How to split your finances on divorce

I am working with a client at the moment who’s going through separation from her partner to calculate exactly what capital sum she needs now to cover essential expenses for her and her children.

The brief details are that the couple are divorcing and the house is being sold. The house is the main asset within the marriage and her solicitor has asked me for advice as to what amount of capital she would need to cover all costs for her children until the children are 18.

There are specific reasons as to why my client’s solicitor is considering her future income needs are met by a capital sum now rather than ongoing income payments.

The mother works on a part time basis due to her child care responsibilities. As a result her income is low and is unlikely to increase significantly over future years.

The report I’ve prepared for my client covers the following:

Private Education

The children are at private school and what’s most important for both parents is that sufficient funds are available to ensure they can continue at this school at least up until A level. Potentially at this stage the children could attend a high standard local state 6^th form college.

The report shows what amount of capital would be required at today’s date to fund private education for the children. It has covered the option that the children stay at their current school until after A levels and a second option that the children transfer to the state system for their A level exams.

Property Purchase

The property is held as joint tenants and therefore my client is automatically eligible to receive ½ of the equity. However, this is insufficient to fund an outright purchase of a property suitable for her and her children.

The report looks as what the shortfall will be against her ½ share based on the cost of hr new property including all associated costs.

Monthly budget

The report looks as what monthly budget by client needs on an ongoing basis to cover her expenses. Two budgets have been prepared: one on a “bare minimum “basis and one on a “current lifestyle” basis.

The reports then looks at what capital sum she would require now to be able to cover these costs up until the children are age 18.

The details provided in this report have allowed both my client and her solicitor to enter financial negotiations armed with knowing as to what capital amount she would either need or ideally like from the sale of the property.

the finances are tight on this specific case and it is too early to know whether my client will receive what she wants. However, what the exercise has done is to provide guidance to her solicitor as to what’s her starting point in negotiation.

If you are going through divorce and would like to discuss your finances please do call me on 01932 698150 for a confidential chat.

photo credit: Flickr/ninopnatividad