Managing Your Finances Through Separation and Divorce in the UK

If you’ve decided to part ways, one of the biggest challenges is determining how to manage your finances. Several financial aspects are involved, such as assets, child upbringing, debts, and more, making the process more complex. However, one must take timely action to avoid significant consequences in later life.

In this article, we will discuss some tips to help you handle your finances while experiencing the stress of the divorce process.

Tips for Securing your Finances during divorce.

Taking care of money and divorce while moving apart needs some planning. Let’s explore:

Consult Experts

Seek the relevant family law advice; it can go a long way in ensuring you protect your finances in a legal and permitted manner. Start by preparing a list of all the assets you may have, including their current market values, with the help of a financial advisor. Allow your solicitor to use this information. Ask them plenty of questions to understand how they can address your concerns and make the divorce process smoother. These assets may include pensions, homes, investments, and businesses.

Make a Financial Plan for Your Future

Your financial situation will change once you separate or get a divorce. Therefore, start thinking about your finances. A good move in this direction can be taking out your credit report. You might need it In case you need a new mortgage. You will also learn about joint debts you may be holding with your ex-partner and must agree on how these debts will be settled to prevent any legal action from being taken against you in the future.

Seek Professional Advice on Dividing Retirement Savings

How you split your pension is a significant financial decision that can affect your long-term economic well-being. One of the popular ways to divide pension assets is pension sharing. It involves dividing one or more pensions between the spouses. Each partner can decide what to do with their share after granting the pension order.

Another method is pension offsetting. It is a financial strategy in which one spouse’s pension rights are balanced against the other spouse’s assets.

Review your Financial Assets

Generally, dividing any cash savings is easy; one partner can transfer the money to the other partner’s account. However, one cannot move the ISAs directly. One of the spouses should withdraw it and then share it with the other spouse. However, it has tax implications, so speak with a financial advisor before proceeding to best understand these implications. In the case of Lifetime ISA, the banks allow money withdrawal but charge a fee.

Additionally, if the savings account has a notice period, one may have to wait to withdraw the money. You can contact your bank or the building society to discuss your options or be prepared to lose interest on your savings.

Think About your Capital Gains Tax Obligations

The new rules have made it much easier for couples to divide their assets without paying significant taxes. Starting from April 6, 2023, spouses now get three years after they separate to transfer assets to each other without facing capital gains tax (CGT). This allows you more time to decide how to divide your help, a valuable option during an already stressful divorce.

However, you must pay the CGT if you decide to sell the asset later. Therefore, reviewing your taxes and finances after you separate is advised.

Parting Words

Taking care of your finances while ending a relationship is challenging. However, there are many steps outlined above you can take to make a smooth transition to a new life. You can also seek advice from a family law solicitor specialising in divorce cases. Visit Lawyersorted.com and find the right solicitor for you.

Written By –

Omar Shams

Omar Shams

CEO & Founder at Lawyersorted.com

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