How to protect your capital in the event of a divorce

A divorce brings stress and sorrow. Amidst all the tensions and emotions, there are also financial worries. Will my income be sufficient? What will happen with the loan for the solar panels on our roof? And what about our joint investments?

Even if today, the financial aspect is the least of your worries, it will no doubt become important for you again in the future. It may make a significant difference if you take precautions to protect your assets now, and will become apparent if you later decide to take out a new loan, buy a car or start a new future elsewhere, for example. Protecting your assets during a divorce is easier than starting again from scratch after one. We've put together a step-by-step plan to help:

Step 1: Negotiate and communicate in an open manner

If, during discussions about who gets what, you do act not in a greedy, but in a generous, way, there is a greater chance that your ex will make things easier, too. Doing so can save both parties large amounts of money. If both partners want every last cent, it can be harmful for both parties – both financially as well as psychologically. It is also very possible, from a purely objective point of view, that you will have to be satisfied with somewhat less money. But perhaps you’ll have greater peace of mind, which is surely worth a lot.

Do you think an open discussion has little hope of succeeding? If so, think about engaging a lawyer, mediator or divorce planner together, which would cost significantly less than each of you hiring your own lawyers.

Step 2: Gather all the pieces of the puzzle and carry out a review

In order to have a complete overview of your personal and joint financial situation, you should make sure you take all the ‘paperwork’ with you. This includes account statements, payslips, tax letters, pension documents, deeds and so on. Once you have everything neatly arranged, ask yourself these four questions:

• What do we have together (and separately)?
• What do I earn?
• What debts do we have together (and separately)?
• In which regime are we married?

The two most common matrimonial property regimes

1. The statutory regime

Here, there are three assets, your assets, your ex-partner’s assets and your joint assets.

Each spouse retains, among other things, what he or she:

• owned before the marriage;
• inherited or received;
• bought with his or her own money (owned before the marriage or inherited/received during the marriage).

Included among the joint assets are:

• items that you bought together with your ex-partner during the marriage;
• professional incomes;
• income from joint property;
• income from own property (rent, interest).

Debts are divided in a similar way: there are personal debts for each spouse as well as joint debts (if you have a joint loan, too, there are still individual obligations to repay the loan in the event of a divorce). In the event of a divorce, each spouse may keep his or her own property while joint property must be divided. In this regard, there is supposition in favour of joint assets. This means that a partner who claims that a particular item (such as an investment, a classic car or a painting) is part of their own property, must also prove this is the case. Finally, with a marriage under this regime it is no easy task to unpick each thread from the financial mess. Or as a Dutch cabaret duo once sang: “Your CD, my CD. Our CD, but received from my mother, so it's mine.”

Should you reach an agreement (by way of a balancing payment from the spouse who receives more valuable items, for example), distribution is relatively straightforward. If no agreement can be reached, other options are available, including intervention by a court or even a public sale or auction of joint property.

2. Regime of separation of property

In a regime of separation of property, there are two assets: those of one spouse and those of the other spouse. No joint assets exist. Each spouse remains the owner and manager of their own property and income. Items bought together by the spouses belong to them both indivisibly. Each spouse also remains liable for their own debts, with the exception of normal household debts. In a regime of separation of property, the actions to be taken are somewhat easier. The indivisible items must be distributed and certain settlements usually take place. Either the partners agree that one of them acquires the indivisible items – the acquiring party pays the other party a sum in this regard – or the items are sold, often at a public sale or auction.

Step 3: Draw up a budget

All economies of scale that those living together have, whether they concern housing taxes, insurance or groceries, no longer apply when you then live alone. That's why it's best to draw up a budget, or at the very least an estimate of your financial future in the short and long-term. How much could you set aside for legal assistance? What will your spending patterns look like? What is essential and what is a luxury? Will your income be sufficient? What are the financial consequences of your divorce? And so on.

While on the one hand you may well have more costs, it may also be the case that new ‘sources of income’ become available. Once you go your separate ways, you may be entitled to supplements or tax breaks if you stay single. In a divorce, an ex-partner may also be entitled to alimony or maintenance. According to the law, both parents must contribute to the costs for food, education and housing for their children. In this case, we talk of child maintenance. In addition, partner maintenance also applies. This means that the partner, who is in a worse financial position, receives maintenance from their ex. This may be the case when there is a large difference between both partners’ incomes, for example.

Besides drawing up a short and long-term budget, you should also take a look at your savings reserve. If you will be on your own, it is useful to set aside a larger buffer. Also check the consequences the divorce may have on your pension, for example via MyPension. The same applies for your investment profile and the risks you wish to take. In anticipation of greater financial security, it could be useful to make more defensive investments on a temporary basis.

Step 4: Make a decision on the family home

If the home is part of the joint assets, you should ask yourself whether you can afford to maintain it. If not, you should consider selling it. Doing so would allow you to free up funds to make a fresh start.

Generally speaking, you have four options:

• Sell the property
• Keep the property in indivisum (or potentially rent it out)
• One of the spouses buys the other out
• Gift the property

If one of the spouses continues to live in the property while awaiting a sale, you should agree on how the costs should be borne.

SOS bank account emptied

You're not fully over the emotional reaction, and you discover that your spouse has emptied the joint account. What now? In the best-case scenario, the intentions are well-founded. Your ex-partner wishes to hold the money in trust to make sure that you don't harbour bad intentions, either. Mutual trust may well have disappeared entirely and your ex-partner has opted for certainty ahead of uncertainty. But what if the intentions are less positive? With the statutory regime (see above), spouses are authorised to manage their joint assets on an equal footing. Each spouse may, without informing – or the consent of – the other partner, withdraw or transfer money without being held accountable.

The problem comes, of course, when one spouse empties the joint account one day and then delivers the subpoena for the divorce the next. And when there is a liquidation and distribution of the joint assets further down the line, it is always the date of the subpoena or deposit of the application that applies to all settlements. Thankfully, you can prevent the money from disappearing. Although both spouses may empty any joint accounts, they must always manage the joint assets in the best interests of the family.

If one of the spouses empties all the accounts, that may well not be in the family's interests. In that case, this spouse must demonstrate that the money has been used in the family’s interests.

Saving and investing for your children after a divorce: what now?

You're divorced, but still saving or investing for your children? That's great. But is it also feasible in practice? Definitely

• If you want to invest for your children, periodic investments provide an interesting option. This can be done from 25 euros per year – all you both need to do is open a KEYPLAN and name your child as the beneficiary. Once you have both opened a KEYPLAN, click on ‘Amend KEYPLAN’ and inform us of your child’s name, date of birth and the transfer date from which you wish to transfer the KEYPLAN to him or her. The beneficiary must be at least 18 years old on the end date.
• Do you want to save for the children? Then all you both need to do is open a separate account for each child.