Navigating a relationship, separation, or divorce, even on good terms, can be challenging. Amidst many considerations, prioritising finances is crucial for your well-being and that of any dependents. That’s why ActOn Wealth’s financial advisors are here for you.
We understand these are challenging times, but we bring a cool head for finance to the negotiating table. We’re motivated to protect your finances during separation and help you start a fresh life chapter with the best possible wealth-building base and strategy.
How can a financial advisor help you during a separation or divorce?
Aside from representing your best financial interests, a financial advisor can help in several tangible, meaningful ways during your divorce or separation.
✓ Accurately assess your assets, liabilities, income and expenses and give a
true picture of your financial situation.
✓ Develop a cash flow budget that assesses your post-separation reality and
gives you the best footing to manage your earnings and expenses.
✓ Expertly evaluate your settlement options, ensuring we consider all
financial implications.
✓ Advise on the best way to structure property settlement.
✓ Plan for your future wealth-building. This isn’t the end, it’s the beginning -
and now you have financial experts in your corner backing you.
Call us for a no-cost, no-obligation meeting. In the meantime, please benefit from these helpful financial tips as we examine some of the most critical steps to safeguard and appropriately divide your finances when separating.
Trust our Melbourne financial planners to have your back - call 1300 022 866 |
1- Involve the right experts for separating finances before divorce
It’s important not to do this alone. The right specialists in their fields understand the processes, obligations and limitations involved. They can save you inordinate time getting up to speed with complex administrative requirements. Importantly, they work in facts, not feelings, and are tasked to look after your best interests.
That’s certainly how ActOn Wealth sees our role. Along with a lawyer and an accountant, a financial planner is a crucial part of your team. We’ll not only work to protect all your interests when ‘decoupling finance’ but develop a strategy for moving forward. We want to help you find the best solutions today and steer you to a brighter, better financial future tomorrow.
Let’s start by looking at how to separate your finances during separation.
2- Begin with a financial audit
Whether you kept everything separate when you were a couple, split everything 50/50, or fell somewhere in the middle, you must audit all finances. You may be surprised just how long this list could become. It should include everything. Depending on your circumstances, that might entail:
Bank accounts (single and joint)
Property (owner/occupier and investments. This consists of any property either of you owns with a third party)
Businesses
Trusts
Shares and investments
Vehicles - vans, utes, cars, boats, caravans, motorbikes, scooters
Machinery and equipment
Jewellery
Artwork
Superannuation
Insurance policies
Credit cards (get a copy of your credit report)
Loans and debts
Superannuation (more on this below)
For the rest of this article, when we refer to property, we are talking about this collective above, not just physical real estate.
Make sure you have evidence of the value at the time of the audit so you can demonstrate if this has changed significantly after the separation.
On the other hand, do not attempt to hide or obscure any of your finances and property. Your ex’s accountants or financial team are likely to take a forensic approach to your paperwork. If they suspect anything is missing, they will find it, and such underhand tactics will not bode well for you. That’s exactly how not to deal with your finances during a separation.
3- critical
Now, we just suggested you essentially time-stamp the value of all your belongings as soon as you audit them. However, their value is ultimately determined during the date of resolution, not the date of separation.
What does this mean? Say you have a joint bank account that holds $10,000 at the time of separation. Unless you’ve done anything to safeguard that money (more on that to follow), nothing is stopping your ex from withdrawing, say, $5,000. When it comes to dividing the property pool, assessments are based on the present-day value, so $5k, not $10k.
It’s another compelling reason to act quickly when dealing with separation and finances.
4- Initiate financial agreements
A financial agreement is a written document detailing how to divide your property. Although this document does not require Court approval, it has some strict criteria, and you must involve a lawyer. You can enter into a financial agreement with your ex before, during or after a separation. We recommend doing so to protect your finances (so the previously-mentioned joint bank account balance, for example, doesn’t suddenly drop from $10k to $5k).
A fair financial agreement will take the same approach as the Court and will consider the following when reviewing divorce and finances:
Combined assets and debts.
The direct financial contribution each party makes to the relationship. This will include direct contributions, such as wages, and indirect, such as inheritances. It will also include contributions that cannot be monetised, such as caring for children.
Future requirements include health, caring, age, and ability to earn an income.
You may also want to consider limiting withdrawals on joint accounts or seeking joint authorisation for withdrawals. Even if you know you can trust your ex, we recommend monitoring all bank activity and changing passwords.
When it comes to dividing finances in a divorce, be respectful but be vigilant.
Divorce and superannuation
Superannuation has become a significant asset for many Australians. As such, clients often come to us to learn how to protect superannuation in divorce. Although you might still be years away from cashing in, a relationship or divorce can have present-day consequences. When it comes to splitting super, there is no one-size-fits-all. We recommend you speak to our superannuation experts and get tailored advice.
Contact us about how to work out finances when separating
Take the complications and stress out of separation and finances and speak to our financial advisors today. We offer a no-cost, no-obligation catch-up to see how we can help get you through this challenging time and onto a brighter financial future.