6 essential steps to protect your finances after separation
It has been a challenging few months and COVID-19 has put significant strain on many relationships. If you are facing the trauma of separation, it’s likely you will be feeling overwhelmed, confused and uncertain about the future. However, there are steps you can take right away to help you feel more in control, move forward faster and mitigate complications down the track.
1. Get informed
Although separation is an emotionally charged time, facing your financial situation head-on is essential.
Having a clear understanding of your assets, liabilities and cashflow make it much easier to move on with building your own life. 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 children’s education.
Being well-informed and honest with yourself will also allow you to make decisions on any necessary changes to your income. Perhaps you may need to return to the workforce or increase the hours you are working.
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 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. 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 about as we hope never need it. However, it’s important that you revisit your insurance policies as they will have authority settings which 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
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 to 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.
It’s important to 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.