Divorce is said to be one of the most stressful life events you can experience. When you decide to part ways, there are a lot of things you need to untangle, including reaching a financial settlement. The financial settlement can make a lot of divorcing couples nervous. Everyone wants to make sure they get what they are entitled to, and this means delving into your finances to determine who gets what.
Protecting your financial interests during a divorce requires a good understanding of the legal process and some preparation. In this article, we will look at some of the most common (legal) ways to protect your money during a divorce.
Get advice from your divorce solicitor
A divorce solicitor will be able to explain how the financial settlement is likely to play out. Every case is different, so you need to get advice that is unique to your situation. Remember that a divorce solicitor will typically charge by the quarter-hour, whether you contact them by phone or email. Don’t occupy their time with complaints about your ex-spouse; this will only increase your legal bill. If you suspect that you may experience financial difficulties after the divorce, it is always better to consult a professional firm like the London accountants Howlader & co. before starting the process.
Close all shared accounts
Continuing to use shared credit cards and accounts will only muddy the water and make it more difficult to untangle your finances. Close all shared accounts and open individual accounts if required. If your ex-spouse needs financial support, you should agree on an amount to give them monthly and then make sure this is transferred without fail.
Be honest about your finances
Your divorce solicitor cannot protect what they don’t know about. Attempting to hide funds or failing to declare income or assets can drag out the divorce settlement process and increase your solicitor’s fee. Hidden assets nearly always come out eventually, and can derail the negotiations.
Remember that attempting to hide assets in a divorce is fraud and is punishable by imprisonment. Since a divorce settlement will require you to disclose all financial transactions, it would be very difficult to try to hide money, anyway.
Don’t try to spend it all
A common way to try to prevent an ex-spouse from accessing their fair share is to spend the money on items that quickly depreciate. Purchasing a new vehicle right before the divorce could turn £50,000 in the bank into an asset worth just £25,000.
There is the risk that the courts will consider the value you paid for the car as the value since it was purchased so close to the divorce. You would then be left with the financial hit of the car purchase, the instant depreciation, and still have to hand over 50% of the £50,000.
Check your company setup
If you have a business partner, divorce can be stressful for both of you. You need to ensure that the business is valued fairly and that only your portion of the business is considered. This could mean returning to your original company incorporation documents and confirming that everything is above board.
You may have informal arrangements between you and your business partner that need to be formalised before you go ahead with the divorce. You may need to involve a commercial solicitor alongside your divorce solicitor to make sure that your business is valued fairly.
Don’t move in with a new partner
If you decide to move in with a new partner, this could increase the amount you have to pay in spousal support, or it could decrease the amount you receive. This is because your new partner’s income will need to be considered as part of the settlement.
If you decide to support your new partner, this won’t reduce your financial responsibility to your ex-spouse. But if your new partner is supporting you, this will reduce the amount of spousal support you are entitled to. And remember, when you remarry, the spousal support owed to you will end.