Money matters might not be at the forefront of your mind when your marriage breaks down. But given the impact divorce can have on your finances, it’s really important to consider the steps you can take now to safeguard your future financial security.
It might feel daunting to be in control of your own finances, if you haven’t been in that position before but understanding your assets and your options in advance can help make the process less scary. Every divorce is unique and it’s crucial to seek legal and financial advice that is tailored to you.
Put money aside to seek legal and separate financial advice immediately. Then, when you are ready to visit your solicitor, a financial adviser can help you draw up a list of joint and personal assets and valuations, so any advice you seek is based on accurate information. And this can make the appointment with the solicitor more time and cost effective.
You should draw up a list of assets e.g. first or second homes, pension pots, investments, value of any businesses etc., when they were purchased and find out if they should fall into the category of marital assets, as well as a list of all your outgoings both joint and individually.
A financial adviser will then be able to look under the bonnet of your financial situation more forensically and give more accurate advice.
What to cancel and what not to cancel
It is best to cancel any financial commitments that might be in a joint name immediately. The more unscrupulous partner could take advantage otherwise and saddle you with debt you are liable for. So, cancel credit cards, joint accounts, personal loans and even overdrafts if possible and set up afresh in your own name.
However, don’t cancel protection policies until you have reviewed them properly, to ensure you don’t get left without valuable cover for debts and children etc.
Whatever happens, your life is going to be very different once the divorce is complete so it’s important to budget for the future life you want to live.
Start saving and planning in advance
Most people know when a relationship is coming to an end, so start saving and planning for when the moment comes because what you want financially from the divorce might not be what you get. This is especially important for the partner who may have been more financially passive in the relationship and doesn’t have a realistic understanding of what outgoings might be.
Obtaining a copy of your credit report is a good start, so you know what your position is, especially as many people will need to think about a new mortgage after divorce. A credit report will also highlight any joint lending you might be liable for.
Consequently, you may want to take another look at your investments, ask for help implementing a pension sharing order or review other financial issues to make the most of your changed circumstances.
Managing your finances during and after a divorce can seem overwhelming, but a financial adviser will make the process as easy as possible.
Whether it’s helping you budget for your new life, setting up new pension and investment arrangements, or simply offering support when times are tough, getting some smart advice can help you feel confident that you’re on track for a more secure financial future.
Carla Morris is financial planner at RBC Brewin Dolphin
