“Until death do us part” …may not always be the case for some couples who tie the knot.
While there were just under 50,000 divorces in Australia in 20181, over the long-term, it’s been found that many divorced people end up disadvantaged compared to their still-married counterparts.2
Divorce can be tough emotionally and financially. So, what can you do to beat these odds?
It’s never easy to start over but working through your financial situation soon after your relationship ends may help you plan the next stage of your life and move forward with more confidence.
Gather financial documents
You’ll probably have a lot going on if you’re in the middle of a separation and it can be easy to get paralysed by the change in front of you. One good way to start is to get together all your information resources: This includes things like your:
- Bank and super statements
- Insurance policies
- History of your employment and payslips
- Any property deeds/mortgage or investment statements
- Will and estate plans
- Rental agreements
- Personal and business tax returns
- Marriage certificate.
This material will be crucial when it comes to working with a divorce lawyer/mediator and with a financial planner or accountant.
Understand your financial situation
Moving to a single income could change your circumstances significantly (bills your spouse used to pay become yours, bills you used to pay become theirs). So, it’s important to have a plan for managing your new financial situation.
Having a clear picture of what you earn versus what you spend will tell you where you stand. If you find that your income cannot match your expenses, you may need to make some changes.
Start by tracking your spending. There are budget planners and phone apps you can use. Alternatively, simply download your bank statements and keep a record of your receipts.
Make sure to include everything from your rent or mortgage, utilities, kids’ education etc, to what you spend on entertainment. You’ll also need to include any debt repayments such as personal loans.
Next, calculate your total income. This includes what you earn if you’re employed, any Centrelink benefits if applicable, as well as any child support you may be entitled to post the separation.
If you own an investment property or managed investment fund, also include any regular income you’re receiving from rent or dividends.
Close joint accounts
As soon as possible, close any joint bank accounts or credit cards and reopen them under your name.
If your bills are paid under your partner’s name, you’ll also need to update this and any insurance policies you share. Lastly, redirect any of your income that is paid into a shared account to your own.
Manage your property and assets
When it comes to dividing up your assets, it can get extremely complicated (and emotional) so you may want to engage a family lawyer to mediate or obtain your own legal advice.
During this process, you’ll need to work out who gets what: the car, home, furniture. You probably need to divide up your super, investments, and any joint debt.
Records of your income and any evidence that proves how much you’ve financially contributed to the relationship, will be important. And if there’s children involved, this too will affect how your financial assets are divided.
You don’t have to go through a separation alone. There are many online Government resources as well as counsellors and financial advisers that can help to make this process a little less painful.
Professionals support networks can guide you through the legal requirements and provide advice about dividing assets/debts, such as a property that is held in both your names. They can also assist you in reviewing and changing your will.
You may also want to use a financial adviser as they can support you in planning out your future finances such as your super, housing situation, estate planning and life insurance.
Bottom line: Going through a separation is a highly emotional time so making too many big decisions alone may not be in your best interest. Lean on professional support and focus on building your future—the grass may be a lot greener!
1 Australian Bureau of Statistics: 3310.0 - Marriages and Divorces, Australia, 2018 Released 27/11/2019
2 Australian Institute of Family Studies: Divorce legacy lingers in older age – 26 July 2018
Important information and disclaimer
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. The information in this article is current as at July 2020 and may be subject to change. This information may constitute general advice. The information in this article is factual in nature and does not take into account personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. An investment with NULIS is not a deposit with, or liability of, and is not guaranteed by NAB or other members of the NAB Group. Opinions constitute our judgement at the time of issue. In some cases information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the NAB Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication. Past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market.