One of the most important things you can do to set yourself (and your family) up for a financially secure future is to get proper advice. Do this as you are separating/divorcing and preparing for a financial settlement.
The more complex your personal situation, this advice will typically involve lawyer, financial planner, tax accountant, valuers, allied health professionals and others.
Get a good team around you to support you through; engage with them early, so you are on the front foot.
Where are you now?
Your advice team can help you to gather the necessary information, including:
- a combined balance sheet – that means what you own and what you owe
- cash flow – what you earn and what you spend currently
- what you have set aside for your future, for example in superannuation.
Document who owns what and who owes, so you understand the net BS position. Consider what your future income and expenditures will likely be. Do your homework to understand the assets/investments in the portfolio which might include property, shares, bonds, and alternatives, and the terms of any borrowings. Investigate if there are any assets, liabilities, superannuation offshore.
Research what is affordable and realistic for your future living arrangements, whether you are buying or renting accommodations.
Where do you want to be?
Being focussed on the future at an early stage can assist in negotiating a better outcome. Once you have finalised the financial settlement, unless a party has been dishonest, it’s unlikely that you will able to reopen or change the agreement. So, be sure to have thought about and discussed with your team what money you need for your future, and why you need it.
For example, if you are getting the family home and mortgage as well as the kids, but you don’t have an income to service the loan, you may have to get a job. Does that fit with your reasoning behind keeping the home OR are you better to sell and downsize as part of the settlement arrangement. Why? What if the home valuation is higher than what you can sell the property for, say in a falling market? Or, you have to capitalise the loan repayments for a period before the property sells, meaning you’ll have less in your hand once sold. Is it better to share the risk?
I’m working with a client currently who is no longer able to work due to ill health. So, ensuring she has an unencumbered home and sufficient money for future medical expenses is high on her lists of needs for the future. Her former partner is fit and able to work in the future, and why she wants to negotiate that she has sufficient to meet her future needs.
What’s getting in your way?
Don’t let doing the work or your mindset get in the way of having a bright, happy future. Build a team of specialist advisers and start early.
Consider even that if you are not controlling the household finances, you are kept in the loop right the way through the relationship as a strategy to ensure you can stand in your own shoes financially if the time comes that you need to stand alone.
This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.