It’s not common when first getting married to think that one day you may be getting a divorce. Though, unfortunately, some marriages will end in divorce, so it’s important that both parties are aware of how a split can impact their finances.
It’s very common to forget about the practical ramifications of a break-up and to focus solely on the emotional. When there is a divorce or separation, any debts that you have accrued during your relationship don’t just disappear as much as we would like them to. Even though financial issues get pushed to the back of the sorting pile for a while, it is something that you can’t ignore long term.
We understand that the end of a relationship can be one of life’s toughest events – but we have helped clients of ours through the same situation. So, please remember, you are not alone here! There are many different forms of support out there for you to take advantage of, and make sure that you do.
Here is a financial checklist of things that you need to do after a split up:
- Close off any joint accounts/credit cards
- Work out a budget
- Update your rental/mortgage agreement
- Do a financial stock-take
- Record your turning points
- Seek legal advice
Get the right legal support
There are many lawyers who specialise in family law who can provide you with legal advice. They will tell you whether you are eligible for legal aid and help you set realistic timelines and expectations for your property settlement.
Tell someone about the emotional weight you’re carrying
You do not have to do this alone. It can be harder to make the right decision, or any decision when you are feeling sad, hurt or angry. Talking to someone about how you are feeling can help you have a clear mind in order to make necessary decisions. If you really are finding it tough to make a decision, you could access a Family Dispute Resolution mediator to assess whether both parties are in a position where they are ready to negotiate on money matters.
How to sort out the finances after a break-up
Most importantly… Make sure you get the right advice!
Be sure to talk to your broker/lender to find out the current state of your mortgage. Find out what your options are regarding the repayments – are you able to defer payments? If you have the option to do this it may be a good idea to give you more time to get back on your feet. They can also help you review your finances, before you decide if you are in a position where you are able to refinance and take on the mortgage yourself.
Your assets will be divided so it’s important to figure out what each party is entitled to. With the right professional advice, you can figure out your assets, liabilities and whether or not you have to sell the property or if one party is going to take on the mortgage themselves. To help the finance specialist assess your situation make sure you have all your documentation – bank statements, tax return, superannuation, payslips etc.
Should you sell the property, sell to your partner, or buy their portion?
You may be lucky enough to have an agreement to sell your property, divide the amount and leave it at that.
Firstly, you need to find out the value of your property – this can be done by getting a property appraisal via real estate agency or specialist agencies that may operate in your area.
This will allow you a variety of options:
- Sell the property and split the profits
- Sell your share of the property to your partner so they own it
- Buy off the property from your partner and own it yourself
It isn’t always easy though and sometimes isn’t a 50/50 split, so if there’s a disagreement about how to split your assets (and liabilities) you may need to consider getting legal advice or an expert involved to help resolve this.
If you decide you want to buy your partner out, it may be possible for you to refinance the mortgage and take it on yourself.
Although, this is dependent on your current income and expenses – if you are unsure about if you will be able to refinance and take on the mortgage yourself, we can help you out with that.
It doesn’t always have to be a difficult process
It’s a tough time trying to figure out who gets what but if you find yourself the correct advice regarding your finances, the break-up process doesn’t have to be a tough one.
If you are in a similar position or know someone who is, get in contact with us today, we can help you decide what the right option will be for your specific circumstances.