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How to handle your finances after a break-up

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Once your relationship is over, probably the last thing on your mind is sorting out the finances. But understanding how your money is managed and how your finances are arranged is vital.

Ideally you want to be on friendly terms with your partner and be able to sit down to work out the finances. Being reasonable and collaborative is going to be much better in the long run than being acrimonious.

Sometimes this means compromising. It can help speed up a property settlement rather than letting it drag on.The quicker it settles, the earlier you can start a new life.

finances after a break-up

In the meantime, as soon as the relationship ends, follow these steps:

  • Close joint bank accounts. You need to separate your money so your partner can't access it.
  • Cancel the credit cards. If your partner uses a card that is in both your names, you are liable for half the debt and interest.
  • Open your own bank account.
  • Go through all your finances. It is much easier to access documents when you are together than after you separate.
  • Gather all your records, including your original birth certificate, passport and children's birth certificates, plus all your records for the bank, tax, accountant, super fund, family trust and home accounts.
  • Start thinking about who gets what. You will need to find out the value of the home (call real estate agents), investments (ask the accountant or financial planner), superannuation (check with the fund) and cash, and note any debts.
  • Check your super arrangements. If you have set up a self-managed fund with your partner, you may not want to keep paying into it while it is sorted out. Consider setting up your own fund to capture your employer contributions.
  • Avoid making any big financial decisions until you know where you stand. Don't sign up for any property deals or investments for at least 12 months.
  • It is a myth that all assets are divided equally in divorce or a de facto breakup. You must be able to show what you have contributed to the relationship and you need a record of all your expenditure and income - for example, if you bought items for the house or paid for renovations. Take records of earnings. Go back to the beginning of the relationship if you can.
  • Check whether you are entitled to any social security payments if you become a single-income earner.
  • Keep up payments to your mortgage and other bills. It is crucial to continue to have a clean credit history.
  • Mark the date of your separation. Keep emails or other records. You can legally get divorced after 12 months' separation.
  • Get expert help. If you need legal or financial advice, ask for recommendations from friends and relatives. See a few experts before you decide which one to engage. Ask about fees and an estimate of costs. Be prepared for some big legal bills.
  • Develop a financial plan. Being single has different financial implications. It is a good idea to curb your spending.
  • Protect what you own with an estate plan. You don't want to leave everything to your former partner, so it is time to change your will and your nominated beneficiary for your super fund. You will need to work out whether to set up a family trust or testamentary trust to provide for your kids.

Who's entitled to claim

You don't have to be married to be able to make a financial claim on your partner's assets. You only need to prove that you have been in the relationship for at least two years; you have a child together; a sexual relationship exists; the extent of the financial dependence; and whether you own property together.

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Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
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