Ensure your finances are in order for life after divorce
According to the Scottish Government’s statistics, ordinary divorce has been decreasing each year since 2011, although simplified divorce has remained fairly consistent. The Scotsman reported in 2012, that Scottish divorce had fallen due to tough economic times and with divorce accounting for a large number of civil cases, it is no surprise that more and more people are undertaking divorce financial planning.
Don’t let emotions ruin your future finances
A break up of any kind is stressful and upsetting, but don’t let this cloud your judgement. Financial planning for divorce is vital; it may seem calculated but both parties have to consider the implications on their future quality of life and that of any dependants.
It may seem cold and heartless, but planning for a divorce step by step could make all the difference to where you will live, whether you will have savings and/or debts and what your retirement plan looks like. If you have children or other dependants, it will determine their future too. Getting it right and spending some time on post-divorce financial planning could make all the difference.
Evaluating assets and debts
As the Citizens’ Advice Scotland (http://www.cas.org.uk/publications/getting-divorced-scotland) states ‘it is generally the case that any goods you owned before you started living with your spouse will remain yours, as will any gifts given to you.’ However, you may need to come to an agreement over any household goods which were bought while you were living together as a married couple, splitting a washing machine isn’t feasible but you may need to decide who keeps it and if there will be any financial compensation to the person who isn’t keeping it.
Be sure to look at individual accounts as well as joint ones and don’t just look at savings, but look at debts too. Do you have joint debts? Car loans, credit cards, purchase agreements are just some of the things to take into consideration when looking to negotiate a divorce financial settlement.
Evaluating assets is an obvious task but ensure that you seek independent advice.
Paying for the day to day
In the immediate aftermath of a separation, you will need to continue with your life – work, raising the children, social activities – as normally as possible, and you may choose to delay some of the larger financial decisions for a while. In the interim, will you need to rent a home? Will you need a car? How far from the children’s school will you be?
Look at your living expenses before the divorce proceedings start; you need to know what you need and be sure to ask for it. Once the settlement is agreed, renegotiation is possible but will not be straightforward and why would you want to reopen the emotional distress by revisiting something that you can deal with once, if you get it right?
The gender divide
While it isn’t always the case, it is normally the woman who gives up her career to raise children for some amount of time. In so doing, she loses the opportunity to keep her pension topped up and can miss out on promotions and salary raises.
Research online, NetMums (http://www.netmums.com/parenting-support/divorce-and-separation/divorce-and-your-finances) and Citizens’ Advice Scotland have good advice that is easily accessible. Work out how difficult it may be to untangle your shared finances – if you own a business together or if you have taken significant time out of work to raise a family are two situations where things are more complicated – then you should probably seek independent advice.
Ultimately, your aim is to ensure that the quality of life for you and any dependants remains as similar as possible to what it was when you were married. You don’t want to leave yourself struggling to buy food each week or to pay the bills.
But don’t use the situation to exact some kind of revenge. Try to be fair. At some point you cared deeply about each other and, especially where children are involved, you don’t want to have things become even nastier.
It isn’t easier for men, often they can lose their home and children to their former wife and find themselves feeling isolated. Some advice from a divorced man would be not to make over large payments between separation and the divorce settlement, as this could encourage or make a case for a larger settlement, and to try to maintain a balance so that work isn’t overly affected. Whatever, the outcome, you will need to have an income and rebuild the other aspects of your life.
After all you have gone through with a divorce, the financial wrangling and emotional and actual upheaval, the last thing you probably want to consider is your will. You must. Your circumstances have changed, make sure that you change your will to make arrangements for the people you love or are responsibly for benefit. You don’t want to have your former spouse in possession of the assets that you wanted to leave to your children or other family to secure their future in the event you aren’t around.
Finally, try to be as fair as possible and don’t let emotions take over. Aim to make both parties (and any dependants) financially secure and stable. In future you may be friends; you may share childcare; but ultimately you will be both have to rebuild parts of your lives and pushing your partner into poverty won’t make you feel better in the long run.