6 essential steps to protect your finances after separation
Separation from a long-term relationship can be traumatic and unexpected. Even the most amicable separation can come as an unexpected shock and is not ever something for which we plan. The emotional fall-out can be difficult to predict and can leave you feeling overwhelmed, confused and uncertain about the future. There are however a few steps you can be taking right away to help you move forward faster and mitigate complications down the track.
1. Get informed
Facing your financial situation head-on is essential. Having a clear understanding of your assets, income, liabilities and debt make it much easier to move forward to start creating your own life. It is also extremely important to have an accurate picture of your cash flow. Only when you have all of this information can you begin to address important issues such as new living arrangements and managing expenses such as mortgages, rent and child care fees. Being honest with yourself and well-informed on your financial circumstances will also allow you to make prudent decisions regarding any changes you may need to make to your income. Will you need to return to the workforce or increase the hours you already work? 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 future income there rather than to a joint account. Contact your financial institution and notify them of your separation and change any joint accounts to “both to sign” rather than “any to sign” or, if possible, make it a priority to discuss with your ex-partner how to divide the money and close the account. Make sure these changes also include any loans you may have together to prevent your ex-partner from drawing 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 and keep a close watch on future transactions. Finally, remember any supplementary lines of credit that are in both your names and open to your ex-partner. Make these a priority in your separation discussions and either close the accounts or impose a limit that you are both happy with until a more permanent agreement can be reached.
3. Update your insurance
This aspect of married life is often forgotten as we hope never need it. However, any insurance policy will have authority settings which will need to be revisited. 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
It is most likely that when you wrote your will, you nominated your partner to inherit everything you own. Chances are you will feel differently about that after separating from them and will need to make changes. Bear in mind that this not only applies to your Will, but possibly to other friends and family if they have left things to you as a couple. At this stage, it would be a good idea to revoke any power of attorney that your partner has over you and to review any binding or non-binding nomination for your superannuation.
5. Restructure your business
Family owned businesses and family trusts often have both partners as directors or shareholders, even if one person has very little to do with the running of the business. It is important to revisit this because, in the eyes of the law, your partner may have as much legal and operational control as you and they could potentially cause serious problems down the track. It is necessary to revoke them as Director as soon as possible and to seek legal advice to move shareholdings.
6. Secure your digital footprint
In a trusting relationship such as marriage, many people have no secrets regarding passwords and digital security. Now is the time to change your passwords and to ensure you are not using the same password for multiple institutions. Also remember that shared computers may give your ex-partner access to many password-secure sites without having to have known the password previously. Take the time to secure your digital footprint so that you and only you have access.