Whether you're married or a de-facto, separation has it's financial challenges

If your marriage or de-facto relationship doesn’t work out, amicable separation might be the next logical step. Separating from your partner can be a very messy situation full of anger, regret, arguments, and a cluster of heartbroken emotions.

It’s a part of human nature not being able to think correctly during traumatic events. But to be calm and composed during these times is very important.

During times like these, you should not be afraid to get help, seek advice from a relationship counselor, or engage a solicitor and handle things like an adult. Separating finances from your partner after a relationship can lead to arguments and broken dishes.

So, it’s advised to sort out your separation, or divorce and finances and handle your money correctly so that you don’t end up becoming broke and lonely at the same time. Don’t let your financial responsibility during separation be a burden on you.

These handy tips can effectively guide you on how to handle money as well as how to protect yourself financially in a separation.

1. Know all your assets

Before thinking about how to handle finances during separation, it’s crucial for you to understand your belongings, what you hold rights to and what you both have as a couple.

You need a clear understanding of your sole and joint assets and liabilities and financial rights after separation.

Assets also include what you need and want and what you should lawfully demand. Learn the laws on financial separation and the division of assets according to your state laws, and don’t be shy to seek professional help if you don’t or can’t understand anything.

Knowing your assets and financial responsibility during separation helps you prepare yourself for life after separation or divorce, and you’ll find yourself in a good state once all the mess is over.

If you are wondering, ‘does a "legal separation" protect you financially?’ then, yes, knowledge and preparation can save you an expensive legal battle and also helps you keep the assets that really belong to you exclusively.

2. Get to know about joint finances

The foremost financial advice on how to handle finances during separation is to know your joint finances, if any, well.

If separation or divorce discussions have been ongoing for a couple of months, then you should keep yourself in the loop and know what your partner is spending, what they’re earning, and how they’re investing money. 

Avoid the situation where you are left entirely clueless, or your partner has hidden away finances from you. Keep a close check on your partner's assets for lawfully splitting finances in separation.

3. Know child custody policies

If there is a child involved in the separation, then you should sit down and have a detailed discussion about your child’s future and plans.

Some essential questions such as coordination of visitation rights, which parent the child should stay with, and how much child support payment is required (depending on your state) should be answered and dealt with accordingly.

This way, you can write down a plan for your kids and deal with their needs accordingly during such an emotionally heavy time. Make sure you have planned for child-support and financial responsibility during separation.

4. Close all joint accounts

This is the most crucial step and must be taken care of when you are contemplating how to handle finances during separation. If your partmner has any debts, you may be held responsible for them until and unless there is a legal agreement stating differently.

You need to take care of this financial responsibility during separation so that it does not become a permanent burden.

This termination of joint accounts and financial responsibility during separation helps protect you from post-separation or divorce financial liabilities and is an essential step.

You should also change online passwords for social media accounts, emails, and your Apple, Android IDs, etc. Don’t forget to keep track of where your money is and whose money is in the said joint accounts.

Get credit cards in your name as soon as you can so that you can be a strong independent person on your own.

5.Establish a new budget

Establishing a new budget for couples with no children can be easy for some. You both have to be responsible for splitting the bills and taking care of your needs for general living expenses.

The problem arises when there are children or if a partner doesn’t earn anything or much as the other. In cases like these, you must understand that you and your children can’t enjoy your lifestyle like before, and you will find it hard to maintain the status quo.

So, plan a budget when you are deliberating about how to handle finances and expenses during separation.

6. Don’t overspend

Are you still mulling over how to handle finances  and expenses during separation?

This can be one of the tough decisions for you to make because when you’re on your own, you might be tempted to travel and afford expensive luxuries to take your mind off things, but you shouldn’t! Don’t add on more financial responsibility during separation.

This isn’t the time to waste money because if your separation leads to divorce, then there might be a problem; in such cases, you can be accused of dissipating assets and get into trouble.

7. Pay joint account debts

Even though you are separated, keep in mind that your debt is still married. It’s better to pay your debt for any joint accounts you might have with your partner as soon as possible.

Get rid of debts and liabilities that you were paying for together with your partner.

Check the credit details for your liabilities, are they up to date, handle them properly, and have your joint accounts closed as soon as you can. Manage your legally separate finances in the partnership strategically before your partner can take advantage of such a situation.

8. Establish and agree on the date of separation

Every state has a different meaning of the date of separation. For some, it might be the day when one partner lets the other one know they are leaving, or it can be the date when your partner moves out. However, this date is significant because it helps in dividing the assets, liabilities and income.

Anything that you might have before the date of separation may be divided, but anything you aquire after the time of separation will not be shared.

Final Word

Reflecting on how to handle finances during separation is an essential step and shouldn’t be forgotten amidst the chaos and arguments. It’s a crucial step for you to take to have a good start in life after the separation.

For couples who can’t handle any decision without shouting, it’s advised to get a counsellor or an arbitrator to have a less messy financial settlement.

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