How much does divorce or separation cost?
Divorce or separation is always difficult to live. Leaving your long-term partner is emotionally painful but can also impact your financial future. Here are the top five ways to financially prepare for your divorce or your separation.
1. Take stock of your financial situation
The financial consequences of your divorce will depend of your matrimonial regime and the division of the couple’s property.
The Civil Code in Luxembourg defines three main contractual regime categories:
- the legal regime (or participation in acquisitions regime) makes a distinction between three properties: the property of each spouse and the common property;
- the separate property regime divides the assets in two properties: yours and the one of your partner;
- the community of property regime doesn’t make any difference between the assets of each other: all property is common (except personal effects and family objects).
In the two first matrimonial regimes, you have to prove which assets are yours. So gather all necessary information such as invoices, property acts or notaries inventory.
2. Protect your bank assets
Protect your assets and make a list of the bank accounts you are the owner, the co-owner and the agent.
For your individual accounts, you have nothing to fear. Your individual accounts are managed autonomously, regardless of your matrimonial regime, and only work with your signature and under your own responsibility. If your ex-partner has a power of attorney over your accounts, revoke it as soon as possible.
If you have a joint current account, the best solution is to close it. Before closing it, keep in mind that the joint account is often used to pay domestic expenses and has direct debits and/or standing orders to pay recurring monthly bills.
You have to follow the same procedures for your bank cards and your assets in safe deposit box.
3. Settle all the questions related to your house, your loans and your insurances
The most important point is the mortgage. You have three options:
- you decide to keep the house alone and to refinance the loan under your own name;
- you decide to sell the house and to make early repayment in full with penalty fees;
- you decide to keep the house together and to stay married to the mortgage.
Whatever your choice is, contact your banker before taking any decision. Do the same for your other loans, home insurances and financial investments. For your other insurances, contact your insurance agent and ask him to adapt them to your new situation.
4. Think to the assets of your children
Protect the savings of your children. On the children’s savings accounts, capital, interest included, is frozen until the age of 18. They are exceptions but they depend from one bank to another.
For life insurance policies, you have two options if you and your partner are both policyholders:
- the insurance policy continues until its maturity date with the same policyholders;
- one of you wants to withdraw from the contract but, in this case, the agreement of both parties is needed. And fees may apply because a new contract must be signed.
5. Prefer negotiation to confrontation
Better a bad compromise than a good trial. The proverb is well known but not always followed. Don’t let your emotions talk, keep calm and realize that a trial will cost a lot of time, energy and money.
You can get separated without divorce. Spouses living separated and apart don’t have to live together but other duties and obligations of the marriage, like aid obligation, remain. And if divorce is for you the only solution, contact mediation centres or lawyers and try to find an agreement before running into a long and expensive legal action.
The queen of cards. There are many different types and they offer many possibilities other than cashless payment, from differed repayment to additional guarantees on purchases.
3D Secure is an internationally recognised security standard for online payments. The service is limited in Luxembourg to credit cards.
If it’s true that when we shop in a store and handover physical cash, the pain of paying finds the act prompts more awareness about spending, and parting with cash may even hurt a bit more than swiping a bank card.