your family.
Aside from the emotional dynamic when a relationship ends, a client has to find someone who they can entrust to support them on the journey to the next stage in their life. In many cases, it is one that can have life changing consequences.
An online search can reveal a long list of names of law firms. Look for a solicitor that specialises in divorce and family law, have a look at their website and find out if they are a member of Resolution. Ask friends and family members if they have a recommendation.
Making the first contact
Making the first contact with a solicitor can be a difficult step. There may be anxiety about the other spouse knowing especially if you have not reached the conclusion that your marriage has ended. It can be daunting thinking about sharing personal information with a stranger. Don’t feel afraid to ask questions – find out the solicitors availability, capacity to take on new work, how they work, what’s involved, what they charge and how they offer first meetings. Some lawyers charge from the outset. Others may offer an initial short meeting at a fixed cost or at no cost. Don’t be afraid to ‘shop around’ to find a solicitor who is the best match for you.
What to look for in my solicitor?
Don’t be tempted to instruct the solicitor who has given you the advice you like. It’s often the advice you don’t want to hear that can be the most important to you. Any good solicitor will be prepared to advise you in detail on all matters, even saying things that may not sit well with your hopes and expectations.
Out of court resolution
Find a solicitor who is well versed in the different types of out of court dispute resolution. This may help you resolve matters without going to Court, saving considerable cost, both of which should be your objective. A good solicitor will be able to explain all the different options open to you and how they would be able to support you through each option. They should suggest which avenue might be most appropriate for you, taking into account of your personal circumstances and priorities.
Your solicitor is obliged to give you the best estimate of the costs involved and their hourly rates. Find out whether the solicitor offers fixed fee charges for any aspects of their work, ‘pay as you go’ services, sets caps on fees, or staging their representation to suit your pocket.
For more information about choosing the right solicitor for you contact Resolution www.resolution.org.uk
If you would like to legal guidance on divorce or mediation, our divorce solicitors in Norwich and Cambridge will be happy to help.
Every separation is unique but the fact remains, there is a right way and a wrong way to go about things.
There are several things you and your spouse are able to do to make the divorce or separation process go as smoothly as possible.
Not Providing Accurate Financial Information
The fact is, finances are a central issue in a separation, especially where a couple are married. If you want your divorce to go as quickly and smoothly as possible, it’s vital that both parties provide accurate and honest information regarding their finances. Information about your assets, debts, income and a realistic budget that represents your marital lifestyle and potential future expenses generally all need to be shared as part of the process of sorting out the financial aspects of a divorce.
Not Putting Your Children First
It’s easy to say you’re putting your children first but sometimes it can be really difficult to do. It’s important to think about how your children might be feeling as a result of the separation and to offer them reassurance about the situation. Try not to lose sight of the bigger picture; battles over the small issues really may not be worth it in the long run. By putting your children’s best interests and needs above everything else, your family will benefit in the long run.
Letting Emotion Take Over
Divorce can be an emotional rollercoaster. There are so many things happening at once and it can sometimes be hard to know how and what you’re feeling. We always tell our clients to expect to experience a range of emotions, resentment, anger, grief and fear. This is normal and those emotions can sometimes last a considerable time after separation. It’s ok to feel this way and it’s normal. However, when it comes to discussions about children and money, it’s best to try and lay emotion to one side to some extent. If you’re struggling to do so, it might be worth considering additional support from a counsellor to help you through this difficult period and to help you gain clarity in order to make smarter decisions, not only for yourself but for your children.
Dwelling on The Past
If you are focusing too much on events and things that have already occurred, it’s a challenge to shift your mindset to focus on what’s currently happening and your future. Focusing on what is going to happen next in your life is key to making smart decisions about your and your children’s future.
Failing to Compromise
To reach an agreement, compromise and a bit of give and take are needed. This can be hard to do during a divorce as some might have the mentality of “my way or the highway” but this will only result in more frustration and conflict which is easily avoidable. It may feel sometimes like you are making all the compromises- but the other person probably feels like that too. It’s rare for someone to feel they have got everything they want from a separation. Being willing to compromise on some issues may make other issues easier to solve- meaning a quicker and more amicable solution can be reached.
By avoiding these 5 mistakes, you’re doing your best to ensure a difficult period is made a bit simpler for everyone. If you are in need of guidance or advice on divorce or children related matters, please do not hesitate to contact our teams in Cambridge or Norwich.
For those who are newly divorced, the holidays can be a difficult time of the year.
Every year many former couples have to figure out how Christmas will be celebrated, especially if children are involved. It can be an immensely painful thing to do but at the same time, it’s an opportunity for new traditions and experience. There’s always a silver-lining, however, sometimes that’s easier said than done.
So, what can you do to survive Christmas? Here are some survival tips for the newly divorced:
Make a plan
What type of plan, you wonder? Make a list, of where you will be, with who, what you’ll be doing, what you’ll think about, and even what you won’t let yourself think about. The last two questions are especially important as you can easily get led on a path of melancholy and feeling sorry for yourself during the holiday period which no one wants to do. By making a plan and trying your best to follow it, you will be pleasantly surprised by the outcome.
Surround yourself with friends and family
If for some reason you don’t know where you’ll be or with who, then start getting busy and make plans. If possible, surround yourself with people, help others cooking and prepping for Christmas or go to the movies, anything that requires your attention with other people involved. It’ll help you get your mind off the fact that it’s your first Christmas without your family and it’s a chance for you to have as much fun as you possibly can.
Begin new traditions
Since basically everything in your life is changing right now, including Christmas traditions. Spend some time thinking about what you can do this year that is completely new, different as well as fun. Making a list of things that will keep your mind busy and that can be enjoyable with your children is a great way of testing and creating new traditions and it’ll also help your children come to terms with the new family circumstances. It can be things from going to the cinema to playing bowling, think outside the box as well as you can come up with great things to do with your children.
Taking these steps will help you get through the Christmas period with less anxiety and worries and feel proud of yourself for being able to tackle such a tough period.