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Divorce And Your Finances How To Manage The Split
Divorce is hard. Managing your financial split doesn’t need to be.
Relationship breakdowns are not about trying times or some proverbial winter from which we all emerge. They’re not poetic or allegorical or Nora Ephron-esque.
Frankly, it’s a shame that divorce isn’t more like the movies. Who wouldn’t want to frolic under the Tuscan sun or join some first wives’ club?
But in reality, separation is about making a thousand practical decisions about how to divide your finances — your property, investments, superannuation and even your debt — at a time when all you want to do is stay in bed and watch The Great British Bakeoff.
Begin with a list of assets
This includes everything from property and furniture to superannuation and savings. Get a good idea of your financial position so you know what’s at stake.
Some common assets to consider:
Property.
Cars.
Furniture and other household contents.
Superannuation.
Life insurance policies.
Shares / investments.
Joint debts.
It can feel overwhelming if you weren’t the financial decision maker in the relationship. Perhaps your mental energy was spent on work or kids, or your partner simply enjoyed the “money side of things” more. The good news is that the Australian government offers FREE resources on separation, including financial counselling and even a financial checklist.
Separate your bills and bank accounts
Today, sharing a life with someone doesn’t just mean a joint bank account. It’s internet and insurance policies, credit cards and frequent flyer family pooling.
Start by gathering all of your documents, bills and regular payments. Cancel the subscriptions which are under both of your names, open a separate bank account and ensure your pay goes into that. This isn’t designed to hide money, it’s just getting you started on untangling your life with theirs.
This is also the most tedious part of the administrative process. Sure, you may be on the phone with Telstra for an hour, or sending questions to the chatbot on the NRMA site, but the good news is that many organisations have processes and pathways to help couples split a registered account without losing things like no claim bonuses.
Decide who will care for children – and whether any support payments need to be made
Services Australia and Family Relationships Online offer advice and resources on parenting through divorce, including:
Child support and financial assistance.
Children and family law.
Talking to children about separation.
Services for children.
Creating a parenting agreement.
Get the right advice and support
In an ideal world we would all have total clarity around every aspect of our financial position. What’s more, we’d be in absolute agreement with our former partner about how to split assets and support each other through the transition.
In the real world, most of us don’t even know who’s name is on the Netflix account.
A family lawyer or mediator can offer guidance and help you reach a settlement with your partner out of court. If money is tight, each state has a legal aid office which can offer free support for things like housing, children and knowing your rights in general.
Remember, if you can’t negotiate a settlement yourself or via a mediator, a court will have to decide for you (in which case your assets will likely be sold to pay for lawyers…).
The bottom line
Divorce really does bite the big one, but staying organised and reflecting on what matters to you can save you a lot of time, money and heartache as you split your finances and care for your family.
Key points:
You need to be separated for one year and one day before you can apply for a divorce. This gives you some time to create an inventory of your assets and begin reorganising your finances.
Just because something is in your partner’s name, doesn’t mean that they’re automatically entitled to it. In a relationship, all assets and debt go into a shared pool in the eyes of the law.
There are a range of pathways to financial and family settlement before resorting to costly and time consuming court proceedings.
If you and your former partner can agree on how to split your assets and support your children, it’s a good idea to formalise your agreement and make it legally binding via a consent order or financial settlement doc.
Family law and your rights within this system don’t just apply to husbands and wives. Defacto partnerships and same sex relationships are equally valid in the eyes of the law.
Read more:
Getting divorced or separating?
Australian rules around divorce
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
