This article seeks to answer this question for you: “What is a financial separation agreement UK?”.
Separating from a partner is a difficult process with a lot of emotions involved.
But one of the main things that causes friction both in relationships and upon their breakdown, is finances.
And dividing money and assets is one of the most important factors in a separation…
In fact, the two most crucial things you’ll have to decide upon is what to do with your home, and what to do with any pensions you both have.
The reality is that if you’ve just ended a relationship with your partner, then it might not be the best time to talk, particularly if things are fractious.
But once you’ve given yourselves time, it’s A LOT easier to come to an amicable agreement over finances when you’re ready to talk.
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What is a Financial Separation Agreement?
Simply put, a financial separation agreement is a document that sets out the arrangements when you stop cohabiting with a partner.
Whether you’re married, in a civil partnership, or simply living together, a financial separation agreement is a useful document to lay out what will happen with property, money, assets, and pensions going forward.
While you can come to an agreement with your former partner, it’s wise to seek the advice of a legal professional once you’ve decided what your route forward is.
That’s because it can be a complicated process. Having EVERYTHING covered in the separation agreement can avoid conflict further down the line.
It’s important to note that you MUST be honest about your finances as you head into this process…
Because otherwise, if your partner finds out later that you failed to disclose or attempted to hide anything, they could then take you to court and ask for more money or a portion of various assets.
Where Do I Start?
You’ll need to be open and honest about your finances.
If you and your partner don’t want to sort out your money with each other, or if there’s any reason you can’t, then it might be wise to look at mediation as an option.
But otherwise, work out who pays for what when it comes to household bills, mortgages or rent, childcare costs, and anything else that will need to be covered.
You’ll also need to decide what to do with your home.
That will depend on what you can both realistically afford to do once you’re living apart, how much value there is in the home, and whether you have any children.
Your former partner might be able to keep paying the mortgage, or pay something towards the costs, after they move out – or vice versa.
But the reality is you’ll have to come to a permanent agreement so that both parties can rent or purchase a home of their own, however that is worked out.
What About Pensions?
It’s probably not the first thing that comes to mind, but if you’re married or in a civil partnership, you might be entitled to a share of your former partner’s pension – though this is more a case for divorce or the ending of a civil partnership.
It’s worth consideration when you’re talking about finances, though, and you should discuss it with your solicitor to see what your options are.
What Else Do I Need To Think About When It Comes To A Financial Separation Agreement?
If you’re dividing up any other belongings and assets, the first place to start is to make a list.
That will include:
- Personal belongings such as jewellery, furniture, and electronic goods
- Cars and vehicles
- Money in bank accounts, including personal and joint accounts
- Any savings and investments
Now, while you don’t have to list ALL of your personal belongings, it’s probably worth listing anything worth more than a specific value, say £500, anything with sentimental value, and anything you want to keep.
It’s also worth noting that you’ll need to include any debts such as bank overdrafts, credit card debts, finance agreements, and hire purchase agreements.
If there are any shared debts, you’ll both be responsible for the ENTIRE debt – not simply half.
This means that if your partner was to stop paying the debt, you’ll be required to settle the debt.
Because of this, it’s worth factoring debts into the conversation to include in your financial separation agreement.
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To be connected to a specialist family law solicitor near to where you live, please either call us now on 0845 1391399 or complete a Free Online Enquiry.