Paula Phelan is a Family Lawyer with Specialist Accreditation in this area from the Queensland Law Society. She has been a lawyer for 26 years and is the director of Phelan Family Law, a Rockhampton legal firm specialising in Family Law only.
How to remain financially protected through a separation?
When separating, untangling your money or responsibilities from your ex-partner can be quite messy.
Common things such as home loans or joint bank accounts can make an ‘easy split’ much more complicated. In fact, some institutions such as banks, for example, require a binding agreement to be in place before they will assist any person in taking names off of accounts or seeking to refinance mortgages.
It’s well understood that still being tied to someone you are no longer with can have a significant impact on your emotional well-being.
However, it can also leave you exposed or vulnerable to that person financially. When a separation involves high emotions, with either party experiencing feelings of betrayal, hurt, loss of trust or wanting vengeance, it can create an unsavoury situation.
There can be real and significant consequences from the actions of others; ranging anywhere from a bad credit rating, losing assets, or to even losing financial security to meet your living expenses.
It’s important, therefore, to be proactive and mindful of your financial ties. A couple of things worthy to take into consideration when separating could be:
· Cancelling joint credit cards
· Keeping documents of joint assets in a safe place (consider an address other than your home)
· Make copies of important documents: any contracts of sale, superannuation statements of both parties, wills etc
· Open a bank account in your sole name (consider doing this before separating if possible)
· Organise with your banks to receive joint correspondence on all the accounts. Contact any other institutions that may also be relevant.
· If there are accounts with excess funds, a home loan with a re-draw or offset facility or a credit card that cannot be closed, consider contacting your banks to freeze or introduce a ‘two-to-sign’ condition.
· If you are concerned that assets may disappear, start a record of the assets or take photos. Taking photos is always helpful in most cases, particularly if you move out of the home and need to collect belongings. Memories can fade.
· Maintain your financial obligations. Make sure you continue paying your expenses, they don’t disappear when you separate. If you’re having conflicts with a partner who is no longer contributing seek legal advice.
· Consider terminating any power of attorney you may have with your ex-partner, updating your will, reviewing your super beneficiary statement or insurance covers as soon as possible also. These are often overlooked and can lead to disastrous situations.
When beginning to separate your financial responsibilities, it’s important to consider formalising the agreement. ‘Handshake’ agreements or any other informal arrangement is not recognised by the court and can leave you open to a property settlement claim years down the track after you may have acquired new assets.
Even if you are able to ‘split’ your financial ties with your partner amicably and easily, you should consider ensuring that agreement is binding.