Are you wondering how to financially separate from a spouse?
Physical separation can be something that’s much simpler to arrange than financial separation. Financial separation requires careful consideration and planning to ensure that all boxes are ticked and you can move on with your life financially.
Here are our top tips on how to financially separate from your spouse after you decide to separate or divorce.
Tips To Financially Separate From Your Spouse
Find Your Financial Starting Point
In order to find your financial starting point, you need to carry out a complete financial stocktake. That means listing all your assets and liabilities, no matter in whose names they are registered. This will be your joint asset pool which will be divided as part of the divorce settlement.
Assets will include all bank accounts, investments, insurance policies, inheritances, superannuation, properties, businesses, vehicles, household goods, jewellery and anything of value. Liabilities include all debt such as your mortgage, personal loans and credit cards.
Look At Your Current Income & Expenditure
The next step when financially separating from your ex would be to assess your current income and expenditure. All forms of income must be included and expenditure must include rent or mortgage, utility bills, school fees, food, insurances, lease instalments and all other day to day expenses.
Decide Who Will Pay For What
Knowing your current incomes and expenditure will enable you to come to an agreement as to who pays for what once you separate. This becomes more crucial if you’re still co-habiting or being separated under one roof, as the law allows.
Some people may not be aware that under Australian Family Law couples have a legal obligation to support each other during and after a separation or divorce if one spouse is unable to sustain themselves.
Draw Up New Separate Budgets
Knowing now what you’re both in for, the next task is to draw up new separate budgets. This will give you both a good indication of what your new lifestyles may look like.
Depending on your personal financial situation, initially try to stick strictly to your basic needs avoiding any unnecessary expenditure, until you’re back on your feet.
Get Professional Tax & Financial Advice
As you’ve probably become aware by now, some of the tasks mentioned above may seem daunting, especially if you have not been taking care of financial matters whilst been married. Valuing your investments, properties, businesses, superannuation, etc, can be complex so don’t hesitate to seek professional legal, tax and/or financial advice. The consequences of getting the figures wrong are too dire to risk doing it all on your own.
The sooner you get professional advice, the better and could save you money by avoiding making costly mistakes.
Open Your Own Bank Accounts
If you have any joint bank accounts, it may be time to close them and open new ones in your name. The same applies to any joint credit card accounts. However, we recommend getting legal advice before you take these steps.
Do that as a matter of urgency as if your ex takes extra credit or fails to pay their share on any joint account, you’ll be held accountable. Also make sure your ex does not have access to any of your personal accounts by changing passwords and pin codes.
Keep Clear Financial Records
Preparing for a divorce or any other legal procedure requires keeping clear records of virtually everything. Gather all potential documents that will be required when dealing with your property settlement.
This can include:
- Marriage certificate and children’s birth certificates
- Evidence of earnings such as payslips
- Bank statements, shares certificates, investments, policies, etc
- Title deeds of properties, business ownership certificates,
- Evidence of living expenses, mortgage, rent, utility bills, schooling expenses, etc
- Receipts and valuations of all valuable assets, such as vehicles, jewellery, etc
- An inventory of all household goods owned by you and your spouse
All these documents are crucial in valuing your asset pool and help your family lawyer or family mediator to fully understand your situation and advise you correctly. It will also make it difficult for your ex to dispose or hide any assets when it comes to negotiating your property settlement.
Start Your Property Settlement
It is often best to start negotiating your property settlement with your spouse as soon as you have decided to separate. The reason for that is that assets are valued at the time of the proceedings, not at the separation date.
If you procrastinate, all assets that you may accrue after your separation will also be included in the asset pool, of which your ex may be entitled a share.
Need to start the separation or divorce process, or want help financially separating from your ex?
Why not book a free information call with one of the trusted family lawyers at Hickman Family Lawyers today?