Ask Paul: We're separated but still have joint finances
Q. I am 46 and have recently separated from my husband. We have two children aged six and nine who are still living with me in the family home but who will also be spending plenty of time with their dad once he moves into new accommodation.
The separation is amicable and at this stage all our finances are still shared.
I earn about $80,000 a year and my husband about $90,000. My super is around $110,000 and my husband has about $135,000.
Our family home is worth about $975,000 with a mortgage of $275,000. We have two investment properties: one recent purchase worth $315,000 with a mortgage of $285,000 and the other worth about $750,000 with a mortgage of $500,000. This second property is neutral after tax, and the plan is for my husband to move into it, which will leave us out of pocket about $25,000 a year.
All loans are currently interest only, with an offset account attached to our principal place of residence.
We have access to about $335,000 in equity in our home loan as a buffer/investment money, with which we were planning to buy another property. But that is now not going to happen.
What should my focus be now? Is investing some of the $335,000 in shares a good or bad idea? Or do I need to play it safe and make some changes. - Kim
A. Sorry to hear about your separation Kim but glad it is amicable. Quite frankly, I don't want you to do anything right now.
Amicable is a great thing in a separation but I certainly do not know, and you may not know at this stage, whether this a temporary situation or whether it will move to a divorce and a financial settlement.
If the separation is permanent, it will be hard for you to make investment decisions until you have a financial settlement. Unfortunately, things do not always go smoothly as assets are separated.
Equally, assuming you will keep your finances shared in a longer-term separation does not seem realistic to me. If either of you "re-partner" it could be rather complex.
Personal relationships come before money.
Fortunately, you have been very successful at building assets, meaning both of you would be in a strong position. But unless I am missing something, my view is to sort out the longer-term nature of your relationship first.