Planning for Separation or Divorce: Key Financial Considerations 

As a financial adviser, and someone who has experienced separation and divorce personally, I understand that it can be one of the most difficult periods in a person’s life. 

Alongside the emotional and family considerations, separation or divorce also involves important financial decisions. From property and pensions to maintenance and tax, there is a lot to consider when moving from one household to two. 

Getting organised financially from the outset can help reduce some of the stress and uncertainty that comes with such a significant life change. 

Start by understanding your financial position 

The first step is to establish a clear picture of the finances of both parties. 

This includes: 

• Income and regular expenditure 

• Property and mortgages 

• Savings and investments 

• Pensions 

• Loans and other debts 

This information is generally captured in an Affidavit of Means, which provides an overview of your financial circumstances. 

Having the full picture from the beginning can make discussions with your solicitor, financial adviser and, where appropriate, a mediator much more productive. 

How are assets divided? 

There is no simple formula for dividing assets following separation or divorce. Every family’s circumstances are different, and a number of factors may need to be considered, including: 

• The length of the marriage 

• Each person’s financial position 

• Assets held before the marriage 

• Each person’s income and earning capacity 

• Existing debts and financial commitments 

• The needs of any dependent children 

 What happens to the family home? 

The family home is often one of the biggest financial and emotional considerations. 

Depending on the circumstances, one person may remain in the property, one party may buy out the other’s interest, or the property may ultimately be sold. 

It is important not to look at the house in isolation. Someone may retain the family home but have limited savings, pension provision or disposable income. 

Looking at the overall financial position helps to understand what a proposed settlement could mean for both parties over the longer term. 

Don’t overlook pensions 

Pensions can be one of the most significant assets involved in a separation, particularly after a long marriage. However, they can easily be overlooked because they are less tangible than property or cash. 

A Pension Adjustment Order may be used to allocate pension benefits between spouses. This is an area where professional legal and financial advice is particularly important. 

What about maintenance and children? 

Where children are involved, their financial needs should remain central to discussions. 

There is no standard amount of child maintenance that applies to every family. The amount will depend on the individual circumstances, including the parents’ financial position, income and the needs of the children. 

It is also important to consider costs beyond monthly maintenance, such as: 

• Childcare 

• Education and school costs 

• Medical expenses 

• Extracurricular activities 

Spousal maintenance may also arise depending on the circumstances of the marriage and the financial position of each party. 

Don’t overlook tax 

Separation can change an individual’s tax position, including the tax credits available to them. 

For example, depending on the circumstances, a parent may qualify for the Single Person Child Carer Credit, which is worth €1,900 in 2026. 

There can also be different tax treatment for child and spousal maintenance. Certain transfers of assets between spouses or former spouses following separation or divorce may qualify for tax exemptions. 

It is therefore important to seek appropriate legal and tax advice before transferring property, investments or other significant assets. 

Reducing conflict and planning for the future 

Getting the right advice early can make a significant difference. 

A solicitor can advise on the legal aspects, while a financial adviser can help both parties understand the financial implications of different options. Mediation can also be helpful where both parties are willing to work towards an agreement. 

One of the best places to start is by getting organised. Gather your: 

• Bank statements 

• Mortgage details 

• Pension statements 

• Investment valuations 

• Insurance policies 

• Details of debts 

• Household expenditure 

Finally, don’t just focus on getting through the separation. Moving from one household to two can significantly change the cost of living for both parties. 

Reviewing your budget, savings, pensions, insurance and longer-term financial goals can help you plan for what comes next. 

Knowledge gives you options. Understanding your financial position early can help you make informed decisions and plan for a more secure financial future beyond the separation. 

Unless you have been hiding behind a rock for the past couple weeks, you would have noticed the coverage of the tracker mortgage scandal in the media. This is where banks have been accused of wrong doing to the public in relation to tracker mortgages taking out. I will run through a few questions that should help shed light on the area. The banks calculated that, even though they might lose money on these products, they could then “hook-in” the people who owned trackers and up-sell them more loans for cars, home improvements, and holidays, all of which would carry higher rates. The higher rates for other loans would off-set the losses on trackers and the banks got sneaky and reacted in the way they always do which is to screw the customer for the banker’s own mistakes and miscalculations.

Could you have been caught up in the tracker mortgage scandal?

Possibly. If you were ever on a tracker and were taken off it. No matter what the reason for this change, you could be one of 13,000 accounts to date affected, although that is by no means certain.

How would I know?

It is known that the banks are committed to going through their loan books to find all those who were affected. They were ordered by the Central Bank to make contact with those customers affected. Unfortunately, not everyone who was incorrectly denied a tracker has been contacted, and the banks and the Central Bank are still disagreeing over some accounts that the regulator considers were affected notwithstanding claims to the contrary by some banks.  And guess what there are many thousands more have been affected. Add a healthy figure onto the13, 000 or so that are currently in the system.et

So do I just have to wait until the Central Bank process is over?

Right now the Central Bank is “the only game in town”, keeping updated by reading the various media outlets will help assure you of what is happening.
Facts to date

• €163m paid to customers in refunds and compensation a ‘fraction’ of money owed
• Customers will ultimately foot bill for tracker scandal
• Full extent of tracker scandal remains unclear

What has twitter got to say?

The big question ever has is should I take a legal action against my bank myself?

You could and by all means, you should do this. The legal avenue is open to anyone who considers they have been wronged. Unfortunately, this process is slow and very expensive. And many of those worst affected simply do not have the financial resources to take a High Court action, which is why the best advice is still to wait for the process to end.
 

When will it end?

It is progressing very slowly. This all started in 2015. Some banks have been proactive in dealing with cases; AIB and PTSB have dealt with a significant number of cases already. Ulster Bank have started to move. Bank of Ireland and KBC, on the other hand, have been very slow off the mark.

You will have some entitlements if you have been adversely affected by the bank’s misconduct.

1. You will have to have the tracker restored.
2. All the interest you overpaid will have to be repaid to you – or used pay off the mortgage.
3. You will be entitled to compensation. (This will be decided by the bank initially and the Central Bank will review to see if this figure is suitable, the Central Bank is demanding the banks do more).

How do you fix it?

It seems that the whole issue is wrapped up by an industry who views success in the short-term, quarterly-results with which our global financial system has become obsessed.

The problem is the core culture that exists within these financial institutions. One has to ask themselves is it too much to demand a certain morality in the boardroom? Is it too much to ask for a few good men and women who apply morality to their business life? If not, we are in a troubling Ireland.

If you want to truly know yourself, pay close attention to the way you treat money.

John Armstrong renowned British writer once said: “One’s relationship with money is life long, it colours one’s sense of identity, it shapes one’s attitude towards other people, it connects and splits generations; money is the arena in which greed and generosity are played out, in which wisdom is exercised and fully committed. Freedom, desire, power, status, work, and possession: these huge ideas that rule life are enacted, almost always in and around money.”

You will find that your relationship with money puts you in one of the following categories:

Obsessive:

You believe that attracting and accumulating money is the sole purpose of your life. Health, energy, time, peace, relationships, ethics — there’s nothing you will not sacrifice in your pursuit of money. Your unhealthy relationship with money has made you obsessive to the point of being dangerous to not only yourself but everyone around you. So you decide to try fight a guy in a different sport who has a record of 49/49 at top level of boxing. Introducing in the red corner Cooonnnor Mcgreeeegor.

Reckless:

Addicted to the highs that money can give you. This makes you spend money even if you haven’t earned it yet. As a result, you find that you are perpetually in debt. You may have even become a financial burden to someone else. People often hear you say that you never have enough money. You are usually anxious and discouraged because of your inability to repay your debt. This is like the gambler who tells you only about his wins but never about his losses.

Daydreamer: 

You dream of being wealthier, but you rarely take action to make those dreams come true. Believing that because you are a good person, money will come.  Your idealistic attitude towards money also causes you to lend money to others even when you don’t have enough to sustain yourself. As a result, you experience more lows than highs.  Somewhat similar to Father Dougal McGuire’s perception of dreams vs reality.

Freeloader:

You don’t bother to earn or save money, even though you are capable of doing so. You are habituated to living off people’s generosity. This has caused you to become a burden to everyone around you — especially your family and close friends. Waiting for others to meet your monetary needs has also caused you to become frustrated and angry, and even harbour feelings of rejection.

Dependent:

You rely on others for money because you are currently in a situation that prevents you from earning. This has caused you to lose your self-confidence and even feel guilty and inferior to others. You fail to realise that you can become financially independent by investing the passive income you receive from others.

Wise:

You value money, but don’t worship it. You know that money is a means to an end and that you need it to help yourself and others. So, you have developed ways to generate it without affecting your well-being. It is clear that obsessiveness or recklessness doesn’t hinder your decisions you make with your money. Instead, you have disciplined yourself to not spend impulsively or let greed overtake you. You know that growing your wealth is better than hoarding it. People often look to you for financial advice. (**cough Alpha Wealth)

If your relationship with money currently shows you are anything but wise, don’t fret. It’s never too late to start treating money well. The main step is to change your perspective about money. The best way to do that is by understanding the role that emotions play in all your money matters. We here at Alpha look at more than just your money! You matter.