If you’re in the process of separating from your spouse, you might be wondering how to protect your assets in a divorce.
It’s important to remember that it’s never too early to think about protecting assets in the event of a divorce – this can be done before commencing a de facto relationship or marriage, or at any stage of a relationship – not just once you have decided to divorce. In fact, it’s much simpler and often cheaper to protect your assets before separation is even a consideration.
Let’s take a look at how to protect your assets in a divorce.
9 Tips To Protect Your Assets In A Divorce
Consider A Binding Financial Agreement
Although a Binding Financial Agreement (BFA) may be seen as being “unromantic”, it is by far the most effective way of protecting both parties’ assets, in the event of a future divorce or separation. Setting out the terms of the division of your assets, a BFA prevents unnecessary conflict, speeding up the separation process, and thus reducing legal costs.
The beauty of a BFA is that both parties draw up their own agreement tailor made to suit their personal needs, instead of leaving that for a Judge to decide. You get to decide for yourselves which assets will be divided, which will not and exactly how they will be shared. A BFA can be drawn up at any stage of your relationship and can be amended by mutual consent at any point thereafter.
Maintain Separate Bank Accounts
If you had any joint bank accounts whilst being married, look at opening separate ones in your name.
It is also vital to notify your debtors as soon as possible, informing them of who is responsible for paying the monthly instalments, and to prevent your ex from borrowing money against your name.
Maintaining separate bank accounts, makes life much easier when divorcing, but even then, it does not necessarily prevent the other party from claiming a portion of it if the Court finds they do have a rightful claim.
Contribute Equally To Household Expenses
Contributing equally to household expenses during a marriage and the separation period certainly allows both ex-spouses to protect their own assets. But in reality, that may not always be possible as in many marriages there can be a disparity in earning capacity.
In some marriages there is a breadwinner and a homemaker, or spouses earning very different incomes. Although individual contributions made by each party are considered by the Court, it does not necessarily place the value of the breadwinner’s financial contributions higher than the non-financial contributions of the homemaker. When it comes to the division of property, the only condition that the Law demands, is that it’s just and equitable.
Keep Clear Financial Records
Courts require documentary proof of everything. Keeping clear financial records will enable your lawyer to fully understand your situation and advise you correctly on your rights and entitlements. This will not only save your lawyer time and you money, but will make it difficult for your ex-spouse to conceal or dispose of any assets without you knowing.
Such documentation to provide your lawyer should include:
- Date of your separation, marriage certificate, birth certificates of children
- Bank, loan, credit card, insurance, investments statements
- Salary slips, earnings, tax returns and superannuation statements (both parties)
- Title deeds of all properties, shares or ownership of businesses
- Rent, utility bills, living expenses
- Proof of purchase, receipts and valuations of valuable assets (vehicles, jewellery, art, furniture, etc)
Review Your Estate Planning
Although many administration adjustments will most likely need to be made after a divorce, it is vital to review your estate planning. Much will depend on your personal circumstances, your age and earning capability, but this can often be a complicated exercise, requiring professional financial advice.
Don’t Try To Hide Your Assets
Family law requires both parties to provide full and frank disclosure of all assets and earnings, and hiding any can have serious implications. In extreme cases it could even lead to imprisonment. If it is discovered that you have hidden assets or failed to make a full disclosure of your earnings, the Court will make the necessary adjustments to the asset pool, and may award a costs order against you.
On the other hand, if you suspect your ex of hiding or disposing assets or failing to disclose their actual income, there are numerous ways of uncovering that. That can, however, be a most difficult and complex process usually requiring professional legal advice.
Review Your Beneficiary Nominations
Many married couples nominate their spouses as beneficiaries in their wills, insurance policies and superannuations. If this is the case for you, review your beneficiary nominations as soon as you have decided to divorce and not wait until the divorce is granted.
This is to ensure that your assets go to the people you nominate and prevent your ex from inheriting everything, if you had to untimely pass away before the divorce is granted.
Seek Legal Advice
As you have probably realised by now that divorce can be a most complicated process when it comes to protecting your assets. Knowing your rights and obligations is paramount in ensuring you end up with a fair outcome, so seek legal advice from a trusted family lawyer in Perth as soon as possible to avoid making costly mistakes.
Keep Your Divorce Costs Low With Family Mediation
There are three basic ways of divorcing in Australia – basic DIY kits, through litigation or with family mediation.
DIY kits are readily available online, are cheap but leave to both parties to work out the terms of their divorce, fill in the forms correctly and submit them to the Court. Unfortunately the pitfalls far outweigh the costs and the process often turns out a complicated and lengthy affair where neither party get a favourable outcome.
Property settlement through litigation means each party appoint their own family lawyers, who will represent you in Court and a Judge will make the final decisions for you. Depending on your lawyer, this process may take months or even years to finalise, costing thousands of dollars and adding much stress for everyone involved.
Family mediation is a totally different concept. A family mediator can offer guidance, remaining impartial at all times, explaining the legal rights and obligations to both parties. Mediators encourage both parties to engage amicably and seek their own solutions towards reaching a settlement suited to their own set of circumstances. Mediation is also the quickest, least stressful and least costly way of divorcing in Australia.
Do you want to protect your assets in a divorce? Speak to our family lawyers in Perth today for a confidential discussion about how we can help you protect your assets in the event of a divorce.