The financial impact of separation or divorce
Separation or divorce is often painful, emotionally and financially. If you face either, be prepared and look after your interests. The following Q&A may help to ease the stress:
Q: Should I get legal advice about divorce?
A: Divorce laws are complex and hard to understand, especially when it comes to sharing assets, child custody and maintenance payments. Even if you and your partner have made an arrangement, it is a good idea to ask for legal advice about how to go about it.
Q: What financial arrangements should I make after divorce?
A: Take the following steps, if possible:
- Set a budget and stick to it until the divorce is over, and pay all related bills on time
- Collect your monthly bank statements and make copies
- Collect all tax returns filed together or separately and make copies
- Make sure all income tax has been paid
- Put valuables in a safety box and make a record of them
- Do not move out of your home until you get legal advice
- Do not transfer or give away assets that are jointly owned
- Do not sign documents without getting legal advice
- Cancel all joint bank accounts and credit cards
Q: When should I start planning for life after divorce?
A: You must assess your financial situation after getting divorced. The following suggestions may help:
- Calculate your income and spending after divorce. Can you maintain your lifestyle, and that of your family?
- List all your assets, their value, and who they belong to, so you can decide whether to keep them or not.
- Have a clear idea of your debts and financial obligations. Are you able to settle all due payments on time?
- Find out what the employment benefits of both yourself and your partner are, plus your life, medical and disability insurances. If you have children, do you have insurance to cover their needs?
- Bear in mind the needs of your partner and children. Should you pay or receive maintenance payments?
- Look at your will after you divorce. If you die or cannot work, how are your children going to be taken care of?
- If you get compensation after divorce, do you need investment advice?