Are you wondering how to separate financially from your spouse?

Our family mediator in Perth, Ian Shann, has put together some tips on effective ways to separate financially from your spouse.

How To Separate Financially From Your Spouse

Make A Schedule Of Assets & Liabilities

The first thing you need to do is to take stock of your financial situation by making a list of all your assets and liabilities.

Assets belonging to you and your ex, including all bank accounts, investments, properties, vehicles, business interests, household contents, other valuables, and superannuation entitlements. Liabilities can include mortgage bonds, personal loans and debt, including credit cards.

This exercise is of vital importance when it comes to dividing the asset pool as part of your overall divorce settlement.

Assess Your Current Spending

The next step would be to assess your current spending habits, in order to evaluate if or by how much you will need to adjust to your new lifestyle.

Work out what your current income and expenses are and then create a separate list of essential and luxury expenses. This will help you work out what you can cut back if you need to reduce your outgoings.

Create A New Budget

Once you’ve assessed your current income and expenses, you’ll need to work out what your future income and expenses will be.

Do you need to work less to care for the children? Do you need to work more to cover your essential expenses?

If you know whether you’ll be staying in your current home or moving elsewhere, consider how this will impact your financial situation.

With many divorces, there may come a drop in income and an increase in living expenses, often requiring some serious financial adjustments for both spouses. Now is the time to create a new budget, to enable you to live within your means.

Seek Professional Tax & Financial Planning Advice

Going through a divorce is a taxing and emotionally draining process at the best of times, often requiring you to make big life decisions under pressure.

Making a quick decision, like putting your home on the market or transferring assets in someone else’s name during this period is easy and, without proper consideration and advice, can result in serious implications later down the line.

Seek professional legal, tax and financial planning advice before making any such important decisions.

Do this as early as possible, so you can have a clear vision of how to deal with what lies ahead.

Split Your Bank Accounts

Most couples have shared bank accounts with both having signing rights. If that is your case, notify the bank and considering splitting your accounts.

If you have joint credit card debt, you’ll need to agree what portion you are each responsible for, and split the debt accordingly.  The same should apply to any shared loan agreements you may have.

Change Your Passwords

Changing passwords and pin codes should be done as a matter of urgency, no matter how amicable your separation may seem right now. Things can change very quickly.

For peace of mind, passwords and pin codes to online banking accounts, phone or tablet, computer, email, should be changed, the sooner the better.

Keep A Record Of Your Finances

From the moment you separate, you need to keep a detailed record of your finances and your assets.

Remember, your assets will form part of the asset pool that is to be divided. So keep a close eye on your finances, in case assets are being disposed of or money is being withdrawn from bank accounts. 

Once assets are removed or money has been spent, they can be difficult to recover which can have a significant effect on your share.

Prioritise Your Property Settlement

It’s worth noting that the value of your asset pool is based on the date that your property settlement is finalised, not when you separate. This will include all assets and income you acquire after you have separated.

It therefore makes sense for most separating couples to prioritise your property settlement and not delay unnecessarily.