Divorce is one of the most difficult things that a person can ever go through and this goes hand in hand with the need for proper financial planning.
How you are going to proceed can have an effect on your financial standing in the near future.
5 Frequently Asked Questions (FAQs) Clients Should Know When Going Through a Divorce
- What’s my current personal and financial situation?
Going through a divorce process is emotionally and mentally traumatic, and even more challenging for the spouse who wasn’t the main income earner or wasn’t responsible for managing the finances.
When you’re suddenly faced with this daunting situation, most people want to know what their financial situation is, and the question of affordability of ongoing expenses such as mortgage repayments, child care costs, household expenses etc becomes very real and stressful.
To get a handle on financial situations, it is often best, to take some time out, and to start gathering important information that will help to provide a realistic view of one’s current financial position.
Here are some important facts and figures to be aware of:
• Bills (household utility, credit cards and store cards)
• Investments (Shares, funds, property, ownership)
• Property Deeds & mortgage papers
• Loan details (home and investments, ownership)
• Banking (savings accounts, PIN numbers etc)
• Tax details
• Insurance policies (home, health and personal)
• Superannuation (personal, SMSFs)
• Wills & Estate Planning details
It’s important to work with a professional adviser who can help to:
• Assess and identify your income and financial commitments
• Develop a new budget and plan to achieve your new goals.
- What do I do with my divorce settlement?
To face life on your own, and at the same time take on the financial responsibilities of looking after yourself and your children can be challenging and daunting.
Most people need to decide upon the hard facts of how they will use their divorce settlement to best provide for financial security and happiness.
There are lots of decisions to be made, and most importantly new personal and financial goals to be set, and acted upon.
This is a crucial time to work with a professional who can help to:
• Review your financial situation after your divorce settlement.
• Help you set new financial goals.
• Help implement a financial ‘roadmap’ to provide clarity and direction.
- Do I need to get my own life insurance?
It’s important to review not only your home and content insurance but your own personal insurance including life, disability, trauma and income protection.
Insurance is an area often looked over in times of emotional and financial anguish but it is one that should be discussed with a professional adviser to sort out what is required, how much is needed and how to structure policies to ensure its cost-effectiveness and appropriateness.
Tip: If you have your ex-partner as the beneficiary of your insurance policy, you’d want to get this changed.
A professional adviser can help you to:
• Review, recommend and organise appropriate insurances for you and for your dependents.
- What happens to our superannuation?
Superannuation is treated very differently in times of a separation or a divorce. It is managed as property under the Family Law Act 1975. It is different because although it’s considered to be property, it is held in a trust, and under superannuation splitting laws, it can be split after a relationship breakdown.
What a professional financial adviser can help you with is to:
• Review your superannuation and retirement savings
• Recommend superannuation build up strategies to help accelerate retirement savings.
- Do I need to update my Will?
Another important area to consider is updating one’s Will when a relationship breaks down or a divorce is imminent.
If you have made a binding nomination in your super or insurance policies, the beneficiaries named (most likely your ex-partner) in these policies can override anyone mentioned in a Will.
At times of major life event triggers such as a divorce or as your legal rights change, important documents such as a Will need to be updated to reflect your new situation, and consider it as part of your overall Estate Planning needs.
A professional adviser can help you to:
• Seek legal advice to ensure your Will is updated or created
Life events often trigger a client’s need for financial planning advice including going through a divorce.
Being financially aware and prepared can save you more heartache and emotional stress.
If you require help with your situation, please speak to a DOME financial adviser.
The information contained on this page is for discussion purposes only and is not intended to constitute financial product advice. It does not take into consideration any persons objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual before making a decision based on any information on this page.