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Divorce - preparing financially and economically

09 October 2015

Australian Bureau of Statistics figures show that in 2011 the number of divorces dropped compared to the previous census.

In the 41-to-44 age bracket divorce is the greatest. For those of us over-50, the divorce rate has doubled, and that’s being led by women.

For many women, the consequences of divorce can be financially alarming.

No matter your age, stage or gender, if you’ve moved out of a relationship and the home you once shared, there are a number of things to keep in mind to avoid what is sometimes called STD – sexually transmitted debt.

Utility bills (gas, electricity, water) are often in the woman’s name. It’s important to ensure the utilities are terminated because if it’s your name on the bills, you’ll be paying them whether you’re in the family home or not.

If you’re experiencing relationship breakdown and have a mortgage or loan with your partner, advise the bank and make sure redraw facilities are cancelled and any further financial decisions require joint signature.

If you have joint accounts, monitoring them so you understand what is coming in and going out makes sense.

Close the accounts if you split and ensure your income and any personal savings are in a separate account.

Get legal advice about existing wills or powers of attorney, insurances and your super and always read everything before you sign.

Remaining objective, especially in the beginning of a relationship can be difficult. When making major financial decisions think about going together to get advice from a third party, such as an accountant.

If you earn more than your partner and/or want to finance your partner’s life, discuss the idea first. For everyone’s sake be clear about whether it’s a gift or a loan, or if it should happen at all.

Clever advice

It’s important to look after yourself and keep abreast of yours and your household finances. No one can expect things to last forever so remain connected to what is happening with your money and discuss decisions. If your partner is off to see a financial planner, ask to go along and get a copy of the statement.

WIRE - Women’s Information and Referral Exchange Inc., is a Victoria-wide free generalist information, support and referral service run by women for women. In 2014 the service began asking why people find it difficult to talk to their partners about money and the strategies that can be developed to help start “money” conversations.

Now, a national project has grown, which aims to support individuals in relationships to discuss their finances with one another. The assumption is that by increasing a person’s confidence to discuss shared finances and financial issues with their partners, as well as participate more closely in the administration of their finances, there will be a reduction in the sort of financial abuse some people experience at the hands of their partners, and which were highlighted in WIRE’s 2014 report.

Don’t despair the finances can be managed: child maintenance trusts can assist with spousal maintenance; capital gains tax can be managed when there are asset transfers; you can manage your own superannuation fund.

Remember, drawing funds from a company could have unintended tax consequences.

Doing the paperwork - transferring shares, adding or removing company directors from companies, or updating wills – it may seem like “little things” but it’s vital in the end.

For anyone thinking divorce or separation is a possibility, it is important to get an understanding of the dispute resolution models available for people divorcing/ separating. Identify which model may best suit you and your circumstances and then work out what your next steps might be.

Here are various resources:

Family dispute resolution options

Thoughts on superannuation

BT helps you prepare