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Wednesday, 3 October 2012

Savings and investments when you end a marriage or civil partnership

Savings and investments are added to everything else a couple own between them like property and possessions. How savings and investments are split up between partners depends on what is decided about other assets like a jointly owned house. Your solicitor or mediator will help if you and your partner can't agree.

How savings and investments are treated when you split up

In most cases, savings and investments aren’t divided up equally

In most cases, savings and investments aren’t divided up equally between you when you end your marriage or civil partnership.

Usually, your savings and investments are one part of a broader agreement covering everything you own, including any property and possessions.

Valuing your savings and investments

If you’re ending your marriage or civil partnership, you’ll need to know how much your savings and investments are worth. You won’t be able to make any sort of final arrangement without this information.

For most investments, you can ask the company that manages them for you how much they’re worth. It’s important to do this, as investment values can change – the investment may be worth more or less than the last time you checked.

It’s also worth checking if there are any penalties for withdrawing investments or closing savings accounts. If there are, you’ll need to bear them in mind for any calculations. If the charges are high, you may be able to arrange the overall agreement to avoid you having to do this.

If either of you has life insurance policies, assurance policies or health insurance policies, you’ll need to take them into account too. You’ll need to work out how much they would be worth if you cashed them in. You can do this by asking the provider for a figure.

Savings and investments with a ‘clean break’

Most arrangements between separating husbands, wives and civil partners try to work on a ‘clean break’ basis if it’s possible.

This means that everything the couple owns is split once and for all and there are no more financial arrangements between you.

To do this, one partner will usually make a ‘lump sum’ payment to the other. For example, if one partner is keeping the family home to bring up children, their savings or investments may be given to their partner.

It’s a good idea to bear in mind the effect that Capital Gains Tax may have if you’re selling or transferring savings and investments. You may need to consider how you time any transactions like this.

If you can’t make a ‘clean break’

Your arrangement may involve one partner paying maintenance to another

When many marriages or civil partnerships end, it’s not possible to make a ‘clean break’ settlement. This might be because there aren’t enough ‘assets’ (money, property, possessions) for you both to live on, or because you have young children.

When this happens, your arrangement may involve one partner paying maintenance to another after your assets have been divided.

Getting help to reach an agreement

You can try mediation to reach an agreement about how to split your savings and investments. This is when you use a mediator as an independent negotiator. They will work with both of you to try to get an agreement.

You could also use solicitors to reach an agreement, and they can get the courts to confirm the arrangement. This is called getting a ‘consent order’.

If you can’t make an agreement yourselves

If you think there’s no way you can agree, you’ll have to ask the court to decide about your savings, investments and pension and other financial issues. To do this you must apply for a 'financial order' (sometimes referred to as ‘ancillary relief’).

It can be very expensive and take many months. So it’s a very good idea to try to settle things yourselves or with mediators or solicitors if you can.

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