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February 16, 2017
Financial Issues Facing Divorcing Couples (Part 1)

Divorce has a tendency to permeate the social, familial, emotional, financial and legal spheres of people’s lives, causing them to experience a great sense of inner and outer turmoil in all these areas and more.

Two things invariably play upon the minds of partners going through a divorce: their finances and their children. However, it seems worrying about money seldom prevents many soon-to-be divorcees from making financial mistakes.

And considering that it takes divorcees five years to recover financially — or more by some accounts — it makes perfect sense to prioritise your financial well-being.

Here are a few of the most common financial mistakes people make during divorce, and how to give yourself the best chance to avoid them.

1. Assuming a Fair and Equitable Split Means 50/50

Parties on both sides of divorce often make the mistake of assuming that an equitable split will result in an even 50/50 split. In Australia, this is not the case.

Every divorce is different, involving a unique sets of circumstances around separate and jointly-owned property, superannuation, health, age, income,

Someone is always blindsided, so let go of your emotions and think level-headedly.

2. Not Reviewing Your Own Financial Documents

Divorce is becoming increasingly complex with couples divorcing later in life after accumulating more in the way of assets and wealth.

Calculating a property settlement requires you to be aware of where money has been spent, and being able to produce a record of it. Review your documents so you can plan ahead and better prepare your financial strategy for divorce.

3. Not Insisting on Seeing Your Spouse’s Financial Documents

Spouses must not conceal their true income or hide assets from one another during divorce. This is an important step to ascertain whether the figures shown on tax filings, on BAS statements or in bank accounts are in fact accurate.

If your spouse performed the majority or all of the accounting, you should have your lawyer request these vital financial documents to prevent any monies from potentially going missing.

4. Attributing Too Much Emotional Value to Assets

For every asset that can be quantified in monetary terms, like vehicles or the matrimonial home for example, there will be items of a sentimental nature that become the subject of heated discussion and much debate.

Spouses need to be cautious of spending time and money arguing over such items. Going that one extra step to have these assets appraised is one way both parties can know what to expect from the divorce settlement.

This process can take some time and can be difficult for some, but without accurate assets values there exists the possibility that you may be leaving money on the table.

5. Prioritising Your Children Over Your Financial Security

If keeping your children in attendance at a private school or in expensive extracurricular activities will come into conflict with your ability to provide for your children in other areas, have a lawyer look over the settlement.

By doing your due diligence, you should be able to avoid making costly financial mistakes.

Contact Sue Holgate, LBH Partner on sholgate@lbandh.com.au for more information, or for advice and representation during this difficult time.