For recently divorced couples, this marks a significant turning point in their lives, not only emotionally but also financially.
Untangling joint finances and establishing new financial independence can be daunting, especially for couples who have shared their financial lives for an extended period.
This concise guide aims to address the most common financial questions and concerns faced by recently divorced or separated couples, providing valuable insights and practical advice to help them navigate this challenging transition.
Understanding Your Financial Landscape
The first step towards financial clarity for recently divorced couples is to gain a comprehensive understanding of their current financial situation. This involves gathering all relevant financial documents, including bank statements, investment portfolios, credit card statements, and insurance policies. Carefully review these documents to identify assets, debts, and any ongoing expenses.
Assets and Debts: Division and Distribution
One of the most crucial aspects of financial separation for recently divorced couples is dividing assets and liabilities equitably. Assets may include the marital home, cars, savings accounts, investments, and retirement accounts. Debts may include mortgages, car loans, student loans, and credit card balances.
The marital home is often the most significant asset in a divorce or separation. Couples can choose to sell the home and divide the proceeds, have one spouse buy out the other’s interest, or continue co-owning the property.
Retirement accounts, such as superannuation in Australia and KiwiSaver in New Zealand, are also considered marital assets. These accounts can be split through a court order or through an “in-service distribution,” which allows a portion of the account to be transferred directly to the non-spousal beneficiary.
Shared debts must be divided equitably. This may involve refinancing the debt in one spouse’s name or negotiating a payment plan with creditors.
If children are involved, child support arrangements must be established. Child support is a financial contribution made by one parent to the other parent for the ongoing care and expenses of their children. Child support calculations consider factors such as the income of both parents, the number of children, and the child’s living arrangements. Remember that there could be a mental and emotional effect on children of parents who are recently divorced couples.
Property division involves dividing the marital property, including real estate, personal belongings, and other assets. The goal is to achieve a fair and equitable distribution of property.
Essential Financial Tips for Recently Divorced Couples
For recently divorced couples, divorce or separation can be a daunting and emotionally charged experience. While navigating the legal and personal aspects, it’s crucial to prioritise your financial well-being. Here are some essential tips to help you gain control and build a secure future:
Take Stock of Your Finances
Gather and securely store key financial documents, including bank statements and tax returns, in both physical and digital forms.
Catalog your assets, such as property and investments, and liabilities like loans and credit card debt.
Calculate your total income, considering sources like salary and support payments.
For recently divorced couples, organising your financial documents, assets, liabilities, and income is a crucial step in managing your finances effectively. I know from personal experience that it is often time-consuming especially when your time and energy is being pulled in so many directions.
However, it’s important to seek professional legal advice to ensure you’re making the best decisions for your unique situation. In my situation, being forewarned was forearmed especially when my ex did his best to pull the wool over my eyes.
For women in New Zealand, the service JustAnswer offers 24/7 access to legal advice, providing a convenient and reliable resource for any additional guidance you may need.