When you are divorcing or dissolving a civil partnership, there is lots to think about. Your children, your home and not least – your money. What will happen to all of these? Who will get the house? Can you afford to keep it? How often will the children be with each parent? How will you share the finances, and how can it be fair?
Here, Juliette Dalrymple, mediator and director and Family Matters Mediate comments on some of the financial issues you might encounter.
Children are, of course, the most important issue and should be prioritised when making any financial agreements. Who will they live with and how often should they see the other parent? Where will they live? Which school will they go to? What will the cost of looking after them be? How much child maintenance should be paid, and will there be any spousal maintenance? Coming to an agreement on your individual roles and responsibilities as separated parents might make it easier to formulate a financial plan for what is needed. Mediation is highly recommended for dealing with issues relating to children when you separate – including by the government. There is a government scheme that offers up to £500 to help fund mediation about children. Find out more here.
Of course, there will be a lot of questions relating to money. Bank accounts, savings and investments, wages and other income, pensions, valuables, cars, mortgage, loans, credit cards and any other debts – don’t forget, if your debts are shared, you are both responsible for them – just like you are both entitled to shared assets.
The family home is often the most significant shared asset. What is to happen to it? Will one person live in it and if so, how will it be financially shared, or will it be sold, which could be necessary to enable both ex-partners to afford a home? It may be possible for one of you to buy the other out, or other assets could be used to balance the equation. If the property was bought during a marriage or civil partnership, it will automatically be considered marital property, but this might not be the case if one person owned the property before the marriage or civil partnership took place. It is important to note that if the home is jointly owned, both people are responsible for the property and its costs – even after separation.
Here, much will depend on whether there are any children. Are they to stay in the family house with one parent, and if so, how will that be financed? If one person moves out, they may still wish to contribute to the mortgage and other bills. An agreement could be reached whereby one person stays in the home with the children until they are 18, with the other contributing to the bills. It may be agreed that the house is then sold when the children reach 18 or leave full time school. Benefits may also be available to enable someone to stay in the house.
Then, of course, there are pensions. All pensions whether large or small must be included in the disclosure (this is the legal name for sharing financial information). Once the disclosure has taken place, decisions have to be made about how the finances can be organised so that firstly the children and then both people living separately can have their current and future needs met. There are various ways of dealing with dividing a pension. One of the most common ways is called pension-sharing, where some of one person’s pension is moved into a pension in the other person’s name. There is information about pension sharing and other ways you can deal with your pension when divorcing or ending a civil partnership on our website. It is important to note that a pension sharing order can only be made by a judge.
Mediation is a cost-effective way of trying to solve differences over money and property, as well as children. If you want to know how it can help you, contact Family Matters Mediate. We can help you to understand the situation and to find solutions that meet your own needs, whatever the situation.
When you go to mediation, you’ll both have to fill in a financial disclosure form that shows all of the assets (these are things you own jointly, on your own or are in the other person’s name) and debts in both names and individual as well as and how much money you’ve got going out and coming in and it’s a good starting point for discussions.
Generally, in divorce and dissolution of civil partnerships, both parties need to be equalised. We can help you come to an agreement that meets both of your needs, making sure that children’s needs are prioritised and each of you have what you need to live. This will include reviewing earning capacity, standard of living, living expenses, children’s expenses and any assets that are not included in matrimonial assets.
We can draw up an agreement for you, which can be made legally binding by a solicitor.
The Family Justice Council has prepared a very good document about sorting out finances on divorce. Read it by clicking on the link.
Cohabitees
People who live together as cohabitees do not have the same rights as married couples or those in a civil partnership and sorting out finances can be more complicated, even though you will still have the same considerations as above.
Mediation can still help. A good starting point, if you are able, is to make a comprehensive list of all of your assets and debts, both individual and shared, and try to decide how they can be distributed. Technically, any assets, such as mortgage tenancy agreements or debts acquired in one name only, are the responsibility of that person only, unless the other person can show, through documents or receipts, they have contributed to them, in which case joint responsibility may be proved.
Children should of course be a priority, as in the case of married couples or those in a civil partnership and both parents will need to contribute to their costs and well-being.
In mediation, we can help you to draw up an agreement about who owns and who pays for what. You are more likely to stick to things if they are set out like this.
A cohabitation agreement or living together agreement is a legal document that sets out many of the things you will need to agree upon if you do separate, and they are a good way to ensure that you stick to what has been agreed.
Amongst other issues, our mediators can help you to come to an agreement regarding:
- Claiming against a property that you don’t own, but have lived in, or deciding how to divide a property that you both own.
- Deciding who will pay a joint mortgage.
- Dividing a jointly owned business.
- Sorting out a debt that you incurred for your ex-partner, but that they won’t pay.
- Sorting out issues where you have a cohabitation agreement, but your ex-partner will not follow it.
Advice Now has written a very helpful document for cohabiting couples, which you can read by clicking on the link.
Whilst it is generally not now possible to get legal aid to help with a divorce or dissolution of civil partnership, you may still be able to get it for help with mediation. Find out if you are eligible here.
