The love is gone. Make sure the money stays.
You’ve shared a life and finances with a partner but now your relationship is over. These five ideas could help you navigate your separation or divorce without ending up with empty pockets and an empty heart.
A divorce, separation or even the breakdown of a common-law relationship, can be life-changing and devastating. And if there are bad feelings or thoughts of getting even, financial retribution during a breakup is not out of the realm of possibility. Even in an amicable breakup, money matters may go awry. According to the National Endowment for Financial Education, almost two-thirds of couples combine their finances which may cause credit problems if they go their own way. 1
And unfortunately, financial abuse is all too common. “Everyone says that he or she wouldn’t do that to me,” says Zeljka Walker, Portfolio Manager and Senior Investment Advisor, TD Wealth, who’s also a Chartered Financial Divorce Specialist (CFDS). “But, I can tell you from experience, it happens all the time.”
Walker decided to specialize in divorce finances after she saw what happened in her own breakup. To protect yourself and your assets, Walker suggests five things you can do as soon as you think your relationship may be over:
1. Keep your eye on joint accounts
When your relationship ends, you and your ex-partner will soon have to work out how to divide your assets and debts, but until you have an agreement in place, be diligent about monitoring what goes in and out of the bank accounts you share. Open your own chequing and savings account and get your own credit card as soon as possible. And, after paying off the balance, try and close any joint accounts you have, including joint credit cards (Although this may not be possible unless you have the cooperation of your ex.) Change your direct deposit information for any payments and talk to your bank about flagging any further borrowing from joint credit cards or lines of credit. If you continue to use loans or credit lines you have together, both of you could be liable to repay the debt. Walker warns, if your ex-partner doesn’t pay his or her share, you will be on the hook — even if you were just a “secondary” cardholder or an authorized user.
2. Update your beneficiaries
If you have a pension, retirement savings, or a Will, check to see if your ex-partner is listed as a beneficiary. If so, that means that they would get a payout when you die. Assuming you no longer want that to be the case, it’s important to rename your beneficiary. If coming up with a beneficiary right away is too much to manage while you have other matters to deal with, you can simply name your estate as the beneficiary. Even if there’s a legal separation or divorce in place, your ex may still get a payout if you haven’t changed your beneficiary or haven’t named one.
3. Check your credit immediately
Obtain a credit report on yourself as soon as possible. If there are any skeletons in your ex’s financial closet, like credit cards or accounts that he or she hasn’t told you about, this may tip you off. In a 2021 TD survey of American couples and their financial habits, 32% reported keeping a financial secret from their partner while 50% said they had no intention of ever sharing this information. 2 To make sure you have good credit for the future, try to clear up any deficiencies or problems that you are responsible for. Ask the credit report company to place a note on your file stating that, going forward, you will not be responsible for any bills under your ex’s name. It won’t stop creditors from coming after you, but it might help your case should you need it.
4. Make a list — Check it twice
Make a list of all the property, debts and expenses that you hold independently and jointly with your ex: account numbers, financial institutions, branches, credit cards, loans and investments. Make sure you have copies of important financial information, such as tax returns, account statements and pay stubs. Keep all receipts for expenses related to joint property. Gathering the information now will be helpful later when you sit down and divide your property. To safeguard your financial information and to protect yourself from identity theft or an unpredictable ex-partner, consider changing paper account statements to e-statements, and updating passwords and even email addresses. And remember to always lock your computers and phones.
5. Build a team
Don’t go it alone. Surround yourself with a group of trusted specialists, such as lawyers, mediators and financial advisors, who can help and support you through this tough time. They can help you make sense of your finances so that you are protected going forward, and you can plan for a secure financial future. They can work through the details to divide up your assets, update your Will, and help to freeze assets should you need to.
- National Endowment for Financial Education. 2014 Financial Infidelity Survey. http://www.nefe.org/Portals/0/WhatWeProvide/PrimaryResearch/ConsumerPolls/PDF/2014%20Financial%20Infidelity%20Full%20Survey.pdf accessed January 18, 2017 ↩
- Love & Money in 2021, TD stories, Feb. 8, 2022 accessed May 11, 2023, https://stories.td.com/us/en/article/infographic-love-and-money-2021 ↩