How to deal with Your Finances on Divorce
So you decided to get divorced? One of your biggest worries might be dealing with your finances, particularly if it’s always been your husband’s job.
That’s understandable. Many of my clients are in similar position to you, so don’t feel bad; it is the way it is. It feels really scary, I know. You feel totally out of control. You see many in respects, you’re smart confident woman. You may have a very successful career, you may be excellent at organising the family, the children, your home and your social activities for yourself and your husband, but when it comes to money, you’ve let him deal with it. It doesn’t really matter whether you are a lady who has been able to spend freely, or a lady whose husband has given her an allowance, if you’ve never have to think about money why would you?
Assets & Liabilities
So what do you do now? Well,the first thing that you need to do is get clear about your assets – the things that you have. This will include all the properties that you may own, cash, savings, investments, trust funds, business interests, jewellery, antiques, paintings and vehicles. Importantly you need to know what the equity of these assets are. Some of my clients are aware that there are plenty of assets in terms of property and cash. However, what they often are often unaware of are the mortgages and loans outstanding on these items. The value of these assets minus the loans upon them is the equity. Sometimes despite a comfortable or even lavish lifestyle, there is actually very little equity. This can come as a huge shock and if it happens to you, you need to be prepared. As well as assets, you also need to be aware of other liabilities. Business loans personal loans, borrowing on credit cards, some of this maybe jointly in your name. If it is, you are jointly responsible for it.
Remember to consider your pension entitlement. If either of you have pensions, the other person can you make a claim on it. Sometimes your pension is one of your biggest marital assets so never overlook it. Never blindly agree to Keeping the house over having a share of his pension pot without proper advice. It can be a huge mistake.
Post Divorce Income & Expenses
Working out what your post divorce income and likely expenses will be is absolutely crucial before you start negotiating. You may be fortunate, you may be able to continue to live the lifestyle that you are used to. Many women however, are not. Again this can come as a huge shock. It doesn’t matter what your standard of living, whether you’ve been used to living in a large house with people to support you such as a cleaner or a cook, or whether you’ve lived in a four-bedroom house the garden, when you’re no longer able to afford that lifestyle it hurts. It can take some readjustment. But burying your head in the sand won’t help you, in fact it will make it harder. The sooner that you can come to terms with your financial reality, the easier both you and your children will find it to adjust.
How are you deal with your finances will be up to you and your husband. You might decide to use mediation. A mediator cannot give you legal advice but they can give you legal information. The mediator will help you to do Financial Disclosure. If you do Financial Disclosure in mediation you won’t have to do it again with your lawyers. Mediation isn’t suitable for everyone. Whether you use Mediation, Collaborative law where you and your solicitor have a round the table meeting with your husband and his lawyer, or the traditional court process, you might have the support of an Independent Financial advisor. That can be useful if you have complex financial affairs or creativity is needed to ensure a fair settlement. Independent Financial Advisors, are expert at dealing with pensions, financial forecasting and advising on the best way to maximise future income. This is outside the remit of a solicitor or mediator.
Getting clear before you start
My clients, they find it less daunting to begin to understand their financial situation before they have to do it for real, either in mediation or with their lawyer. When you’re faced with paperwork you don’t understand, in an environment that’s tense and that you’re paying for by the hour it’s easy to feel overwhelmed. It’s easy to feel confused, and lack confidence. That’s why, when I work with women, one of the things that we do together is reality test, her financial circumstances. Where is she now really, and not just accepting where she thinks she is. We go on to to look at her values – what’s important to her. I invite you to do the same thing. You see, when you consider what’s important to you it can often make the loss of a current lifestyle easier to cope with because actually, what you really want isn’t what you’ve got. That lifestyle it’s part of an old life, not the one that you’re moving towards. It allows you to think creatively, it allows you to feel excited that moving forward, where you will be in control, you will understand your finances, and you will be able to budget and create a life that you can afford and that supports you.
I’ve created the Figuring out your divorce finances five day challenge to support ladies just like you to understand their financial situation, so that you get comfortable with the numbers, consider where you may have to compromise and be prepared to ask for what you need. If you’d like to join the challenge enter your details in the box below. Remember ladies, nobody is going to judge you. This is about you getting clear about where you’re at so that you feel calm confident and in control.
Emma Heptonstall, The Divorce Alchemist, is a Divorce Coach for Ladies who Leave. You can email her at email@example.com or visit her at www.emmaheptonstall.com