how to separate – money and property

by Helen Howard and Audrey Thompson

money and property | help and info

If you're thinking about splitting up from your partner, or if your partner's just left, you need to get on an even keel before you can make longer term decisions.

© C4

When everything seems in a terrible muddle remember you don't need to sort everything out at once. In fact it's often better to leave the major decisions, such as where you're going to live and access to children, until you're more emotionally prepared to deal with them. Be gentle with yourself and get support from friends, family or a professional such as a trained counsellor (For more information on couple counselling see couples on the rocks) so you can handle the split better.

Much of the following advice (with the exception of the law on property) applies equally to unmarried partners who are separating. See cohabitees for more information.

breathing space

Sometimes when things get tense at home you both need time away from each other. You don't need to start off a divorce straight away – sometimes having a trial separation can give you a breather and some time to think. But if one of you is going to leave the family home, he or she will need an alternative space to live and make arrangements to see the children (if you have any) to give them the reassurance of seeing both parents regularly.

money worries

For all couples, splitting up means facing difficult financial decisions. Before you will have had one or two incomes to meet the costs of running one home. Now the same money will need to pay for the cost of two homes. In this situation family finances overwhelm many people. These tips will help you get to grips with new arrangements.

• Work out your family budget to find out where the money goes – and see if you can agree on a figure as contribution towards outgoings/maintenance from the partner who's leaving the home.
• Make sure you prioritise making payments – the most important thing is to ensure you have a roof over your head so maintaining rent or mortgage payments will be a priority.
• If you have debts, contact your creditors (it is better than ignoring the problem – which won't go away) and see if you can work out affordable repayments over a period of time. Check out our help and info section for where to find debt counselling and advice.
• See too if you can get any extra help financially. The working families tax credit (which replaces family credit) is paid to top up wages of people with children and is often of genuine help to families who are facing break-up. It is means tested. The wage earner needs to be working at least 16 hours per week and have one dependent child. The income threshold for 2001-02 is £92.90 weekly and the basic credit since June 2001 is £59 weekly – you can get extra help with child minding or nursery costs.
• If you're paying council tax, and there is only one adult now in the home, you can get a reduction of 25% of your council tax bill.
• As well as trimming your outgoings, are there any ways to top up your income? You might need to increase some working hours or consider taking in a lodger if you're the spouse still in the home – you can receive up to £65 per week tax free from a lodger.

bank accounts

If you have a joint account ask yourself whether or not you trust each other enough to carry on with this for the time being or would it be better to close the account and divide up the money in it and open fresh accounts to cover the regular outgoings? If you have a joint account, you are jointly and severally liable for any overdraft – although the bank will usually ask for repayment from a wage earner first.

credit cards

Again this is a matter of trust between the two of you – to avoid any heartache later it might be better to stop any joint credit cards you have to make sure you don't build up unexpected extra debts.

lone parents are poorer

Money problems are common when relationships break down, particularly when children are involved. According to the National Council for One-Parent Families, three in five single parents live in poverty. Being a lone parent costs money and often results in a loss of earning power. The absence of a second carer makes childcare, transport, food and other goods cost more so inevitably lone parents are almost always worse off than couples. They are overtaking pensioners as the poorest group in British society. Over half of the people who become lone parents have to move – often into council property. Nearly a third of lone parents experience homelessness, that's 30% compared to 3% of couples with dependent children.

the home

If your home is owned in joint names, you don't have to take any extra steps to protect your position legally – if either of you wants to sell, the other co-owner will need to agree to a sale and sign a contract before anything can go ahead. You don't have to sell the house straight away – one of you might be able to buy out the other's share in the home for example. And keeping the home on for now will give the children (if there are any) more security for the time being.

If however it's in your spouse's name alone, you need to make sure that your interest in it is shown on the legal title of the property. It would be sensible to see a solicitor and talk through the issues at this point before embarking on a course of action.

To ensure your interest in a property is shown you need to register your matrimonial home rights as a caution or charge on the title of the home, to make sure that any prospective purchasers or mortgagees know that you have an interest in the home too – and so that it can't be sold or mortgaged over your head. You'll need to know the Land Registry title number of the property (you can get this from your bank or building society if they have a mortgage on the house) and will need to complete a special application form – your solicitor can do this for you.

finding a solicitor

Choose a solicitor who is experienced in and up to date with family law (which probably won't be the solicitor who dealt with your house purchase). It's often useful to get recommendations from friends who've already been through the experience – but be wary of advice (however well meant) to go for a really aggressive solicitor. Aggro from a lawyer is likely to bump up the legal costs considerably which will mean there is less of the family 'pot' of money to go round.

Getting an hour or so of initial legal advice tailored to your own individual and family situation is money well spent – and many family solicitors will offer half an hour or so of free advice (or a fixed fee interview) so the outlay shouldn't be too high. Solicitors charge by the hour and their charging rates vary from about £75 an hour + VAT for a trainee solicitor up to £250 + VAT per hour or even more for one of the top flight lawyers in central London. But always remember that you are in the driving seat – your solicitor has to take your instructions.

The Solicitors Family Law Association can supply you with a list of local family law specialists. All their members must sign up to a Code of Practice that says they should aim to adopt a conciliatory approach to minimise the bitterness of divorce.

You may well also be able to sort things out with your partner directly – otherwise family mediation, where a trained counsellor helps both parties negotiate decisions on children, property and finance, is well worth considering. There are a number of organisations offering mediation services. Check out our help and info section for more information.

pre-nuptial agreements

An increasing number of people, not just the wealthy, see pre-nuptial agreements – drawn-up, agreed by both parties and signed before the marriage takes place – as a way of ensuring a smooth divorce. The aim is that the partners can leave the marriage with exactly what they put into it plus equal shares of anything amassed during their time together. A word of caution though, such arrangements aren't always upheld by the courts although recognition is becoming more commonplace. Also if children are involved the courts can ignore prior agreements if it is in the child's best interest to do so.

cohabitees

The fact that there's no such thing as a common law marriage may come as something of a shock. Although people talk about common law marriages – these were actually abolished South of the Border over 250 years ago (although in Scotland they still exist as marriages 'by custom and repute'). What this means is that a separated woman partner cannot get maintenance for herself from her ex-partner – although child support will still be payable. The law on property is more complex too. If the home is owned jointly, then it will usually be split 50/50 – even if one partner needs the money more. Also an ex-partner might be able to postpone a sale and even seek a greater share of the proceeds under the law. If the home is owned in one partner's name alone – the other will have to prove that she owned 'beneficially' a share of the home – not an easy task. Seek a solicitor's advice straight away.

real life stories

fair shares

When Jacqueline Cowan left her husband of 35 years in 1994 she received a £3.2m divorce settlement – enough to give her £100,000 a year until well into her eighties. She also got the family mansion with cottage, tithe barn and 15 acres. But her husband is now worth £12m after making a fortune from a bin liner business, and following a case paving the way for 50/50 splits for wives, Ms Cowan set about getting her share of the new money too. She petitioned the court for an extra £2.9m on top of her original settlement. For years battles over who gets what when relationships break down have filled the courts and led to widespread changes in the law. Ms Cowan's chances of success improved dramatically since the House of Lords ruled, some say controversially, that wives of rich or even moderately wealthy men should get a bigger share of the assets and not just enough to meet their 'reasonable requirements'. When Ms Cowan and her ex started out in life they set up home in a council house with no telephone, television or washing machine. Nowadays judges say wives' contribution in caring for husband, family and home has to be valued similarly to contributions made by the husband in building up a business. Where wives have helped their husbands build up their wealth they might expect to be getting nearer 50% of the assets, even in big money cases.

lonely struggle

Olwyn Jones split with her partner when her son was just 18 months old. The end of the long-term relationship had major financial repercussions. 'We were in difficult circumstances because when we were together we rented two rooms in a house for over £600 per month. When my partner left I had to pay the rent and the total child care costs of £500 per month, costs we shared before,' Ms Jones explains. 'What my ex paid me didn't even amount to half of what I needed. It left me with virtually nothing to live on.' Ms Jones then had to find herself somewhere to live. Her child was growing older and needed more space. 'We couldn't go on living in two rooms,' she says. A self-contained flat proved to be much more expensive. Then a new crisis occurred. Her partner took the money they amassed from joint building society shares and left without repaying a £2,000 loan he had borrowed from her parents. At the same time her ex's solicitor also managed to get a reduction in his client's maintenance payments. 'He always paid the least amount he possibly could,' she says. Looking back Ms Jones says she went about the split in the wrong way: 'I was naïve and didn't approach the Child Support Agency (CSA) for five years. I thought I could handle it but I couldn't. 'We had two major rows because he refused to increase maintenance payments even though his salary has always been much larger than mine and he receives an increase every year.' The matter is now in the hands of the CSA. 'It's the only way I can receive some financial protection,' says Ms Jones. 'He always sees any money he hands over as being given to 'me', she adds. 'He doesn't see his contribution as helping to support our son.' With hindsight Ms Jones counts herself as fortunate that at the time of the split she was employed in a full time job and was able to rely on her parents for extra financial support.

(November 2001, resources updated June 2005)

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