MY MONEY

The money questions you need to ask when getting a divorce

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Breaking up takes an emotional toll but it also leaves you with some major financial decisions - decisions that can have a long-lasting effect on financial security and wellbeing.

Myths such as 'the woman always wins' or 'assets are split 50/50' leave people thinking that they're entitled to the assets they brought into the relationship, along with gifts from family.

Starting out with incorrect information can set you off on the wrong foot and lead to bitter fights.

how to navigate divorce money myths

Every family and every situation is different and many factors have to be considered when coming to agreements about sharing the family wealth.

For example, disparity in income and earning potential, health, child-rearing responsibilities and age are factors that influence how the assets should be split. It is a good idea to get information from a family law specialist who can give you guidance on what to expect.

Work out the costs

It is not easy seeing your assets divided up, and you will want answers to questions such as: "Will I be able to stay in my home or be able to afford a new home?", "Can the kids stay at the same school?", "Will I have to go to work?", "Am I going to be able to rebuild my superannuation?".

A divorce financial planner can help answer these types of questions and put real numbers on the various potential outcomes. They also can help with budgets. Having a good understanding of how much you need to meet reasonable living expenses can give you control over your finances and ensure you spend money on the things you value.

Any dreams and aspirations a couple has for their children don't usually change after a separation.

Working out how much it costs to care for and educate the children will help you work out what you can afford after you separate and how these expenses will be paid.

Win a copy of Breaking Up Without Breaking Down

If either of you is on a low income, spousal maintenance may be paid while the low-income earner retrains and starts earning more. This tends to be for a short period of time only because the Australian family law system encourages a clean break between the parties rather than ongoing support arrangements.

Dealing with conflict

Grief, fear, greed, ignorance and revenge can lead to conflict during a break-up. This usually happens when one partner is focused on winning for themselves without considering the other person's needs. Sadly, the traditional family law system has nothing set in place to address these issues and it's left to the couple to explore more peaceful ways to negotiate the settlement.

Mediation can be a good option for low-conflict couples and where both people have a reasonable understanding of the family's financial position.

If there are contentious issues to be worked through, poor communication, mistrust or complex asset structures, collaborative practice would be more appropriate. In collaborative practice, the couple would have all the services they need to deal with the emotional, financial and legal issues that must be addressed before agreements can be reached.

Mediation and collaboration are non-adversarial processes that support people to make agreements that are appropriate for their family. These processes are significantly less expensive than the more traditional family law system.

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Tricia Peters has nearly 20 years' experience in divorce financial planning. She is a certified financial planner, a mediator, collaborative law financial planner and alternative dispute resolution practitioner. She served as president and director of the International Women's Development Agency for more than 20 years. Tricia spent 25 years as a lecturer at RMIT where she developed and lectured in the Bachelor of Business Financial Planning in Australia, Singapore and Malaysia. She co-authored the award-winning textbook Personal Finance.
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