THE BIG SPLIT: PROTECTING YOUR ASSETS
Whether you’ve already said I Do, are about to walk down the aisle or are happy co-habiting, Anderson Strathern reveal how to protect your assets should two become one.
With the average age at which women in the UK are getting married – 35.7 years – it’s safe to assume that assets have been accrued. After all, by our mid 30s many of us will have built up careers, pensions, savings and made it onto the property ladder. Sadly, some of us have come into inheritance too.
So when it comes to saying I do, or even just deciding to co-habit with that special someone, according to legal experts Anderson Strathern, we should protect our assets.
“Divorce, or splitting from a long term partner, is without a doubt one of the most emotionally draining experiences someone can go through,” admits Danielle Edgar of Anderson Strathern. “But, it can be even more financially draining. As unromantic as it is, protecting your money is something you need to consider early on during a separation – and ideally before you even get married or buy a house together.”
For those who are still to marry, a prenuptial agreement, or prenup, is now fairly common and highly recommended.
“Prenups are bespoke contracts used to protect certain assets, or make specific provisions in the event of the marriage coming to an end, which otherwise may become part of the matrimonial pot for division,” explains Danielle. “Essentially, the future spouses take control of how divorce may affect them, financially or otherwise, at an early stage.”
“As people these days tend to marry later when they have already built up some wealth, having a prenup is a good idea to minimise personal and financial loss,” explains Danielle. “It can be a simple ring-fencing exercise of pre-marriage assets and wealth, or it can involve a more complex review of potential inheritance, protection of family money and company restructuring.”
She adds: “Prenups can be a positive thing if they are done in a friendly, cooperative way. Perhaps not the most romantic way to start a marriage with, but for those who have already been married and had a bruising divorce, a prenup can be very valuable. We see time and time again that divorces aren’t as challenging or expensive outcome when a prenup has been entered into.”
Living Together Agreements
For those not married but living together, couples in Scotland fall under the definition of ‘cohabitants’ in the Family Law (Scotland) Act 2006. This sets out what cohabitants can claim if there is a separation or where the relationship ends by the death of one of them.
But Danielle warns: “Couples may think that because they are living together they automatically have the same rights as married couples – but this is not the case. This is why a Living Together Agreement or Cohabitation Agreements are always worth considering.”
These contracts can include a record of what you own, how you will manage your finances throughout the relationship and how you will deal with various matters in the event of separation.
“Both agreements help avoid the stress and cost of a disputed claim at the end of the relationship and a family lawyer can help decide which one is best,” explains Danielle. “Often people feel uncomfortable having this conversation with their partner, but making an agreement can strengthen a relationship and give both partners a greater sense of security, especially if there are children involved.”
Additionally making a will is advised for all those living together so that their intentions are known.
The Big Split
But if divorce is already on the cards, what can we expect – and how can we make sure we’re financially protected?
“In order to divorce in Scotland finances have to be agreed and care arrangements made for children under the age of 16,” explains Danielle. “Solicitors try to sort out finances and care arrangements prior to raising a divorce and putting in place a Minute of Agreement that sets out clearly what’s to happen with particular assets in order to give spouses a clean break from one another – and their joint finances.
“If a Minute of Agreement has been put in place then a divorce can proceed on an undefended basis. However, if there are disputes over assets then an action for divorce will have to be raised at Court and not only would you be asking the Sheriff to grant a divorce but you might also be asking for financial or care arrangements to be decided as well. It can be costly when you have to raise a divorce and it is contentious. Therefore, knowing your financial situation is key and also checking if you’re eligible for legal aid.”
Get Financially Focused
According to Danielle, at as early a stage as possible, find out or know as much as possible about your and your spouse’s financial position. Income. Household bills. Savings and investments.
Apparently one in four women don’t have an accurate picture of their joint finances and Anderson Strathern often come across this. Danielle advises: “I would suggest getting to know your finances early and have access to joint current and savings accounts – you need to know what comes into the bank account by way of salary or other funds. Also know who your mortgage provider is, how much is the mortgage each month. Even if one usually deals with the money, if that is not you, find out as much as you can.”
She adds: “If separating and you have instructed a solicitor, they will write to the other side and ask for vouching of all finances in single and joint names to pull together a picture of the family finances. I always recommend to make a list of the assets held in your own name and what you think is held in joint names and in your spouse’s name to help build the financial picture.”
This is why it’s important to work out the value of your own assets – and be fully involved in the process of having joint assets valued.
“If it is a house that is being transferred then you will need to have it valued by a surveyor to work out the market value. You will also need to contact your mortgage provider and ask for a mortgage redemption statement which will show how much outstanding mortgage is left so the equity can be calculated once valued. If there are pensions then you will need to contact your pension provider and ask for a Cash Equivalent Transfer Valuation (CETV) which will show the amount of pension that has accrued from the date of marriage to the date of separation. Other assets such as furniture and other valuables can also be valued.”
If you are divorcing, Danielle Edgar from Anderson Strathern has created a step by step guide to make the transition that little bit easier.
- Seek Legal Advice. If you’re going down the route of divorcing then definitely seek legal advice sooner rather than later. It can seem like a daunting task going to a solicitor, however I find that people feel a lot better and more secure about their situation after meeting with a solicitor. There are a lot of unknowns and the best way to get through the process is to arm yourself with as much good advice as possible.
- Agree a Date. You will need to agree a date of separation as this is the date that some assets and debts will be valued from. Once the date of separation has been agreed between you and your spouse, start pulling together all your financial information.
- Identify Assets. Take control and arm yourself with information about your assets. Don’t be afraid to contact your bank, mortgage provider and pension provider for information – they receive requests for financial information from separating people all the time! This intel will arm you with the information you need to know regarding what is yours.
- Keep it Friendly. If you can keep matters as amicable as possible (which isn’t always easy or do-able) you and your spouse might come to a private agreement about how finances and care arrangements for children are to be dealt with. If not, your solicitor will write to your spouse to request vouching with a view to compiling a list of assets and debts to properly assess the matrimonial pot and advise as to what will be a fair division of the assets and can then negotiate on your behalf to achieve a fair division.
- Talk to a financial planner. Life after a divorce can look very different so it’s always worthwhile getting some independent financial advice to help create a new path for you and your finances.
The Anderson Strathern team have a wealth of expertise so please get in touch if you are looking for advice or guidance. To discuss your divorce matters in confidence with Danielle Edgar contact: firstname.lastname@example.org.
Join EGG Today
Become a member of EGG and enjoy a heap of exclusive benefits. You’ll get access to Exclusive Offers, Events and your very own Digital Membership Card – use it to discover great places in Edinburgh and connect with like-minded girls.
£30 per year