Separating or divorcing is an enormous transition that can be very stressful. It will bring significant changes to you.
In the event that you, unfortunately, have to go through a separation or a divorce you should make sure that you have a separation or divorce agreement.
…a written agreement that formally sets out how you and your former spouse / partner have agreed to divide the finances, investments and family related responsibilities which you collectively enjoyed when you were still together.
In drawing up a separate agreement make sure that the following matters, if so appropriate, are included:
Living arrangements.
How you will divide property.
How you will divide your finances and investments.
How you will divide debts.
If spousal support will be paid.
Custody of children.
Access to children.
Child support payments.
How you will divide any personal pension or occupational pension plans.
How the social security contributory pension will be divided.
What are the big money dangers if you separate or divorce?
Your divorce or separation may create money problems. Many people find it hard to pay the bills – plus their legal fees – during this time. For example:
o You may have been living on two incomes, but now you are on your own
o Your money may be invested in a house, a property, or a business, and it will take time to get your share
o Your divorce may be complicated, and you will be short of cash until you and your ex-spouse reach an agreement.
No matter what happens, make sure that you don’t fall into one of these three common traps:
Even if you have to borrow money, it’s important to pay the bills. If you do not, you will have to pay interest anyway.
If you rush or don’t have a plan, you may make costly mistakes with the money you get after your divorce. Before you spend, it’s important to decide what you will need that money for in the future.
Acting too quickly can be a mistake, but so is taking too long to sort out your finances. Here are some of the dangers of doing nothing:
o If you have money to invest and leave it in a bank account, you may miss chances to grow your money. You may even lose money.
o If you and your ex-spouse still have joint accounts and credit cards, one of you could spend money or go into debt, so be sure to close them down quickly.
o If you delay making changes you need to make, like cutting your costs or getting a new job, you may spend money you need for your future.
o If you plan to claim spousal support, you need to file within two years of separation. If you wait too long, the court may dismiss your claim.
o If you don’t update your will and insurance plans, you may create big problems for your children or other family members.
Sometimes the worst thing you can do is nothing. You need to make wise, timely choices to help you reach your financial goals. If you’re not sure what to do, or you’re afraid of making a mistake, get advice from an expert.