Separating or divorcing a partner or de facto can be absolutely devastating both emotionally and financially. This divorce survival guide should help ease the pain.
I was fascinated, and saddened, to read this week that the latest divorce rates are up 13 per cent to 56,000 a year.
According to lawyers, the two most common reasons for divorce were domestic abuse and infidelity, while lack of communication and compatibility, and financial issues were among other leading reasons.
But an increasing reason for marriage splits is incompatibility with an anti-vaxxer and conspiracy theorist partner… that is certainly a sign of the times.
Other reasons for divorce were:
- Gender transition
- Anti-vaxxer/conspiracy theorist
- Relocation
- Religious differences
- Second family/other lives
- Gambling
- Sickness/illness related
- Growing apart
- Involvement of in-laws
- Crime/incarceration
Even though it is more common than ever, separating from or divorcing a partner or de facto can be absolutely devastating both emotionally and financially.
As emotions career out of control it is easy to let your financial wellbeing fall by the wayside. Many never fully recover from the hammering their wealth takes from the pounding of separation.
But there are several steps you can take to regain control and rebuild your new financial future.
1. Protect what you’ve got
Rebuilding your wealth starts the minute your partner walks out the door. We know you’ll probably be an emotional wreck, but you need to focus for a short while to secure what is yours financially so that you’re not cleaned out.
Keep documentation of any joint assets in a safety deposit box, rather than in the home especially if you suspect that your ex may try to tamper with it. Remove any personal property to a safe location or take photos to prove the items existed.
Take money out of any joint bank accounts and set up your own… but be fair. For example, if there is $10,000 in a joint bank account only take out $5,000.
Cancel any joint credit cards so that your ex doesn’t go on a spending spree and leave you holding the bill.
Change the password on your bank accounts to stop them being cleaned out.
Apply to the bank to change your accounts to two approvals. This means that both you and your ex have to approve withdrawals from the accounts.
Organise with the bank to receive all correspondence relating to all your accounts. This includes credit card bills, transaction and savings account statements, mortgage updates, and superannuation statements.
Collect and secure as many documents as possible and make copies of the lot. Things like the deeds to the family home and any investment properties, share certificates, tax returns and super fund details.
2. Be tough with the property settlement
The sooner the property settlement can be completed, the sooner you know exactly where you stand financially.
Don’t fall for the trap of an ex-partner delaying a settlement because it just continues to complicate your finances and adds to the risk of them taking advantage of you.
There is no formula used to divide assets and work out how much of the property settlement each are entitled to. A judge or mediator listens to evidence and decides what is just and equitable based on the unique facts of your case.
Disputes in the Family Court look at what you’ve got and what you owe, direct financial contributions to the marriage, indirect financial contributions to the marriage, and non-financial contributions to the marriage.
Have valuations performed on expensive items such as houses, antiques and jewellery as proof of the fair market value of the items for the settlement.
3. Put together a good team of advisors
Once you’ve told everyone about your plans to separate and have your short-term finances in order, the next step is to put together your support team.
The saying goes ‘don’t get mad, get even’… and to do that you’ll need a good lawyer, accountant and financial planner in your corner.
Naturally it depends on how messy the separation is as well as the size and complexity of the property settlement. If the parting is amicable then there is probably no need for a lawyer but an accountant/financial planner is always helpful with the settlement.
4. Review legal obligations
Remove any powers of attorney you have given your ex to assets that are in your name alone. Destroy any general powers of attorney giving your spouse the right to act on your behalf in legal and financial matters.
Review things like wills, insurance cover and superannuation beneficiary arrangements and make any necessary adjustments.
5. Recreate your personal financial plan
You and your ex may have done some financial planning, but clearly your situation, your goals and your plans have changed. Sit down with your advisor to assess your current financial picture, income sources, and savings goals.
Now you have control and you should be comfortable with the types of investments in your account.
6. Understand your expenses and income sources
Redo your household budget to reflect your new circumstances. Make sure you have a realistic understanding of all of your expenses, in conjunction with your sources of income.
Try and live below your means until you get back to some sort of normality.
7. Don’t take on too much debt
You may feel free as a bird and want to celebrate the end of a messy relationship but unless you effectively manage your financial situation, things could turn sour.
Don’t max out credit cards on expensive holidays celebrating your freedom. As you consciously try and avoid getting into debt, you should also try and pay off existing debts.
8. Focus on earning and income
Assess the prospects of your job and whether there are better opportunities elsewhere. Consider a side hustle or second part time job. Not only will it increase the family’s income, and take financial pressure off, but it increases your sense of your own financial independence.
Advisor checklist
- How much do they charge?
- for a consultation?
- for each hour they spend on your account?
- as an administration fee?
- What experience have they had in divorce or separation cases?
- Ask for references or testimonials from past clients you can read
- What are their accreditations?
- How long have they been in business?
- Are there any barriers to taking your business elsewhere?
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