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Part of the process of separation and divorce is re-establishing financial independence.
This can be a difficult process and you will be required take stock of your current circumstances and prepare yourself for what lies ahead.
The best approach is to attempt to separate you and your spouse’s finances as soon as you separate.
Below is a list of the things you should consider:
If you own any real property in your name, then the first thing you should do is to seek legal advice.
Find out where you stand in terms of legal interest to property, and whether that interest has been potentially compromised.
If you have property in joint names, you may choose to come to a financial settlement and have either your name or your spouse’s name removed from the title. The spouse whose name is being removed from the title may receive a settlement in return.
If there are any existing mortgages, it is recommended that you or your spouse refinance your mortgage so that the liability is no longer shared.
Many couples open joint bank accounts that they can deposit their savings into. When going through separation or divorce, one of the first things you should do is close all such accounts so that neither spouse can go on a shopping spree, or withdraw any money without your knowledge.
Make sure that if you have any accounts in your name only are secure. Change the passwords and ensure that no one else other than yourself can access those accounts.
If you don’t already have a bank account in your own name, it might be good to open one so you can move all the money that is yours into it.
Much like bank accounts, many couples also share credit cards.
Now that you’re going through a divorce, it’s time to deactivate all those joint credit cards so that you and your spouse are no longer sharing any debt.
Look to the future
After you’ve looked after everything else, you should start mapping out your current finances to plan for the future.
An easy way to do this is to create a spreadsheet with all the details of your finances including, bank accounts, credit cards, mortgage repayments, bills and other expenses.
By laying out all the information you will be able to assess your financial situation and set new financial goals for yourself.
Doing this will also reassess some of the financial goals you might have had. For example, that couples holiday may no longer apply, and you can direct the saved funds to your mortgage instead.
Take this as an opportunity to start afresh and focus on your needs and goals.
One of the more complicated aspects of divorce is trying to extricate all your formerly personal affairs from the broken relationship. Relationships that have a business in the mix may further complicate an already emotionally taxing time.
The question is, what happens to a business when two people who run it are now separating or going through a divorce?
While there is no one-size-fits-all answer for such a scenario, there are some common threads in situations where two people who run a business together are now going through a separation or divorce.
Here are three common threads that often appear when a person is going through a divorce or separation with a partner who they also run a business with.
Get professional help
The first thing you should do is seek help from the professionals. Even if you don’t plan on going to Court, you should get professional legal advice about where you stand and what options are available to you.
A lawyer will be able to give you perspective in terms of what steps you should take and what outcome you can expect. By speaking to a lawyer first, you can proceed with confidence knowing that you have the expertise and knowledge of a professional.
Dividing up the assets of the business is not always black and white.
There will be things that are jointly owned, and others that owned by only one spouse.
There will also be contributions that will be hard to quantify in dollar terms, and the parties may be faced with an unsolvable equation with no correct answer.
Although a difficult task, it’s important to be meticulous when working out the value of each asset in the business.
Hiring an independent valuer to help you with such a daunting task may save you from some serious headaches.
Most divorces will involve a property settlement, so having a fair assessment of the value of your business is extremely important.
Ideally, the value of the assets can be calculated and tallied, and the two parties will agree on the value of the business and divide it amongst themselves accordingly.
However, if this doesn’t work, then the Family Court may order the sale of the business.
Some couples may even choose to continue to manage their business together, or one party may sell their share of the business or leave the day-to-day management of the business to the other party while taking on a more secondary role.
Not all divorces are marked by animosity, and former couples can and do successfully continue to run their business after separation.
Find out how much your business is worth
Occasionally, the Family Court may appoint an independent valuer to work out the value of your assets.
This is an unbiased and impartial assessment of the value of your business which will help the court establish each party’s entitlements when dividing the business assets.
A Court-appointed valuer will likely dispel any preconceived notions of bias, and is more likely to garner acceptance of the final valuations.