Whether divorce was your idea or not, it’s often the case that thoughts about finances come secondary to the needs of your children. Whilst this is understandable, it often leaves many women on the back foot when it comes to the financial settlement. If your divorce is high conflict this can be especially challenging and it’s important that you take dealing with your finances seriously from the beginning to preserve your assets and to give you a greater feeling of being part of the process rather than it happening to you.
If money hasn’t been your domain in the relationship, it’s even more important that your divorce team (everyone should have one), includes members who can help you figure out what’s important to you and how to achieve that financially. Having a vague idea, or thinking it’s not that important could lead you to an unfair or unsuitable settlement. The circumstances in which you can ask a court to revisit your financial settlement are limited and expensive. If you start from the proposition but you need to get it right first time, you’ll save yourself a lot of heartache, time and money. Here are my 5 top tips to get you started.
- Rule no.1 No negotiation without knowing your numbers
My golden rule for anyone is “no negotiating without knowing your numbers. This means being clear about the value of your assets (what you have) and your liabilities (the things you owe), including your pensions, investments and soft loans to family or friends that you may have. ‘Guesstimating’ just isn’t good enough I’m afraid. You need to know those numbers before you start the negotiating process. This upfront work can be tedious but trust me, you’ll thank yourself over and over for doing it properly from the start. This includes being clear about your numbers, your joint numbers and the numbers of your spouse. - Understanding your spending
Understanding your spending is crucial! Form E requires you to consider your future income needs which can be challenging particularly if you don’t know where you are going to be living or what income you may have, either by way of maintenance or earnings. So how to get started? Start from where you are now if your financial circumstances haven’t changed. If your circumstances have changed, use the figures for your pre-separation lifestyle. It’s not just household bills, its your magazine subscriptions, latte habit, gym membership, salon visits, weekends away, everything.
This can be an eye-opener and a scary moment but the sooner you know what you spend, the sooner you can start considering what you need. Let go of the guilt and shame you may feel. If you struggle with difficult feelings about your spending you may need to work on your worthiness – particularly if you’ve had a high conflict relationship where your spending has been scrutinised and criticised. Remember – it is okay to get your hair done and keep fit. - Getting the right financial advice to plan for the future
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. - Don’t compare your situation to anyone else
You are not your best friend or the man at the school gate. Neither are you the woman that you share an office with. It is virtually impossible to compare your situation to those of someone else so don’t do it.
The law that governs financial settlements are known as the s25 factors and, unless you are the same age, have been married for the same period of time, have the same career path as your friend (and your husband’s age and career and earnings are the same as her husband), your children are the same age and you have the same pension pots you just can’t compare yourself to anyone else.
Get the best advice you can. That doesn’t mean the most expensive advice by the way. It means the advice that’s right for you in your circumstances. Have a team around you who specialise in their zone of genius. A lawyer, a divorce coach, a financial adviser an actuary. All these people can help you make sound financial decisions from different perspectives. - Be prepared to compromise and be flexible
It would be very unwise not to think about what your husband wants and needs too, however much this may irritate you (and it might not)! Just as you need to move forward to a new life, so does he. He needs a home. He needs somewhere for the children to stay. He needs to feed himself and have a life too.
How ever wealthy you are (unless there’s millions), you are both likely to see a change in life style to some degree. Because what was funding one family, now has to support two. Most people have to accept compromise. For some it’s leaving the 5 bed house with gardens to a 4 bed house on an estate. For others it’s going from a 4 bed to a 2 bed home and for others from home ownership to living in a rental property. If you consider his needs from the get-go, you will have some idea of the likely outcome for you, begin to readjust AND prepare your children.
About Emma
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. Emma is also the host of The Six Minute Divorce Podcast. To find out more visit www.emmaheptonstall.com