Q: My partner and I have recently ended our relationship after 10 years together. We have a joint mortgage, joint accounts, shared credit cards, and have been each other’s next of kin and beneficiaries. In terms of practicalities what do I need to do to separate our finances?
A: Firstly, I just want to wish you well and say I hope you are also able to look after your emotional well-being. A separation, especially after such a long time can be difficult to process and I hope you are being given the space to do so.
As much as there is an emotional toll when it comes to break ups, there can also be significant financial implications. It’s therefore important that you take the necessary steps to delink your finances right away. Some areas you might want to think about are:
- Closing down any joint accounts One of the first things you will need to do is to close down or freeze any joint accounts to try and minimise and disagreements over spending. If the account is overdrawn, both of you are responsible to tackling this so it is important to have a discussion about how you will handle this. If you have two credit cards on the same account, these should also be put on hold, or the primary card holder should remove the secondary holder to avoid any further disagreement
- Discussing the debt You will have enough to think about, so it is important that you act quickly to stop any debt becoming worse. Be aware that debt in your name, even if it was taken out to support your partner is still your responsibility to pay off. Also be aware that if the debt is in both of your names, it is your joint responsibility to pay off. However, if your partner is unwilling or unable to do so, this will become your responsibility and something you will have to tackle. Failing to do so could leave you with a poor credit rating.
- Delinking your credit Check your credit records with all three credit reference agencies Experian, Equifax and TransUnion. If any of these are still showing you as being connected to your ex-partner, you will need to ask for a financial dissolution. This might seem like a lot of work but being linked when you are no longer in a relationship won’t improve your credit rating, even if you partner does have good credit. It could however negatively impact it as any debt or missed payments your ex incurs will damage your credit rating. Just imagine how you might feel if at some point you get rejected for a loan or mortgage because of a financial mistake your ex-partner made even after you separated….
- Managing your mortgage The literal roof over your head will likely be a big topic to agree. How you move forward and decide what to do with the home you shared will depend on several factors including the value of the house, and your financial situations. If you want to stay in the property and are able to agree on a price you can afford, you might want to consider buying your ex-partner out of the property. Do be aware that even if you can agree this, banks will want to see proof that you are able to handle the mortgage alone before they agree a mortgage with you. If you do decide to sell up, you’ll need to agree with your ex-partner how to split the equity in the property.
- Attending to the admin You will almost certainly need to remove your partner as your next of kin or your beneficiary in that event or any illness or debt. This means thinking about your workplace pension/benefits, your will or life insurance and anything else that has your partner listed. Think about who you would have as your new next of kin or beneficiary and get in contact with the necessary sources to make sure this is quickly changed over.
While the best (and least expensive) case scenario is to amicably find way to divide up debt and assets, the reality is that this may not always be possible. If things are complicated, or you feel your partner is being uncooperative you may need to consider using a mediator or seeking legal support to ensure that things are fairly divided up. In any case do make sure that you take the necessary steps to take the best of care of both your emotional and financial well-being.
Do you have a question you’d like Dav to answer? Email us and let us know. All responses are opinion only and do not constitute financial advice