Going through a separation or divorce can be a stressful and emotionally-charged time, particularly when it comes to conversations around shared finances and the division of assets. Having a clear plan for how you approach these discussions can help provide direction and ensure you reach a fair solution that everyone is happy with.
Set yourself up for financial independence
The process of dividing assets can take some time, so in the first instance, it’s important to set up bank and credit card accounts in your own name so you have the freedom to manage your own finances day-to-day. Take the time to review any direct debits or deposits you may have set up on shared accounts and redirect these to each individual’s new account, for example, your wage, monthly phone bill, or Medicare repayments. Reviewing previous bank statements can help to identify any direct debits you may have set up.
Establish a clear picture of your shared finances
The next important step is to capture a clear picture of what you own together and the value of each. This document can not only help guide discussions around how to fairly divide assets and liabilities but can provide a helpful checklist for things you may need to address such as closing shared bank or credit card accounts, reviewing your insurance policies, or accounting for any debts or commitments that will continue to need to be paid.
This list could include:
- Savings accounts
- Credit cards
- Property and other assets
- Life insurance, income protection or TPD policies
- Debts and liabilities
- Household items and possessions – furniture, art, appliances.
There are a number of nuances and complexities to consider when dividing assets particularly when it comes to superannuation and taxes relating to the property. We can help provide guidance on the different considerations when dividing these assets.
Ongoing financial considerations
When going through a separation or divorce, everyone’s relationship and financial circumstances are different. That’s why it’s important to come to an arrangement that’s right for you, and for some, this will involve an ongoing financial relationship. This is commonly the case if you have children, as you will need to agree where the children will live, and how you will manage and share their living expenses ongoing. For many, this means that one person will remain in the family home which is something that should be considered when mapping out your shared assets and liabilities. When considering how you will share your parenting responsibilities, it’s also valuable to look at the insurances you have in place that will be there to protect your children in the long run.
The most important thing as you make these adjustments is that you feel empowered and in control. As one of the biggest shifts in your finances may be moving to a single income, part of re-evaluating your financial plan should be to review the protections you have in place.
We are here to support, as you establish your financial independence and revisit your individual goals. Please reach out if you’d like to discuss the financial plan and protections you have in place to protect you and your loved ones.
As always, if you would like to discuss the contents of this newsletter please give us a call 07 5559 5760.