One of the most important questions to consider when a relationship breaks down is how assets and liabilities will be divided.
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At the outset, the parties need to:
Work out the value of assets and debts at the date of separation (or a later date may be applicable).
Decide how to split them. The most important assets are usually the house and the pension fund.
Write up the decision as a Separation Agreement signed by both parties.
- House - This is an important aspect that merits special treatment. Can one party afford to buy out the other? Or should the house be sold?
- Policies - Obtain surrender value from date of marriage to separation (or a later date may be applicable).
- Pensions - Pensions are considered as part of the assets to split between the parties. Obtain cash equivalent transfer value from the date of marriage to separation (or a later date may be applicable).
- Cars - Owned outright or with loans or company car?
- Furniture - Usually a split can be agreed, otherwise assess second-hand value. Antiques may have to be valued.
- Shares & investments - Include employee share schemes (watch out for tax issues).
- Other items - Jewelry, owner's equity in business, holiday home, golf clubs.
- Income - Salaries, perks, business profits, rents...
- Mortgage - The higher the mortgage and property values, the harder it will be for one party to take over the house and buy out the other.
- Credit cards & personal loans - These may be joint or in single names but should all be vouched.
- Business loans & overdrafts - Look at recent balance sheets and bank statements.
Money: the goal
- Add up joint assets & individual assets.
- Deduct debts.
- Calculate the 50/50 split.
- How much does she have, how much does he have?
- How much to be transferred to the other to balance?
- Consider specific legal circumstances which may mean a 50/50 split is not appropriate. These may include any gifts or legacies received by one party, the costs of caring for children, whether one party sacrificed their career to further the other party’s career, etc.
Family Law / Divorce
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