Even before the pandemic hit, roughly one in three marriages were statistically doomed to end in divorce in Australia.
Now, with all the new strains and restrictions on our lives, the cracks are showing more than ever, new data has confirmed, with family therapists and lawyers noting a jump in clients seeking counselling or a permanent split.
A study on the impacts of Covid-19 by Relationships Australia, the leading national provider of relationship support services, found that 42% of people had experienced a negative change in their relationship with their partner during the last few months.
If you are considering a divorce, however, there are some pitfalls to be wary of, warns Brisbane-based financial advisor Helen Baker.
Below she outlines five of the most common mistakes to avoid.
Mistake 1 – My lawyer has all the answers
One of the biggest mistakes people make is to rely on a lawyer for all aspects of divorce. Yes, you need to see a lawyer, regardless of whether children are involved, because they know the law and will guide you through any legal issues that need dealing with. They are great at legally drafting what you need to close your property settlement and your divorce and can advise you on likely entitlements under the Family Law Act. Lawyers are not however authorised to give financial advice. You need a licensed financial adviser, ideally with divorce planning expertise, who has the skills and insight to scope your goals and values (for now and the future), assess the assets that would help you achieve those goals and who can provide detailed realistic options and easy-to-understand calculations of what an asset split could look like and mean for you. Professional financial advice also takes any recourse off the lawyer over money matters and assets.
Mistake 2 – Believing you’re ‘not entitled’
Early in the discovery process, we identify exactly what assets are ‘up for grabs’. Property, investments, shares (including shares in the spouse’s private company), superannuation, cash, certain Trusts, anything that has value or potential value. And it does not matter whose name it is in! Do not be bullied. Do not fall for the ‘I’ve worked while you’ve stayed home so you’re not entitled…’ or ‘This is my superannuation’. Those statements are wrong.
Mistake 3 – “I just want the house”
Women particularly have an emotional attachment to the family home, particularly when children are involved. As a result, it’s common to see women keep the family home, leaving all other assets to the husband. This is not always a good option. Here are a few reasons why:
• The upkeep of a large home can be a financial drain. Can you comfortably afford all those costs on your own earnings? If relying on your ex for outstanding mortgage repayments, what happens if he loses his job or defaults on payments?
• If all your money is going into the home, there’s little left for extras you deserve – such as family holidays – or little luxuries that promote self-care (such as a relaxation massage or a new pair of shoes).
• Staying put so as to keep the children ‘stable’ is commendable; staying put to keep up appearances is not. Children are likely to be more resilient than you think.
• Children do grow up and leave home. Without other investments, you may have to sell family home to fund your future. Is downsizing an option for you, providing some surplus funds for investments? That’s a tough question only you can answer. Most people I’ve seen want to stay where they are or maintain their standard of living. Something has to give!
• Some women cannot see the value in their ex-husband’s superannuation or its tax-effectiveness, so they leave him with a pot of gold come retirement time.
You may be tempted to think “I’ll sell the house and rent instead: then I have money and I won’t have to worry about rates, or maintenance or home insurance”. That’s true but what about long term? Once you are out of the property market, it can be difficult to buy back in. And I’ll raise that issue of security again: a landlord could kick you out. It may be worth buying something a little smaller, a little further afield.
Mistake 4 – Wanting your day in court
You’re really hurt and pinged off with Dearly Ex-Beloved and you want to hear the judge beat down on the other side and say how bad he was. You want your day in court. Surprisingly, the judge might not see the situation your way. The cost associated with this risk can be seriously damaging and takes a very long time. Sometimes it is better to know in your heart that you were right and settle and move on. Imagine growth on investments you settle on over those two or three years you may have been waiting for that day in court, less legal fees, stress and torment!
Mistake 5 – We were just sleepover buddies: He has no claim on me
You may be a woman with considerable assets. You may have a friend who sleeps over regularly, what you smilingly think of as ‘a close friend with benefits’. When do sleep buddies become de facto? That’s an increasingly grey area, legally. You need to be aware of it. You may well be in a de facto relationship without even living together! And that means your assets may be up for grabs… Remember your wedding day? It’s likely you engaged a makeup artist, hairdresser, dressmaker, perhaps a venue co-ordinator too. You had a bridesmaid or three to help. My point is you were unlikely to be on your own in preparing for it. The same goes for divorce.
In my opinion you need at least:
• A specialist family lawyer
• A financial adviser
• An emotional counsellor (e.g. psychologist).
Be clear in your goals. Understand the pros and cons before you sign on the bottom line. Remember, you can’t buy peace – they don’t sell it in a shop. There’s no point fighting over something you don’t want or that doesn’t work for you. The stresses of divorce—the fighting and anxiety— can result in long-term damage that costs more than making wise decisions.
- The above information is an edited extract from Helen Baker’s book On Your Own Two Feet.