“Yes I’m miserable! But I can’t afford to leave him. How would I survive?!”
Sound familiar? Perhaps you’ve heard someone you know and care for express something in similar frustration. Or maybe you hear the echo of that selfsame little voice in your head, and you’re afraid to tune into how you really feel about your relationship.
In May, Bayside Family Law Solutions shared an interesting article from the UK, citing a survey finding that nearly 1 in 3 Britons fear they would end up homeless if their relationship broke down. It’s an alarming statistic. There is no doubt that financial stress can be a consequence of relationship breakdowns, and that the fear of a dire financial future post-separation is real for many people. At Bayside Family Law Solutions, we have observed this worry in clients who find themselves in a variety of different circumstances.
Tales from the trenches
For our client Meg*, the fear of losing her reasonably affluent lifestyle and falling into the trap of being asset rich and cash poor was of grave concern.
Meg had recently separated from her husband of 25 years, and between them they owned a number of investment properties in addition to a very comfortable family home in Bayside Melbourne. Following their separation, the parties had been negotiating their financial arrangements privately, and matters had progressed to the point where they had all but reached agreement on the final terms of their settlement.
Meg had planned on retiring in around seven years, and was relying on accessing her substantial superannuation savings when the time came. But in the meantime, she needed to find a way to bridge the gap between her plentiful assets and poor cash flow. At our recommendation, Meg met with a financial planner and explored options to structure the settlement in a way that catered to her needs, both for the present time and also for when she became able to access her super. Both Meg and her ex were happy with the revised proposal and final consent orders were rapidly drafted and then approved by the court.
For other clients, their fear is more than just the worry of dividing shared assets – they’re concerned about how they will be able to financially cope on their own. This is particularly worrisome for individuals who are leaving relationships where the other party assumed complete responsibility for managing joint finances. Often we meet clients who have little to no understanding of their joint assets and the level of debt they may be in. They do not know how much income their partner makes, or how the income is spent. It’s not uncommon for one party to have no experience managing income or budgets.
Irrespective of your particular circumstances, there are a number of steps you can take in preparation for your post-separation financial future.
Become financially literate. Now.
Make it your business to find out your current financial position, including that of your partner. Make sure you know exactly which assets you both own, and the current debt attached to these. Become familiar with terms like ‘offset account’ and ‘balanced portfolio’. If your partner has a business, find out if there is a trust attached to it – and if you are a beneficiary of that trust. Find out how this could affect your financial position.
Create a budget, and stick to it. If you’re concerned about a financial crisis, seek help.
There are an array of free services that can provide assistance, including the Financial & Consumer Rights Council which is a free, independent financial counselling service for people with low incomes or those who are experiencing financial crisis. The website includes a handy counsellor directory. Financial Counselling Australia offers simple step-by-step guides which explain how to fix common debt conundrums, in addition to providing access to the National Debt Helpline on 1800 007 007 where you can talk to a free phone financial counsellor from anywhere in Australia or arrange free face-to-face financial counselling. The MoneyHelp website has free information on managing bills and debt.
Seek the assistance of a private financial advisor and/or accountant.
Being financially literate and across your outgoings is not only vital for life post-separation – it will also make you feel more confident when negotiating property settlements.
At Bayside Family Law Solutions, we work closely with you to help negotiate a settlement that enables you to thrive financially in your new life post-divorce. Need more support? We have a network of talented financial planners, advisors and accountants we will happily refer you to. Just ask.
*Alias names have been used to protect client identities.