Divorce – How to deal with the stress and anxiety
When a relationship comes to an end it’s often a very traumatic experience, no matter how sensitive or dignified everyone tries to be. Any relationship breakup can be a testing time for all concerned. It’s not uncommon for one person to be more committed to the split than the other. That person can seem to be taking everything in their stride whilst their estranged partner may well find the process debilitating and exhausting. All involved can feel at their lowest ebb and an ending to the proceedings may seem like a distant goal on the horizon.
It can have huge implications for your personal finances. Tackling your finances as soon as possible can help you take a positive step towards getting your life back on track and by taking control you can relieve some of the stress and anxiety involved.
Key not financial considerations
Respect can be a big part of handling the process well. Respect for yourself, who you are and your own dignity and sense of worth. Anger and revenge may be at the forefront of your mind but, as with any ending, it’s important to try to be gentle with yourself. Look after yourself and commit to eating and resting properly.
Respect your choices. Don’t allow yourself to be bullied or badgered into decisions that you don’t feel are right for you. Talk with a good friend, especially a divorced friends as they’re the most likely to understand how you’re feeling and what you’re going through, but remember, however good their advice, it’s you who has to make the final decision.
Have respect for the relationship. It’s played a big part in your life and no matter how wretched you may be feeling today. You may have become a parent, try see yourself as more worldly-wise, have a clearer sense of what’s right and wrong for you. You’ve no doubt had several life-experiences since you first met each other; think of how much you’ve learned, the different things you’ve done, where and how you’ve lived, the values and lessons along the way, both good and bad.
Regarding children, talk to them and let them know that you both love them, but are choosing to live apart. Explain how that will be better for all concerned. Children often need reassurance at a time like this, especially as it’s not unusual for children to wonder if they were in some way to blame for the breakup. They may also need reassuring that they can still see or speak to either parent whenever they wish.
Respect how you want to be in the future. Your experiences during the relationship will have taught you a great deal. Where do you want to go from here, what’s your idea of a fresh start? There must be lessons that you’ve learned from this time that you’ll aim not to repeat, things that you’ll want to do very differently from now on. Enjoy the opportunities for growth and progression.
Respect the healing process. Take time to reflect on what went wrong and the way in which you’ve been affected by different aspects of the breakup. Some people find that counselling can be a helpful part of the healing and recovery process as the sessions provide dedicated regular time to focus on your issues and navigate a healthy way forward. This can provide a valuable opportunity to heal, understand yourself better and discover what you really want out of life. When you feel better about yourself everyone in your life starts to benefit.
Key financial considerations :
Make mortgage matters a priority.
If you and your former partner have a mortgage together, deciding what to do about your home can be difficult. If you are married or are civil partners and seeking a legal separation, decisions about the house and mortgage will form part of the agreement. However, if you are not married or civil partners, it can be more complicated, particularly if you did not agree what you would do in the event of a separation before you bought the house together. If you qualify as a co-habiting couple then you have certain rights if you were financially dependent on your former partner. If you both had a written agreement on your financial affairs, then this will be legally recognised.
Because there are legal issues to consider, you should contact a solicitor for advice on dividing your home, dealing with mortgage issues and dividing the contents of your home. As well as your solicitor, a financial advisor will also help you weigh up your options and ensure that any agreement you make is fair to both of you.
Complete a financial health check
You will need to complete a personal finance overhaul now that your circumstances have changed. First, you need to know what you have to work with, so make a complete list of your current savings and sources of income (including any benefits, allowances and tax relief etc.). Then try to make a list of what exactly you spend your money on. This will help you look at areas that you could possibly change and by taking control will help you help reduce some of the stress & anxiety involved.
Splitting your joint finances
If you have a joint bank account the first thing you will need to do is pay off any outstanding household bills from this account. You also need to agree whether you will close your joint account and split any money in it, or whether one of you will keep the account. If you are going to keep the account open, contact your bank in writing asking them to change the account into one name.
It’s also a good idea to review your insurance policies as you may need to amend an existing policy or take out a new one. For example, if you have a joint life insurance policy, you will need to cancel it and take out a new policy in your own name, if you still need one.
Dealing with your debts
Consider any outstanding non-mortgage debts that you and your former partner hold jointly, including any credit cards, loans, car loans or car finance agreements. If you are married, dealing with debt will form part of any legal separation but if you and your partner were living together and have joint debts, you need to tackle them before you go your separate ways.
If your debts are in joint names, you are jointly responsible for them, and missing repayments will affect your credit rating. List out all the debts and decide who is to pay what. Contact the lenders and let them know what you have decided to do. If debts are not met, a lender can take you both to court.
Pension Adjustment Orders (PAO)
Pension benefits for many are often the most valuable asset after the family home. A PAO allows a legal way of splitting up pension benefits in the event of the breakdown of a relationship recognised by law. Pension benefits cannot be shared out without a Court Order. Proper financial advice will help you to understand the value of the pension benefits, both before and after any settlement is made.
Widow’s, Widower’s or Surviving Civil Partner’s (Contributory) Pension in Divorce
If you are divorced (or your civil partnership has been dissolved) and you would have been entitled to a Widow’s, Widower’s or Surviving Civil Partner’s (Contributory) Pension had you remained married, you keep your entitlement to the Widow’s, Widower’s or Surviving Civil Partner’s (Contributory) Pension. The pension is payable regardless of other income.
Maintenance payments
Where divorce requires that one party put life cover in place to provide maintenance payments for children in the event of death while the children are still dependant, there are two options available and one may result in a significant CAT liability. Ensure the life policy is structured to avoid a CAT liability on any payout.
CAT – Capital Acquisitions Tax
Transfer of assets between spouses whether by way of gift of inheritance are exempt from Capital Acquisitions Tax (CAT). Separation does not affect this exemption but divorce does. Ensure assets are transferred before the decree of divorce.
Succession Rights in Divorce
Succession relates to the inheritance of a person’s property on their death, giving the surviving spouse/civil partner an automatic right to a share in the estate of their deceased spouse/civil partner. Once a decree of divorce/dissolution is granted, the parties are no longer married or in a civil partnership, and succession rights are automatically extinguished.
Financial planning for clients who have experienced a relationship breakdown can be complex but the right advice will ensure that both parties continue to plan for a secure and comfortable life. Getting good financial advice early in the process is key to this!
If you aren’t sure what steps you should be taking, send me a private email, Kevin at info@planreview.ie, or feel to give me a call where we can have a chat with no obligation or cost to you.
Kevin O’Neill
Independent Financial Broker
0868290989
www.planreview.ie
