There are lots of things to think about if you break up with your significant other – but in between processing your emotions and adjusting to a new routine, it’s important to also take some time to divide your assets, as this will have big financial ramifications for both parties.
In all of these examples, we’ll talk about reaching an agreement with your ex-partner. It is definitely easier to go through this process if you’re able to deal with them directly. However, if things are too hostile or you are unable to agree, you can pay a mediator to help you resolve things.
The biggest decision to make is what to do with your home. If you rent a place together, then you may both need to continue making payments until the contract is up – otherwise, you’ll probably be guilty of breaking the lease. This can make it difficult to decide who gets to continue living in the property: if you’re keen to stay, consider offering to contribute towards your partner’s portion of the rent or compromising on another aspect of your agreement.
When you own your home, you can consider selling up and splitting the proceeds. To do this, you’ll need to calculate what value the property has: how much will be leftover from the sale after the mortgage is paid? When deciding how to split this value, you need to compare earnings and also consider other assets and financial needs, responsibilities or dependents.
In a lot of cases, it may make more sense for one of you to stay in the home and buy the other partner out. You’ll need to reach an agreement with them about how much the person staying in the home should pay – and that person will also need to convince the bank that they can continue to make the mortgage payments on their own or potentially switch to a different type of mortgage.
The best way to separate out your belongings is to go through them together and decide who should keep what. It may not be the most pleasant process, but it can also prove cathartic and it can definitely help avoid more conflict further down the line. Prioritise big ticket items like white goods and furniture.
Think practically as well as financially. If one of you is keeping the home then it may make sense for them to keep the majority of furniture and appliances too. In that case, you should work out how much it will cost for the other person to replace those items, and both contribute towards that cost.
If you weren’t married or aren’t planning to divorce yet, then once you’ve come to an agreement and split things accordingly, the work is over. You may want to consider getting a solicitor to draft a separation agreement if there is a lot of money changing hands, but you aren’t obliged to and it wouldn’t be legally binding.
For a divorce, things are slightly different. After reaching an amicable agreement, you can get your solicitor to draft a consent order. This is signed by the judge and becomes legally binding. In cases where you and your ex-partner are unable to agree, you can apply for a financial order. This would mean that a judge decides how to split things up, and is typically a last resort.