How to protect your finances during separation
Posted by Northadvisory on March 7, 2022
Break-ups are hard. When a relationship ends it can be filled with turmoil, and the separation process is often messy. If you have been together for a long time, it’s likely that you have to sort through a lot of things to determine who keeps what… not to mention coming to an agreement about parenting arrangements.
While it can be a highly emotional time, it’s crucial that you don’t relinquish your own financial security. Seeking suitable legal and financial advice can help make sure you walk away with your fair share of entitlements.
Today, we look at how to protect your finances during separation.
What to think about first…?
It can be hard to think straight when your mind is on a rollercoaster… but when you and your partner first start discussing separation, it’s most likely that you’ll need to come to an agreement about living arrangements.
Every situation is different and this is why having appropriate legal advice right from the start can help make sure you understand the implications of packing your bags and leaving.
Often, if there are children, one parent will stay in the home with them and the other will find alternative accommodation. But it’s important to note that moving out could impact your future options, should you want to take ownership of the property at a later stage.
Do I really need a lawyer?
It’s not unusual for separating couples to remain amicable and for them to believe they can go through the process without needing a lawyer. And in some instances, this is the case… it really depends on your personal circumstances and how well you and your ex still get along.
But enlisting professional legal services will guarantee that legally binding agreements are just that – legal. Verbal agreements or handwritten notes are not going to be sufficient if your partner changes their mind in a few months and decides they want something more.
Making sure there is formal documentation of your asset division – such as a consent order or a financial agreement – helps to protect you from any future attempts to take a larger portion of the divided wealth.
Plus, there are potential financial implications, such as stamp duty advantages on any investment properties. Normally, a transfer of ownership would attract capital gains tax, but when the transfer occurs due to an order or agreement, the CGT is not applicable until you eventually sell the property. It is this type of complex financial matter that warrants seeking professional advice.
Sorting out the finances
Most couples who have been together for a while are likely to have joint accounts and bills in both names. This is where you need to make prompt changes to ensure you remain financially protected.
Is your salary paid into a joint account? If it is, you might consider changing it. Alternatively, you could put a freeze on the joint account or adjust the account so that it requires both signatories to sign off on transactions… this way you both need to approve any money movements.
Negotiating with your partner about how to divide the finances is of course the preferred outcome, but keep in mind how it would impact you directly if they cleaned out the account. Would this immediately impact your financial security? Taking early steps to minimise the fallout is always a good decision.
We are here to help
Here at North Advisory, we understand that going through a separation can be a difficult time. Our team is always here to help support you with professional accounting advice. We can also assist with your personal wealth management to make sure your financial future is secure.
Contact us to find out more about how we can help you today.