How To Ensure You Get The Best Financial Settlement on Divorce
For many clients, money is a touchy subject. In the UK we are culturally trained not to talk about it! But divorce is not the time to be squeamish about money issues. It is time to take control of what you have, and what you need. And to have an eye on your soon-to-be-ex’s financial activity too. Let’s look at how to ensure you get the best financial settlement on divorce.
Know your numbers
If you’ve followed me for a while you’ll know this is one of my mantras! Don’t agree to a single thing before knowing your numbers. And what do I mean by that?
I mean know absolutely everything you have to pay out for. Think about your living expenses. Use bank statements to verify your assumptions. You’ll be astonished at how much you’d overlook otherwise. And make sure you take a year’s expenditure into account. There will be annual expenses (such as insurance or the car MOT) that you’d miss otherwise.
Think about your debts. Both your own, and joint liabilities you hold with your spouse – such as a mortgage. If your name is on the mortgage you’ll be liable for payments regardless of what your soon-to-be-ex does.
A note about assets
Then move on to your assets. What do you own? This will include any equity you have in your home, savings, investments, belongings and pensions. You may need to do some detective work here – delve into bank accounts that you’ve not looked at before. Understand what pensions you and your partner have. Seek valuations on your home, car, jewellery and other valuables.
The court distinguishes between matrimonial and non-matrimonial assets. Matrimonial assets are those which you acquired together – either when you lived together pre-marriage, or during the course of the marriage. They are usually things like a family home, pensions and savings. Non-matrimonial assets are those acquired before marriage or after separation. They can still be shared between both partners, if there is a good reason (for example to ensure the needs of both parties are met).
Keep records of all your findings, along with any documentation you can get together.
Think about your soon-to-be-ex’s assets
As well as investigating your own financial picture, think about your soon-to-be-ex’s. For some clients, their spouse’s financial life is a complete mystery. There may be private bank accounts, assets or pensions that you know nothing about. You will have clues to some of it though – if your soon-to-be-ex is employed they are likely to have a pension. If their monthly income doesn’t come into a joint account that you have access to, it must be going somewhere.
They should disclose everything when it comes to completing the Form E. But if you’ve done your own research you will be able to question anything that seems odd or incomplete in their disclosure more easily.
If you suspect that they are hiding assets and you are in a high net worth marriage it is worth contacting professional asset tracers. Asset tracers work legally to ‘follow the money’. They can also provide professional advice on tactics to ensure the fairest financial settlement for you. Rather than having a ‘gotcha’ moment in court (however satisfying!) it can be more productive to have a mediated, non-combative approach.
Think about your needs – now and in the future
Your research into recent living expenses will give you an insight into how much your lifestyle currently costs. Every divorce decision will vary, but it is reasonable to expect to maintain a similar standard of living after divorce – if means allow. The ‘standard of living enjoyed by the family before the breakdown of the marriage’ is a factor the courts would consider when ruling on your case.
Of course, both you and your soon-to-be-ex need to have your needs met. And it is often the case that there is less money to go around when you separate. It’s common sense that two households are more expensive than one. So it’s not guaranteed that life will proceed exactly as before. But you certainly have the right to fight for a similar standard of living if there are means to allow it.
It’s also worth thinking about the future – particularly when it comes to your children’s future. If there are predictable expenses relating to the children, make sure you take these into account with any financial settlement. For example. will life be more expensive with older children? Are there education expenses to consider?
Are you making this mistake?
It is common for my clients to minimise their financial needs. They work out the absolute bare necessities to scrape by, for themselves and for their children and think that’s enough. This can be because of feeling guilt, or because they just don’t want to rock the boat.
If you recognise yourself as you read this please remember: you (and your children) do not deserve or need to live in poverty just because you are getting divorced. The court recognises this too. As we saw earlier – your standard of living during marriage is taken into account. Wherever possible the court will want both parties to come out of divorce with a similar standard of living to during marriage.
So be your own best friend when you’re thinking about your needs. It will make your life a lot easier in the long run.
Is a 50/50 split inevitable?
If it is down to the court to make a decision on your financial settlement a 50/50 split is their starting point. Then they will take into account the Section 25 factors we discussed in ‘How Does The Court Consider Fairness When You Divorce?’.
Imagine your divorce as a tug of war. The weight starts in the centre – that’s a 50/50 spilt. Then the judge will consider the factors relating to your case. Things like the welfare of the children, the needs both you and your soon-to-be-ex have. And things like your ability to bring in income, now and in the future. Those factors will push or pull the balance of the financial settlement. The parent with majority care for young children is likely to have less earning capacity, for example, and this will impact on the court’s decision.
Every single case will be different, so it’s hard to pinpoint exactly what the outcome will be. But it’s safe to say a 50/50 split is not inevitable. Because in many cases, the court would not see that as the fairest outcome.
Be the CEO of your divorce
Regulars to the blog know I’m famous for telling clients to be the CEO of their divorce! Why be the CEO? Because, ultimately, whether you accept the title or not, that’s what you are. Of both your life and your divorce. You are in charge.
Does it mean you have to have all the answers yourself? No. The CEO of a company isn’t the expert in every part of the business.
Does it mean you need to know what you want and have a plan to get there? Yes. As leader of your life and your divorce, it’s crucial you know what you want and why. Then you can get the pieces in place to work towards it.
Does it mean you need to burn yourself out? No. Gone are the macho days of business leaders being proud of working themselves into the ground. They now recognise the smart choice is balance: they need to maintain their health and wellbeing. And to get in the support they need when they need it – whether that’s on the finances, the legalities, or the decision-making.
Work with me
As a former solicitor and mediator, as well as being a coach, I can help you with every facet of your divorce. I can help you get clear on what you really want and need. And I can help you navigate the paperwork and legal process too. So if you’re worried that you’re not going to get a fair deal – let’s talk it through together. Book in a call here.
Emma Heptonstall, the Divorce Alchemist is the author of the Amazon best selling book How to be a Lady Who Leaves, the Ultimate Guide to Getting Divorce Ready. A former lawyer, Emma is a family mediator and founder of Get Divorce Ready the online self-study and group programmes. Emma has been featured on BBC Radio, The Telegraph, the iPaper and in Marie Claire Magazine. To find out more visit www.emmaheptonstall.com