SEPARATION, DIVORCE AND FINANCIAL PLANNING: What You Need To Know
My financial advisers in their recent newsletter provided advice to their clients in regard to a separation in their relationship. The financial adviser wrote, “It is an unfortunate fact of life that couples will separate and even divorce. The financial adviser went on to say that their advisers have dealt with these difficult issues and have become sensitive to the requirements of a separating couple.
The advice given in the newsletter was, “If you and your partner have decided to separate your first course of action is to contact a solicitor who can take you through the legal process of separating your assets. Assets include: the family home, any investment properties, cash in the bank, managed funds, your superannuation, home contents, cars, etc.” While the division of all these assets have to be determined by the Family Law Courts your adviser can help you with the following. The newsletter went on to list the various areas where a financial adviser can assist. The assistance they provided was as follows:
The financial adviser can help you to establish a new budget for you in line with any changes in income and assets.
Managing joint loans
Most couples will have some form of joint loans. The financial adviser can help you with the best way to pay these off or bring the debt down to make it more manageable for each partner.
Selling any property
The adviser went on to say that they can assist in selling the property in the most tax effective way. The newsletter goes on to say that sometimes the couple may choose to keep the family home and rent it out or one partner may choose to buy the other out. The adviser can discuss the most tax effective way for their client to sell any property investments that they have due to separation.
Re-financing and obtaining a new loan
The financial advisers have a financial team which can discuss re-financing with their clients if they choose to take on the loan of the other spouse or obtaining new finance for a new property to live in.
Changing beneficiaries for super and insurance policies
The newsletter goes on to say that the clients’ superannuation is classed as an asset when it comes to the separation of property and the client will have assigned a beneficiary on the superannuation and insurance policies in the event of death. The newsletter further states that when a client separates it will be necessary to change the beneficiaries on both of these policies and potentially even split safer assets with their former partner.
Managing long term financial needs
The financial advisers state that whether it be investing, budgeting or making a property purchase the financial adviser can assist with the long term goals and decisions of the client.
The newsletter concludes with the following statement, “While all of our advisers are impartial and each members’ details are strictly confidential we do recommend that if our members are separating that one member considers taking on another adviser within the financial advising group. This will not cost either party but enables us to offer you both the best possible advice without any concern for impartiality or conflict.”
This differs entirely from the practice in a legal firm. Solicitors can only act for one party and are unable to provide any advice whatsoever to the other party in a separation.
It is always beneficial to parties when separating to not only obtain legal advice but to obtain financial advice on all financial issues which may be affecting them as a result of the separation but in particular in regard to taxation consequences and the restructuring of their assets once the separation has occurred.