Making sense of money during a divorce

Staying on top of your finances during a life-changing event like a divorce can be hard, but it also presents a chance to take control as you cross over into a new chapter.

Aside from the emotional impact of separating from someone, divorce also means changing your money mindset. You go from being part of a couple with shared dreams and goals to disentangling your finances from one another and shifting your focus to your own financial well-being.

If you've never had to sort the mortgage renewal or find the best insurance options because your partner always did it, it may feel daunting, but you can do it.

It’s a process that can take its toll – on your mental and physical health and your other relationships. But you don’t have to face it alone, and by following some general guidelines, you could make the process a little less overwhelming.

Nurture the common ground

If you and your partner can try to come to as much agreement as possible, it could make things easier when it comes to dividing your assets, including property and pensions. It could also be less complex if one of you is not financially dependent on the other – and if you don’t have children.

On the other hand, things could become more complicated if one of you has more money or assets than the other or has built up a much bigger pension. This could turn into conflict when you’re talking about dividing up what you have, the debts you owe and how to deal with any ongoing financial issues (like child support).

Going through a divorce will no doubt stir up lots of emotions, and it might feel impossible to make sound and balanced decisions. Seeking some advice from a divorce financial expert, lawyer or neutral party could help ease some of your stress.

Protect your interests

Although some people who ‘uncouple’ do it amicably, others aren’t as lucky. If you’re not on good terms with your partner, you’ll want to protect yourself. You may need to take steps to contact your banking provider(s) and ask for your details to be removed from the account(s) and open new accounts in your name only. This could also extend to changing passwords, PINs and security questions that your partner might know or guess.

Keep the following in mind if you are thinking of taking action:

• Don't think you have to attempt to handle the process of separating your assets and finances alone. You may need help from an expert who can help you make the best decisions for your situation. They will charge for their services, but you may find it worthwhile in the long run
• Avoid agreeing to anything without understanding the consequences
• Don’t hide or dispose of any assets or debts without disclosing them to your partner or their representative. Don’t move money from a joint account into your own, without disclosing it, either
• Don’t run up debts on a joint account, freeze a bank account or stop making any payments you've agreed with your partner

Forge some financial clarity

If you want to help plan your finances and negotiate a fair financial settlement, create a budget that reflects your current and expected income and expenses. It could give you a feeling of confidence to plan in this way, and you may even spot areas where you could make savings or boost your income.

Don’t forget

• A financial expert can help you stay alert to any tax liabilities (Opens in new window) (such as capital gains tax) based on your financial decisions and status. They’ll also break down the long-term financial impacts of what’s happening
• If you have children, it’s important to ask your financial adviser about how child support and child benefit and the division of assets may impact your tax liabilities
• Review your insurance policies such as home or car insurance, important documents like a will if you have one, and financial agreements like trusts

As much as divorce can cause you to feel despondent, it’s an opportunity to reset, reach out to experts and think about your long-term financial goals – whether you want to save, invest, buy a home or strengthen your retirement plans.

Shape your financial future

Separating from someone you’ve shared part of your life with might be one of the most difficult experiences you’ve ever had. It can also affect your finances in ways you could not have predicted. However, there are opportunities to take hold of the things you can control, which could lead to building a brighter future for you and your financial well-being.

Recommended reading

• Is it worth putting off a divorce during the cost-of-living crisis?
• Help to protect your financial interests during a divorce
• How to separate joint debt after a divorce

Disclaimer: The Hub is intended as a knowledge portal to provide information on a range of topics, including financial products and lifestyle management. These articles are not financial advice. Articles may reference products and services which Chase UK does not currently offer. We recommend seeking out an independent financial adviser if you have any questions. Tax treatment depends on your individual circumstances and may be subject to change in the future. We do not offer any tax advice.