Financial Advice for Divorce or Ending a Relationship
Michelle Tate-Lovery interviewed for the Australian Women's Weekly - Divorce Special Edition 2013. This article is a guide as to which professionals are required and how to pick them:
When a relationship breaks down, financial consequences follow.
Your world has changed and you need the right assistance, to understand your current position, to re-evaluate your priorities, and trade-offs.
For many, ending a relationship may be the first time you feel the need to see a Financial Planner or have been faced with making financial decisions.
As lifestyle Financial Planners we can assist in the following areas:
Your new financial position
- We work with your Lawyer in determining the right settlement to meet your future lifestyle needs.
- We help you become aware of your financial position, prior to separation and afterwards in relation to your income, expenses, assets and liabilities.
- You will need to unwind your combined financial structures.
- You will need to rearrange bank accounts and cancel credit cards.
- You may need help to redefine your goals – both lifestyle and financial. Mainly, you need assistance in understanding how you can make decisions and take action to move you ahead toward financial independence, while maintaining flexibility.
- You will need to review your cashflow and budgeting.
- You may need to re-enter the work force or attempt a career change, potentially due to new income needs. How to manage your income often involves becoming savvy with financial terminology.
- How will you fund your childrens’ education?
The family home
- Should you retain the family home? This can be a difficult decision. Generally the partner that retains custody of any children of the marriage retains the house.
- Can you afford to retain the family home or should you sell, invest the proceeds, and rent for a while?
- If you commit to a mortgage by yourself, what financial position does this put you in and will it affect your other long term goals such as having a comfortable retirement?
- You may need to restructure your finance to ensure the best value and flexibility. You will need to reduce your non deductible debt as soon as possible.
How will you split your investments?
- Careful consideration is required when determining the best split of investments, there are stamp duty and capital gains tax exemptions in most cases where investments are transferred as a result of marriage breakdown. Financial planning advice is required for an appropriate investment strategy for your needs after the property settlement. A surprise tax bill down the track is not desirable.
- Superannuation can be split between the members of a couple as part of a property settlement. You can request information about your partner’s superannuation benefits from the relevant superannuation fund. Splitting superannuation is complex and requires specialist financial advice.
- We can help by providing you with information and understanding around defined benefit superannuation, understanding tax implications.
- You will need to review the person nominated to receive your superannuation benefits upon death.
- How will you continue with superannuation funding?
- You may need education, in an ongoing coaching service, in relation to your investment options. After we have appraised your current financial position, we can coach you as your financial position evolves over the course of your settlement, and as your life progresses afterwards.
- How could you invest to supplement income – passive income?
- How could you invest for capital growth?
How should you invest your financial settlement?
- A settlement lump sum can be daunting, and if mismanaged, a wasted opportunity. You may need assistance to deal with a settlement, as you may not be familiar dealing with large amounts of money.
- You will need to review your level of life, disability, health and income protection insurance to ensure you and your family have sufficient levels of cover, especially if you have taken on moredebt to retain the family home.
- You will require estate planning and a new Will as divorce causes a Will to be invalid and especially in the case of new partners.
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