If you and your partner are separating or getting a divorce, it’s not always easy to know what this will mean for any joint accounts or joint policies you share.
Splitting up can be traumatic enough without immediately thinking about your finances, but if you do share several accounts with your former partner, it’s worth addressing how you might be able to separate these sooner rather than later if possible.
If your relationship is ending, and you need help dividing your money and property or making arrangements for your children, amicable is a trusted legal service for separation and divorce. Unlike solicitors, amicable works with couples and offers a fixed-fee service that includes VAT to help manage all aspects of separation so that you can agree on the best way forward for your family and your finances. Get in touch to explore how they can help you separate in a kinder, better way.
Here, we look at some of the things you need to think about if you hold joint accounts with your partner and you’ve made the decision to separate.
How do we separate joint savings and current accounts?
If you and your partner split up or have a dispute and have a joint account, you should get in touch with your bank as soon as possible and let them know you are separating.
Hopefully you might be able to resolve things amicably, but if not and you want to put a restriction on the account so that neither you nor your partner can take money out of it, the bank should act. Unless a court decides differently, any money held in a joint savings account is considered to belong to you equally.
Be aware that different banks have different approaches when it comes to joint accounts. In some cases one of you may be able to freeze a joint account but both of you will have to sign a document to unfreeze it. This can be a problem if your ex won’t co-operate. This should be explained to you when you open the account.
Banks should also keep your details confidential. However, bear in mind that the Financial Ombudsman Service has in the past turn down a claim from an ex husband against his bank after it (unintentionally) told his wife how much was in his personal account. As a result of this the ex-husband had to pay his ex-wife an additional £73,000 in the divorce settlement. The bank and ombudsman argued that he had a duty to disclose all his savings as part of the divorce process so no compensation was due.
The bank doesn’t have to contact both of you. If it has always addressed statements to your partner, for example, it doesn’t have to write to you if you split up, although it must do this if you ask it to.
Who is responsible for joint debts when you separate?
If a debt is held jointly with your former partner – perhaps you took out a credit card or loan together, then the creditors can pursue either one of you for the debt. That means if one of you decides to stop paying, the other will be liable for keeping up with repayments.
It’s therefore really important to try to pay off any joint debts as soon as possible or come up with a way you can split what you owe between you so that one of you becomes solely responsible for repaying certain debts and the other the remainder. Remember that you will need to ask your creditors to move debts into individual names if you want this to happen.
Sometimes it’s not easy to know whether you’ve separated everything, but you can find out whether your finances are still linked to your ex-partner by checking your credit records with one of the main credit reference agencies, which include Experian and Equifax and CallCredit.
If these records show you are still linked, you can ask the credit reference agency to update their records so that they show you are “financially disassociated” from your partner. You’ll usually need to provide proof that any accounts are now held in your sole name rather than jointly, which your bank or creditor should be able to provide you with.
You don’t have to wait until you’re officially separated or divorced to financially separate yourself from your ex – you can do it as soon as all joint accounts are closed and any mortgage or other credit arrangements are no longer held jointly. Find out more in our guide Sorting out your finances when a relationship ends.
Who pays the joint mortgage?
What happens to your joint mortgage when you divorce or separate depends on what you plan to do with your shared home.
If, for example, the property is in joint names and you want to transfer it to one name because one of you plans to remain living there, that’s treated as a new mortgage and whoever is taking on the mortgage will need to meet the lender’s income criteria to get a loan.
In cases where only one partner is earning an income, maintenance may be taken into account. However, it’s very difficult if you want to borrow more than 75% if you’re relying on maintenance payments. Some lenders will take maintenance into account, with most accepting either a court order or Child Support Agency order as proof, whilst others will want to see bank statements. Most lenders will look at how long maintenance has to run – if it’s spousal maintenance, for example, it may be for life, but if it’s child support and it’s only going to run for two or three years, that will probably be discounted by the lender.
Some lenders may not accept maintenance payments as a form of income at all, so it’s a good idea to seek advice from a mortgage broker.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
What happens to shared household insurance policies?
If you and your partner split up, how does it affect your home insurance? And what happens if they damage the property after you’ve separated?
If your partner is moving out of the family home, it’s important that you get them to sign a letter to say that he or she is happy to have their name taken off the policy. Ideally you should change the locks or ask for your keys back if you are going to be living there alone. However, if you can’t get the keys returned it shouldn’t invalidate the policy.
Remember, these situations are often highly emotionally charged and it can be complicated unravelling your finances from someone else, so if you need help, it can be a good idea to seek mediation or, if you’re unable to resolve things that way, professional legal advice. For more information on mediation, or to find your nearest mediation service, visit the National Family Mediation website. Alternatively, you can find a solicitor with the help of Resolution, a membership organisation for professionals who work with separating couples.
If your relationship is ending, and you need help dividing your money and property or making arrangements for your children, amicable is a trusted legal service for separation and divorce. Unlike solicitors, amicable works with couples and offers a fixed-fee service that includes VAT to help manage all aspects of separation so that you can agree on the best way forward for your family and your finances. Get in touch to explore how they can help you separate in a kinder, better way.
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