Financial Advice Blog

6 essential steps to protect your finances after separation

If you are facing the trauma of separation, you'll likely be overwhelmed and uncertain about the future. These steps will help you feel more in control, move forward faster and mitigate complications down the track.

If your relationship is over, you’ll likely be feeling sadness, overwhelm and uncertainty about the future. Handling money matters is probably the last thing you feel like doing while you’re dealing with the trauma. However it’s important that you don’t procrastinate protecting your finances after separation.  If you do, you’re leaving yourself financially vulnerable and you could face complications down the track.  Taking steps to protect your money now will also help you to feel more in control of your future and enable you to move forward faster.  Here we take you through step by step what you need to do to protect your money and secure your financial future.

1. Get informed

Although separation is an emotionally charged time, facing your financial situation head-on is critical for your financial wellbeing.  It will also make it much easier to move on with building your own life.

The first step to protecting your finances after separation is to get a clear understanding of your assets, liabilities and cashflow.  Our financial position and budget calculators can help you do just that.

After a separation your household budget can take a massive hit, especially if there are children involved.  It’s only when you have this information that you can begin to address important issues such as new living arrangements and managing expenses such as mortgages, rent and children’s education.

Living expenses are usually much less when you live together as a couple sharing the costs. Paying the mortgage or rent by yourself can become challenging and you may need to make some tough decisions on your expenditure.

Being well-informed and honest with yourself also allows you to make any necessary changes to your income. Perhaps you may need to return to the workforce, increase the hours you are working or consider a side hustle as an additional income stream.  Armed with accurate information, you are one step closer to a financially stable future.

2. Separate your money

It is a good idea to separate financially as soon as possible, even if you and your ex-partner are still on friendly terms.

Open up your own bank account and direct all your future income there, rather than to a joint account.

Contact your financial institution to notify them of your separation.  Change any joint accounts to “both to sign” rather than “any to sign”.  If possible, make it a priority to discuss with your ex-partner how to divide the money and close your joint accounts. Make sure these changes also include any loans you may have together.  Otherwise your ex-partner could draw down on the loan without your consent.

Any finances that are not easily separated need to be closely monitored. It would be prudent to print off statements, take photos and keep a close watch on future transactions.

3. Update your insurance

This aspect of married life is often forgotten about as we hope never need it. However, it’s important that you revisit your insurance policies as they will have authority settings and beneficiaries that will need to be updated.

With life insurance policies, the beneficiary will normally be your partner and you will need to consider if you want this changed.

4. Re-write your will and other legal documents

It is likely that you nominated your partner to inherit everything you own in your will. Chances are you will want to make changes after separating.

Bear in mind that this not only applies to your will, but possibly to other family members’ wills if they have left things to you as a couple.

Don’t forget to also review any binding or non-binding nomination for your superannuation in the event of your death.

It is also sensible to revoke any power of attorney that your partner has over you.

5. Restructure your business

Family-owned businesses and family trusts often have both partners as directors or shareholders.  This is often still the case even if one person has very little to do with the running of the business. However, in the eyes of the law, your partner may have as much legal and operational control as you.

To avoid problems down the track, revoke their directorships and seek legal advice to move shareholdings.

6. Secure your digital footprint

In a trusting relationship like a marriage, many people have no secrets regarding passwords and digital security.  But just like it’s important to protect your finances after separation, it’s critical you secure your digital footprint too.

Take the time to change your passwords as a matter of priority.  It’s also good practice not to use the same password for multiple institutions.  There are loads of apps and tools available to help you do this as efficiently as possible.

Remember that shared computers may give your ex-partner access to many password-secure sites without having known the password previously.

Further help

Divorce and separation can create enormous financial pressure at an already highly distressing time. Many divorced or separated couples are unprepared for the financial realities of single life and need help to get back on their feet.

A financial adviser can help by:

  • Assisting you to manage your cashflow
  • Helping you to identify new financial goals
  • Formulating a plan for a financially independent future through appropriate investing
  • Securing your future with necessary insurances
  • Protecting your loved ones by updating legal documents
  • Taking the emotion out of big financial decisions so you don’t make mistakes that negatively impact your financial future.

If you prefer to go down the DIY route, we have a Financial Planning for Divorce and Separation ebook that may help.  This ebook provides an overview of common financial issues that arise through divorce and separation and how they can be managed.

The Australian Government has also produced a checklist for divorce and separation.  Please note that this checklist only covers the basics.  It’s important to pay consideration to broader financial matters such as insurances, wills and estate planning and any businesses as well.

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