A divorce can be draining, both emotionally and financially. It may feel like you’ll never get to the other side. But you will.
Unfortunately, there is no “one size fits all” approach to resolving financial disputes. However, to get started, consider these divorce do’s and don’ts.
DO…
Gather Financial Information
Now is the time to get a good handle on all your financial information. If you didn’t control the finances within the marriage, getting your key financial records together is an important step. Here is a great starting list by ASIC’s Money Smart[1]:
- Savings and transaction account statements
- Utility bills (e.g electricity, gas, mobile and internet)
- Credit and store card bills
- Property paperwork (deeds, mortgage papers, home loan details)
- Investment paperwork (managed fund statements, share dividend statements)
- Tax records (tax returns and tax file numbers)
- Insurance policies (e.g health, home and contents, car, income protection and life)
- Superannuation accounts (both yours and your ex-partners)
- Will and estate plans
- Contact details for your accountant and lawyer
Create A New Budget
With the end of a relationship comes change, financially you need to work out what income and expense are going to change. With this knowledge you can then plan for your future better, as well as avoid and rude financial shocks.
An easy way to start a new budget is to write down all your income streams and expenses, then work out what is essential and what can be cut back.
Related Article: Surviving Divorce: Financially Where To Start
Reduce Joint Debt
“Although you may be separating from your spouse, your debt is still married. You must continue to pay any joint debt accounts that you have in your name. Check your credit report for a list of those accounts, such as credit cards, and consider closing them as soon as possible. Keeping joint credit cards open could be dangerous because you are still responsible if your spouse splurges on a big-ticket item.”[2]
DON’T…
Hide assets or income
“When you go through a financial settlement there is a duty of disclosure in relation to all aspects of your financial affairs, which means you are both legally required to set out everything you own, earn and owe.”[3]
It is a must that your lawyer is fully aware of your financial matters, or you may find yourself being penalised by the courts or worse your spouse delving into your affairs that could draw out the legal proceedings, making the process lengthy and costly to both parties.
Forget about updating your will, insurance and superannuation
Updating your will to reflect the changes in your life as being divorced does not cancel an existing will and different rules apply in each state.
Remember to review all insurance policies including car, home and contents, income and life protection, especially if you have children, to ensure they provide the level of cover you need.
Sorting out your superannuation is an important step in planning for your future. Once you separate or get divorced, super is treated as a type of property and can be divided by agreement or by court order.
Note: This is general information advice only and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters, please contact us on 03 9620 0088 or email info@resolveconflict.com.au
[1] Divorce and Separation’, ASIC Money Smart Financial guidance you can trust, viewed 12th September 2018, https://www.moneysmart.gov.au/life-events-and-you/life-events/divorce-and-separation
[2] [2] Leamon, S 2016, 3 Tips for Managing Your Money While Separated From Your Spouse, Nerdwallet, 21 September, viewed 12th September 2018, https://www.csmonitor.com/Business/Saving-Money/2016/0925/Three-tips-for-managing-money-while-separated-from-your-spouse
[3] Trainor T 2018, ‘What not to do with your money when you’re getting a divorce’, Money, 11th April, viewed 12th September 2018, http://moneymag.com.au/financial-dos-donts-divorce/
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