A marriage coming to a final end is never easy. There are so many things to think about when you and your partner separate, from housing to bills.
One of the most challenging parts of a divorce is separating your finances. It requires a lot of organising but you can take a few steps to prepare financially for a divorce.
In this article, we explain what you can do to get your finances sorted for your divorce.
Practical Ways To Prepare Financially For A Divorce
Separating your finances from the finances of your spouse can be a challenge but there are a few practical steps that you can take to get your financial status ready for your divorce.
Gather All Your Financial Information
First, you will need to have a good understanding of your current financial situation and financial position.
Gather any bills, paperwork and important financial documents that refer to you and your spouse.
It’s a good idea to make copies of these documents, so you and your partner can have access to them easily.
While the majority of financial documents may be online, such as your online bank account or on emails, you may also receive physical paperwork to your home address.
Gather all these documents and keep them in a safe place. You may also want to speak to a lawyer to find out what financial documents you need for the divorce.
It’s worth pointing out here that you shouldn’t hide any documents or assets that belong to you and/or your former spouse.
It’s a legal requirement to disclose all assets, including your financial position.
Organise Your Paperwork And Bills
There is a great variety of financial documents that you will need to gather and organise, including birth certificate, marriage certificate, all insurance policies, bank account statements, tax records, loan statements, mortgage statements, car registration and utility bills.
You will also need to keep your passport safe as well as any government benefits documents.
In addition to all the official documents, it’s also a good idea to make a note of any important dates, such as the date you separated.
This is important as you can only apply for a divorce in Australia when you and your partner have been separated for more than a year.
Your divorce lawyer will likely also ask you for a family profile which includes full names and contact details of your ex, your family and your employer.
Make sure that you have all these documents and notes stored safely. They should be accessible for you to hand over to your lawyer.
Update All Your Accounts
Once you have all your documents together, you know exactly what accounts need to be changed.
This could be your email account, bank accounts, mortgage, bills and any other accounts with your name.
You will need to cancel any overdraft facilities and close joint bank accounts. Update any super and ensure that any payouts go to your specified person.
If you have a lease or rental agreement, then make sure that you update these contracts.
Sort Out Your Mortgage
One of the biggest financial debts of married couples is the mortgage, which is one of the biggest things that couples need to sort out to prepare financially for a divorce.
Check with your partner how you want to handle any mortgage repayments until the property is either sold or settled.
You will then need to notify your mortgage lender and let them know that you have separated. Then, cancel the redraw and advise your bank of the cancellation.
If your name is not on your home, then it’s important that you speak to your lawyer about how you can protect your potential share of the property.
See A Lawyer And Get Support
One of the biggest mistakes that divorcees make is that they wait too long before they contact a lawyer.
It’s essential that you get legal advice as early as possible to ensure your finances are separated in the right way and you are as financially prepared for divorce as possible.
A good family lawyer with experience in divorce law does not just give you guidance on finances but he/she may also be able to provide advice on your entitlements and legal rights.
Your lawyer will ask you a variety of questions, including about your financial position.
He/she will be able to advise on alternatives to court proceedings and potential outcomes of your separation.
As there are a few time limits when it comes to handing in legal documents, it’s vital that you speak to a lawyer as soon as you decide to separate from your spouse.
Seek Support
Not only do lawyers provide financial support but you can also find more help when you contact your local authorities.
They will be able to give you more details on charities and other organisations that can give you advice before and after your divorce, and to help prepare your finances.
Create A Plan To Repay Any Debts
Once you understand your personal financial situation better, before and after the divorce, you will be able to create a financial plan.
This is a great idea if you want to pay any debt, such as credit card debt or pool financing. Or you want to save for a new car or house, or budget for a new apartment.
After you have organised your finances and finance documents, you may have to watch your money with some financial discipline.
Paying your debts off first before you start saving is the best option to prepare financially for divorce and to start a new financially independent life.
Learn To Live Within Your Means
Another aspect that’s often difficult before and after a divorce is the change of living standards, especially if you have to adjust to surviving financially as a single mum or parent.
A divorce always comes with lifestyle changes for you, your ex, any children and the rest of your family.
You may need to cut down on unnecessary expenses, such as subscription services, and match your lifestyle to your new financial situation.
Final Thoughts
A divorce is a difficult time for everyone involved but you can already get yourself organised before the official divorce proceedings by following the steps above for how to prepare financially for a divorce.
This can help you separate from your partner financially and you can also start building your new life with your own money and new financial goals.
