How to protect your financial assets if you get divorced

21 July 2015

Divorce or dissolution of a civil partnership can bring out the worst in people, so it’s important to know what to do to ensure you don’t lose out financially. We explain what you should do to protect your finances when you separate.

Protecting your home

When you split up, your biggest financial asset is likely to be your home. Protecting your interest in it will depend on what agreement for ownership you have in place. If you don’t know this already, it’s important to find out as soon as you can.

If you’re joint tenants

Many couples who share ownership of their home are joint tenants. (In Scotland this is called joint owners with a survivorship destination). Neither of you can sell the property without the permission of the other. If you both decide to sell it, any profit you make will be split between you. If one of you dies, the full ownership of the property passes onto your ex-partner.

If you’re a joint tenant, it may be worth thinking about becoming tenants in common before the divorce or dissolution is completed, so that you can prevent your share passing straight to your ex-partner if you were to die before them.

If you’re tenants in common

Some couples may be tenants in common. This means that you agreed how much of the property each of you would own when you bought your home. Being a tenant in common means you can leave your share to whoever you want in your will. You may want to do this if you have children.

If ownership isn’t shared

If your home is in your ex-partner’s name only, they can sell it or re-mortgage it without asking for your permission. For this reason, you should register an interest in the property to help prevent this happening without your knowledge.

If you have registered an interest, the court must take this into account when deciding on a settlement. You may have some rights to stay in the home if you have dependent children or you can prove you contributed towards the mortgage, bills and other outgoings. The rules for registering an interest are different depending on where you live in the UK.

Find out how much it costs to get divorced.

Mortgage and rental payments

If you are a homeowner

Anyone named on a mortgage agreement is liable for the whole debt, even if it’s a joint mortgage. You should contact your lender to let them know you have separated. If you’re worried that your ex may fail to make payments, you will also need to discuss your options with your lender.

If you fall into arrears, your credit file will be affected. This could make it difficult to get a mortgage or other credit in the future.

If you are living in rented accommodation

If you have been living in rented accommodation you should inform the landlord of your change of circumstances. If both your names are on the tenancy agreement you will both have the right to carry on living in the property. You will only be able to end the tenancy if it isn’t for a fixed term, otherwise you will be both be liable to carry on paying the rent. If one of you wants to move out, you could ask the landlord to change the tenancy into your name only but whether they will agree to this will depend on what type of tenancy you have.

If only your name is on the tenancy agreement, you’ll still be liable for payments. If the tenancy agreement is in your ex-partner’s name only, they can ask you to leave and you might have to find somewhere else to live. However, you can apply to the court to stay there if necessary. There are different rules for doing this depending on where you live in the UK.

Bank accounts, credit cards and loans

Bank accounts

If you have a joint account, speak to your bank about changing how it is set up, so both of you must consent to any withdrawals. You may want to now only pay enough money in to cover joint expenses, such as mortgage or rent payments, bills and loan or credit card payments.

Alternatively, you could get the bank to freeze the account. Many banks will allow one person to do this but it can cause problems as both of you will have to agree to reverse this decision.

Credit cards and loans

You are both liable for any joint loans or credit agreements, even if one of you doesn’t keep up with payments.

If your ex has access to your money through a second credit card, you are liable for the debts as the account is in your name. If you’re worried they’ll max it out, you can ask your provider to block the card to prevent them from using it.

Other financial assets

Don’t forget about your other assets, such as savings accounts, stocks and shares, valuables and other assets, including those tied up abroad.

How you divide these up will depend on whether they are held jointly or in your own names. For some savings accounts you may have to give notice and could lose interest or be charged a penalty if you take the money out too soon.

With other investments, such as shares, you will need to value them and you could pay tax or other charges if you sell them or transfer them to your ex-partner.

If you have a lot of savings and investments, it may be worth speaking to a financial adviser about the best way to split them.

Speak to a solicitor if you suspect your ex may attempt to hide or take money out of these holdings or tries to move them abroad.

Did you know that your pension is also classed as an asset? Find out what will happen to your pension when you divorce.

All information accurate at time of publication

This article is provided by the Money Advice Service.

Money Advice Service

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.