• Serendipity Team

5 tips to help you navigate relationship breakdown – what to expect when going through a divorce.

Updated: Apr 19

A breakup is a deeply emotional time. In addition to processing your emotions there are a lot of practical changes and important decisions to be made. Given that money is a major cause of stress for all Australians, you will find the separation process much easier to handle once you have a solid grasp of your finances and can put any unnecessary fears to bed.

If you find yourself facing the prospect of a divorce, here is a blueprint to help you navigate the breakup without the added overwhelm.

Step 1 – Get clear on your short-term numbers

As a starting point it is important to gather all your financial information including sources of income, living expenses, as well as any assets and debts you have (jointly or individually) and put together an updated budget.

To help you to plan your cash flow needs it will help to consider the following:

  • Where will you live while you finalise the property settlement?

  • If you have children, what will be the custody arrangement (at least in the short term)?

  • How much income do you have access to (consider how many hours you are likely to work once you have separated as well as any Centrelink and family support you have access to).

  • How will any jointly held bills and debts be paid during the separation process?

  • Is the separation amicable or will it require additional legal support and mediation?

If you find yourself facing a shortfall and unable to cover all your living expenses, it is important to address this as soon as possible. Brainstorm ways to reduce your living expenses or bring in additional income and arrange a short-term payment plan for your bills to buy you time while you get back on your feet.

Step 2 – Update your important documents

Now that your immediate needs are taken care of it is time to make sure all your important paperwork reflects the change in your relationship’s status. Now is the time to check your:

  • Will and Power of Attorney - Make sure that your will and power of attorney reflect your current wishes. This is especially important because a separation will not affect or revoke your will, even though your intentions may have changed. In addition to reviewing these documents it is important to speak to your family members and consider whether there is potential for you to receive an inheritance during this time which you wish to protect and preserve.

  • Superannuation - Check your paperwork to see who is currently entitled to your superannuation and update your Binding Death Benefit nomination.

  • Insurance policies - Check who is the listed beneficiary on any life insurance policies you currently own. This is also a good time to update your address and bank account details to make sure these policies continue to remain in place and are not able to be cancelled by your ex-spouse

Step 3 – Get professional advice

During the separation process you will likely be faced with a series of big decisions, so it is important to get the right professionals on your team. Having the relevant facts at hand will make it easier to determine which is the best option for you.

  • Tax implications - As a starting point it is important to understand the tax implications of transferring super, real estate or any other assets that you own either jointly or individually. If you own a business together and wish to sell it or transfer part ownership, this also needs to be considered from a tax perspective.

  • Borrowing capacity – Check whether you have sufficient borrowing capacity in the event that you need to buy your spouse out of the family home or business or if you plan to purchase a new property to live in.

  • Legal advice – make sure that you understand your legal rights, risks and responsibilities during the separation period. For example, what happens with your ex’s debts if they default on their loan payments? The same goes for legal exposure related to a family business (for example, if you are a director of a private company) and any gifts or inheritance you receive during this time.

Step 4 – Rewrite your vision

Now that you understand the financial implications of your split and the options available to you it is time to create a new vision for your future. What does your new normal look like? Try to avoid letting the numbers dictate your plans for the future. Instead, start by imagining your ideal outcome. Give some thought to:

  • Where would you like to live?

  • How would you prefer to spend your time?

  • Who would you want to spend time with?

  • Do you have any hobbies or career goals you wish to purse?

Once you have a vision in mind it is time to set some timeframes and numbers to those goals and start to formulate a plan to make your vision a reality. Deciding which goals have most priority will help you to navigate any necessary compromises, should the need arise.

Step 5 – Ask for what you want

By understanding your needs and the financial impact of your separation you will be in a better position to negotiate a property settlement. Keep in mind that the longer it takes to negotiate a settlement the more the separation is likely to cost, so it is in everyone’s interests to find a workable middle ground. A great starting point is to identify your ideal outcome, as well as the minimum you are willing to accept and use that as a guide during your negotiations.

Navigating a relationship breakdown can be stressful and overwhelming. Having a financial adviser in your corner can make it easier to navigate the big (and small) financial decisions you need to make along the way and to negotiate your desired outcome with confidence.

A financial planner can assist you with your divorce by evaluating the outcomes of your potential financial settlement. At Serendipity are collaboratively trained and can work with your solicitor during the divorce process to assist you to achieve a satisfactory outcome.

If you are in the process of separating or considering doing so, please do not hesitate to reach out to us for a chat. We will be happy to assist.

What you need to know

This information is provided by Serendipity Wealth Advisors. The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information.