Navigating Financial Waters: Your Divorce and Separation Financial Checklist

Divorce and separation are tough. There’s no sugar-coating it. Beyond the emotional rollercoaster, the financial side of things can feel like a tidal wave about to crash. But, just as you can’t navigate the Great Barrier Reef without a map, you shouldn’t navigate a divorce without a solid financial checklist. So, let’s dive into this comprehensive guide that will help you stay afloat and even sail smoothly through these stormy waters.

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1. Understand Your Financial Situation

Before you can figure out where you're going, you need to know where you stand. Start by assessing your current financial situation:

• List Assets and Liabilities: Make a detailed list of all assets (property, savings, superannuation, investments) and liabilities (debts, loans, credit cards). Include joint assets and individual ones.
• Income and Expenses: Track your income streams and monthly expenses. Be honest and thorough. The more accurate your numbers, the better your financial plan will be.
• Credit Score: Check your credit score. It might not seem like a priority now, but your credit health will impact your ability to move forward, whether that’s renting a new place, securing a loan, or just ensuring you’re on solid ground.

Knowing your financial position gives you a clear picture of what’s at stake and helps you make informed decisions during the separation process.

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2. Secure Your Finances

Once you’ve assessed your financial landscape, the next step is to secure your finances. Here’s how:

• Open Individual Accounts: If you haven’t already, open your own bank accounts. This includes a transaction account, savings account, and possibly even a credit card. Keep in mind that closing joint accounts should only happen once both parties have agreed and arrangements are made for any direct debits.
• Change Passwords: Change passwords for all financial accounts, including online banking, PayPal, investment accounts, and even eBay. Make sure your financial data is protected.
• Direct Debits and Automatic Payments: Review any direct debits or automatic payments. You may need to update or cancel them depending on your new financial situation.

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3. Update Legal Documents

Legal documents will need a refresh to reflect your new circumstances. Don’t overlook these:

• Will and Power of Attorney: Update your will and power of attorney to reflect your new life situation. Consider who will manage your affairs if something happens to you.
• Superannuation Beneficiaries: Update the beneficiaries on your superannuation. This is often overlooked but could have significant implications if left unchanged.
• Insurance Policies: Check and update the beneficiaries on any life insurance policies. You might also want to review your coverage to ensure it meets your current needs.

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4. Budget for the Future

Now that you’ve got the basics sorted, it’s time to plan for your financial future. A fresh start deserves a fresh budget:

• Adjust Your Budget: Your income and expenses are likely to change. Adjust your budget accordingly. Make sure to include all new costs, like rent or mortgage payments on a single income, utility bills, groceries, and childcare if applicable.
• Emergency Fund: If you don’t already have one, now’s the time to build an emergency fund. Aim for at least three to six months of living expenses. This cushion will give you peace of mind as you adjust to your new financial reality.
• Consider Financial Advice: A financial advisor can help you develop a long-term strategy. The Finance Insight Report by Voosh Finance is a great place to start. It’s FREE and provides personalized finance advice tailored to your situation.

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5. Plan for Child Support and Spousal Maintenance

If children are involved, child support and potentially spousal maintenance (alimony) will be a part of your financial discussions:

• Calculate Child Support: Use the Australian Government’s Department of Human Services Child Support Calculator to estimate payments. This helps in understanding what you might need to pay or receive.
• Spousal Maintenance: Consider if spousal maintenance is applicable. This depends on factors such as income disparity and the length of the marriage.

Remember, child support and spousal maintenance aren’t just numbers on a page—they're commitments to ensure everyone involved has what they need.

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6. Divide Assets and Debts Fairly

The division of assets and debts can be one of the most contentious parts of a divorce:

• Property Settlement: Engage in discussions or negotiations about how to split assets, including the family home, investments, and even sentimental items. Be prepared to compromise, but also protect your interests.
• Superannuation: Understand how superannuation is treated in a divorce. This can be split as part of the property settlement, and it’s crucial to know how much each party is entitled to.
• Debt Management: Discuss and agree on who will take responsibility for any outstanding debts. Consider closing joint credit accounts to prevent further liabilities from accumulating.

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7. Consider Tax Implications

Divorce can have significant tax implications. Here are some things to keep in mind:

• Capital Gains Tax (CGT): Property and investment transfers might trigger CGT. It's crucial to understand these tax implications to avoid surprises down the track.
• Income Tax Adjustments: Your tax situation may change if you move from a dual to a single income household. Update your tax file number declaration and consider how this impacts your annual tax return.
• Child Support and Family Tax Benefits: Understand how receiving or paying child support affects your eligibility for Family Tax Benefits and other government assistance programs.

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8. Take Care of Your Mental Health

Lastly, remember that your financial well-being is closely linked to your mental health:

• Seek Support: Don’t hesitate to seek emotional support from friends, family, or a professional. Handling finances during a divorce is stressful, and a good support system is essential.
• Self-Care: Engage in activities that promote your mental well-being. Whether it’s exercise, meditation, or simply taking time for yourself, these practices will help you maintain a clear head as you navigate this transition.

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9. Utilise the Finance Insight Report

As you chart your course through separation and divorce, remember that you don’t have to do it alone. Voosh Finance’s Finance Insight Report is a FREE tool that provides personalised advice to help you make the best financial decisions based on your current situation. Whether it’s understanding how to budget on a single income, navigating child support, or just getting your finances in order, this tool is designed to guide you through every step.

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Wrapping Up

Divorce and separation are challenging enough without the added stress of finances. By following this checklist, you can take control of your financial future and ensure that you're prepared for whatever comes next. Remember, a little preparation now can save you a lot of heartache later. And don’t forget to tap into resources like the Finance Insight Report—a free, personalised tool that can help you through this transition with tailored advice that suits your needs.

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