Get some certainty in this uncertain process with the basics every woman should know about divorce and money.
Divorce is a significant life change that can bring emotional and financial challenges. While the emotional aspects are well known, the financial ones are often overlooked. As a money educator, I’ve seen many women face unexpected hurdles post-divorce because they weren’t prepared financially. If you’re considering divorce or in the process, here are three crucial things every woman should know before finalising the split.
Have you had an experience with a superfund recently? Complete our 5 minute superannuation survey and you’ll go into the chance to win our $1,000 Quarterly Prize Draw.
Complete the survey here.
Understand Your Financial Position Thoroughly
Before you start the divorce process, it’s essential to have a complete understanding of your financial situation. This includes knowing your assets, debts, and income sources. Many women may not be fully involved in household finances, but this is the time to get clear on everything. Gather information about joint bank accounts, investments, retirement savings, superannuation, and any debts such as mortgages, credit cards, or personal loans.
It’s also worth considering how your income will change post-divorce and what this means for your lifestyle and future financial goals. Speak to a financial adviser to get professional advice on how to restructure your finances, understand your entitlements, and plan for life after the split. You can start your research at the Financial Planning Association of Australia (FAAA) website at www.faaa.au or use resources like MoneySmart at www.moneysmart.gov.au.
Superannuation Can Be Split—Don’t Overlook It
Superannuation is often a woman’s biggest financial asset, yet it can be overlooked during divorce proceedings. In Australia, super can be split between spouses as part of a property settlement, and it’s vital to consider this, especially if you’ve taken time off work to raise children.
Make sure you have a clear understanding of both your own super and your spouse’s. You’re entitled to seek a fair share, particularly if you’ve contributed indirectly to your partner’s super by supporting the household. A good family lawyer can help ensure superannuation is included in your financial settlement, which will impact your long-term financial wellbeing. For more information on superannuation splitting laws, visit www.ato.gov.au or www.familycourt.gov.au.
Tax Implications of Property and Settlements
Divorce settlements can come with tax consequences that are easy to overlook. Whether you’re dividing property, investments, or receiving lump sums, there can be capital gains tax implications or other financial considerations that may affect your overall settlement.
It’s crucial to get professional tax advice to ensure you understand any liabilities. For example, if you’re receiving a family home as part of the settlement, but your spouse is keeping other investments, there might be hidden costs such as future capital gains tax. It’s important to ensure the division of assets takes these long-term factors into account, not just the immediate payout. For detailed information on tax and divorce, you can visit the Australian Taxation Office website at www.ato.gov.au.
Divorce is a time of huge change, but being financially prepared can make the process smoother and help you secure a stable future. By understanding your financial situation, ensuring your superannuation is part of the settlement, and being aware of tax implications, you’ll be better equipped to handle what comes next. Take the time to seek out expert advice—it can make all the difference.
For more money tips, here is everything you need to Know About Money Before Getting Divorced. And prepare yourself with the Three Biggest Money Regrets for Getting Divorced In Your 50s.
