Dividing investments and savings when you separate if you were cohabiting

Dividing investments and savings should be relatively straightforward if you’re not married or in a civil partnership when you separate. You may be able to claim back your contributions to them in some circumstances. You may also need to value them and pay tax or charges if you sell them or cash them in. Find out what you can do.

How investments and savings are treated

Generally, any investments or savings in your sole name belong to you alone and any owned in your ex-partner’s sole name belong to him or her alone. But if, for example, you’ve made a contribution towards their solely-owned assets, you may be able to make a claim for a share (and vice versa). If you want to do this, you must act quickly and seek professional advice from a solicitor who specialises in family law.

In England or Wales, you need to show you had a ‘beneficial interest’ in your ex-partner’s investments or savings.

In Scotland, you need to show you’ve suffered what’s called ‘economic disadvantage’ (basically, are financially worse off) or your ex-partner has obtained an ‘economic advantage’ as a result of the relationship. You would have one year to make a claim from the date of your separation.

Making a claim could be expensive – so you should take legal advice before you begin any court action. You may also need to arrange valuation of any investments.

Dividing savings accounts

If you have already agreed how you will share money you’ve saved in your own or joint names, it’s important to understand your options for doing this when you separate. The process may be different, depending on the type of account you have and whose name it’s in. You may have:

Cash ISAs

These can only be held in one person’s name (and not jointly). If you want to give your partner money from your cash ISA you’d have to take the money out of the ISA. You couldn’t transfer it from your own account directly to theirs.

Savings accounts

These are more straightforward and you could simply transfer some money from your account to your ex-partner’s. The only difficulty might be if the money is in a notice account. If that’s the case, you will have to ‘give notice’ and tell your bank or building society that you want to take out your money. If you don’t, you could lose some of the interest.

If the money is in a fixed-rate savings account, you may not be able to cash it in before the term is up, or if you can, you may lose a substantial amount of interest.

How to divide investment property

An investment property – such as a buy-to-let property or a holiday home – owned in your name or your partner’s name alone belongs to that person, unless the other can show you’ve made contributions towards it. Try to negotiate between you, perhaps through mediation, how these contributions will be paid back; otherwise, you should seek legal advice in order to assess your claim.

If you or your ex-partner own an investment property jointly, you will need to get it valued to work out whether you want to sell it or to continue owning it or renting it out. Contact your lender if you want to take your or your ex-partner’s name off the mortgage – and consider talking to a mortgage broker if you think you will need to remortgage. But bear in mind new rules that lenders must consider when assessing whether you or your ex-partner can afford a new mortgage.

Valuing your investments

If you have investments, you should be sent a statement every year telling you how much they are worth.

But this may not be same as the amount you would get if you cashed in or transferred your investments. Instead, depending on the type of investment, the value maybe the:

  • transfer value
  • surrender value

Your first step should be to ask the investment company for an up-to-date valuation, or transfer or surrender value. You may have:

  • stocks and shares ISAs
  • unit trusts, investment trusts or OEICS (open ended investment companies)
  • investment bonds
  • bonds
  • with-profits policies, such as an endowment

Understanding the costs of cashing in investments

Cashing in your investments may not be the best option, because you may have to pay tax and extra charges.

  • You may have to pay Capital Gains Tax (CGT) if you cash in or sell an investment and make a profit. You have an annual CGT allowance, which means you can make a certain amount of profit – once selling costs and fees are deducted – before you have to pay tax. You don’t have to pay this tax if you’re selling your main home or on stocks and shares ISAs. This is a complicated area so it’s probably well worth getting advice from an independent financial adviser or accountant. You will have to pay for their advice.
  • Depending on the investment you have, you may have to pay charges if you sell or cash it in early. Even if you don’t have to pay a charge, you may lose out if you sell share-based investments when the stock market is at a low level.

Transferring or selling shares you own

If you own shares you can either transfer them to your ex-partner or you can sell them so you can give your ex-partner the money instead. It’s worth taking advice from an independent financial adviser or accountant about which is the best option.

  • You can transfer shares to your ex-partner by filling in and signing a ‘stock transfer form’ (otherwise known as a ‘J30’ form). You may be able to download this directly from the website of the company you own shares in. Your ex-partner may have to pay stamp duty.
  • If you have a stockbroker (or use an online stockbroking firm), they can arrange to sell the shares for you. Make sure you find out how much this will cost. You may also be able to sell through a share-dealing service offered by the company you own shares in. Not all companies offer this service.

Giving away assets to your ex-partner

If you give away an asset, such as an investment that you have made a profit on, you may have to pay Capital Gains Tax.

Married couples and those in a civil partnership who separate can give away assets to their ex-husband, wife or civil partner without having to pay CGT. But couples who live together without marrying or entering a civil partnership then split up can’t do this.

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