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Conscious Uncoupling: Financial Dos and Don’ts for a Happy Exit

Debates about the divorce rate, whether it’s trending up or trending down, can be contentious and confusing. Statistics and anecdotes alike are interpreted to bolster claims that society is going to the dogs or making progress. On one hand, the divorce rate reached a 40-year low in 2015, according to data from Bowling Green State University’s National Center for Family & Marriage Research. On the other hand, a recent report from the Pew Research Center states that divorce rates for Americans over age 50 is on the rise.

For the couples themselves, however, such debates are irrelevant. What’s at stake for them is existential, emotional and complex; how it all goes down will determine their family’s future health and prosperity.

Once it gets to the point where one or both parties want out, the next crucial questions regard how best to proceed. If there are kids involved, the process will require re-envisioning what it means to be a family after the parents have parted ways.


Transitioning from paired to parallel

Gwyneth Paltrow was widely mocked for calling her split from husband Chris Martin a “conscious uncoupling.” But in doing so, they gave a name to an approach embraced by a growing number of dissatisfied couples.

Post-boomer generations X and Y, many of them children of divorced parents themselves, may eschew the kind of acrimony and pain depicted in movies like “Kramer vs. Kramer” and countless country songs, in favor of something more mindful and constructive than conventional divorce.  

Among millennials, 52 percent say “being a good parent” is the most important thing in life, a higher priority than “having a successful marriage” (30 percent) or “a high-paying career” (15 percent), according to the Pew Research Center. So it’s not all that surprising that many unhappily married 20, 30, and 40-somethings today want to construct new lives that include their erstwhile spouses in meaningful ways.

For LGBTQ couples, the long struggle for legal marriages has necessarily been paired with conscious determination to sustain families, even after relationships fray, without relying on the courts. Many couples, celebrities included, continue to live in close proximity post-separation in order to ensure their children’s well-being and regular communication. Sites like and cater to devoted parents who prefer not to be lovers or housemates.  


Building a contingency plan and restructured trust

Copacetic separation entails considerable time and attention to details that may previously have been taken for granted. People otherwise determined to live separate lives must agree to a matrix of arrangements that will keep them connected, potentially for the rest of their lives. Perhaps it’s helpful to think of conscious uncoupling, as “pre-divorce,” with a few rules you can iron out together.  

Couples approaching their split as a creative life event, rather than a contest or admission of failure, can address their financial separation as part of collaborative reboot that enables both partners to thrive. In the whirl of emotions and change that comes with even the most amicable of uncouplings, it may be hard to focus on the big picture; but thinking in the long-term clarifies personal and familial priorities.

Here are nine tactics for consciously getting your financial ducks in a row for living separate lives:

Manage your emotions. Feeling hurt, helpless or vengeful is normal when a relationship ends, but don’t let yourself be swayed when it comes to business affairs. Pick your battles and do the homework.

Consider kids as contingencies. If the conscious part of your uncoupling regards parenting, alimony and child support are just part of the equation. You will need work out arrangements for how you will care for your children going forward. Spell out how you will share responsibility for tuition and extra-curricular fees, getting them from place to place, managing visits, vacations, extended family, handling developmental or behavioral challenges and physical and mental health.

Take care of administrative tasks. Close joint bank accounts, credit cards and other shared accounts and open new ones in your name to begin establishing good credit on your own. Change your status on tax records, post office listings, utility bills, school information, professional licenses, property titles and healthcare coverage. Revise beneficiaries on insurance policies, pensions and retirement savings. Remove your partner’s name from your will and other end-of-life documents such as trusts, medical directives, and power of attorney.

Log child support payments, alimony, medical expenses and other relevant transactions using personal-finance software. Organize your records and keep them in good order, even if you haven’t done so previously. Track and promptly address recurring costs like car payments, utilities, rent or mortgage, cable and phone bills.

Establish a budget and live within it. Expenses mount whenever a couple begins dividing assets, living quarters, transportation and other costs they once shared. Adjust your expectations accordingly.

Obtain credit reports for you and your partner. Even if you trust your soon-to-be ex-spouse, it’s important for you to know that they are managing their debt effectively to avoid getting stuck with unexpected debt. They should do the same.

Get property appraised before dividing it up. You won’t equitably divide stuff if you don’t know its true value. Virtually everything—including assets and liabilities that are in only one partner’s name—is fair game if someone decides to make a claim on it, so it pays to have them accounted for.

Minimize shared debts. If you can’t pay it off before you split, think about how each partner can move their portion of mutual debt into a separate account under their name alone. Otherwise, creditors could try to collect on what your ex doesn’t pay.

Prepare to delay retirement. Working longer to increase your lifetime income will help offset the financial impact of uncoupling. We live longer today than ever before, so make the effort to maximize your Social Security and Medicare benefits before you need them.

Enjoy the upside. Divorce may bring tangible benefits, such as escaping payment of Alternative Minimum Taxes (AMT), which can mean saving thousands of dollars every year. Alimony payments are generally deductible, which lowers your effective taxable income. Medicare eligibility and Social Security payouts improve once your spouse’s income is no longer taken into account. And your kids may enjoy more financial aid options when they reach college age.   

Did you know...

Divorce rates in Australia, Belgium, the Czech Republic, Norway, New Zealand and the United Kingdom fell between 1995 and 2014.*

*Source: Organization for Economic Co-operation and Development 

Disclosure: HSBC commissioned this article. The views and opinions expressed do not necessarily reflect the views and opinions of HSBC.