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Advice Priorities in Turbulent Personal Times

separation-divorceDivorce and separation is a traumatic time for anyone who needs to deal with this type of life challenge.

Coming to grips with the emotional side of the event is significant, but, at the same time, there needs to be some clear thinking applied to the financial side of your life.

The following is a list of some of the financial priorities that need to be clarified and dealt with as soon as it appears that a relationship split is a reality.

1. Who Are Your Financial Advisers? Most couples share financial and tax advisers, who look after their joint personal and/or business affairs. In a separation situation it is almost impossible (and highly unadvisable) for the one adviser to act for both parties. As soon as is practically possible it should be decided who will be staying with the existing adviser and who will be seeking new advisers. This decision sometimes can be made by the separating parties and sometimes in conjunction with the adviser.

2. How Will Information Flow? Determine what information both parties are legally obliged and/or willing to share with each other and what information you would prefer to remain confidential.

3. Financial Advisers Are Not Relationship Counsellors. Often you have a long term relationship with your adviser, but this does not mean they are qualified to comment and help you with the personal side of your relationship issues. Try to keep your conversations to the advisers’ areas of trained expertise – things like tax, superannuation, estate planning and general financial planning.

4. Financial Advisers Are Not Family Lawyers. You will almost definitely need both financial and legal advice to assist you through any separation/divorce process. This is particularly relevant if there are dependant children and a significant asset pool involved.

5. Get Help With Short Term Needs and Costs. Usually a separation results in at least one of the parties needing to find alternate accommodation. Access to immediate cash flow also can be important for partners who have been focussed on home duties and have traditionally relied on the other partner’s income.

6. Review Your Financial Goals and Plans. Most couple’s financial plans take into account their joint needs and resources. These will almost definitely change in the event of a separation. Long term earning abilities, asset splits and superannuation all come into the mix at this time.

7. Review Assets Held in Joint Names. Once a financial settlement is agreed upon, it is very important to ensure any joint ownership situations are unwound in favour of the new owner. This is particularly important with assets such as property and joint bank accounts. For example, while it might be agreed that the wife is given the family home as part of the settlement, if it is not transferred out of joint names the ownership of the property will automatically revert to the husband if the wife dies. Similarly, if you continue to use a joint bank account after separation, there is nothing to stop your former spouse from accessing the money in that account.

8. Don’t Forget Superannuation Accounts. There was a time when superannuation could not be included in a calculation of joint assets. Family law now recognises that it is part of the asset pool and that often one partner has been able to accumulate a lot more superannuation due to having an uninterrupted working life.

9. Review Wills and Estate Planning. Agreeing to a financial settlement will not automatically cancel any estate planning that is in place. Wills and Powers of Attorney need to be reviewed, as do any binding nominations of beneficiaries on your super fund and any other insurance policies

10. Centrelink Status Needs Updating. If you are in receipt of any social security benefits, then these need to be assessed and recalculated in relation to your new living arrangements.

Source: Advising Couple on Separation and Divorce, Kaplan Professional 2017, by Gary Spencer (Spencer Private Wealth) and Melanie Palmer (Palmer Legal).

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