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Coping with the strains of divorce

Nobody should have to begin planning for divorce before they're even married - but it would be helpful.

WLM Financial's Laura Menschik ha s done her fair share of "hand holding" with those in desperate need of financial, and sometimes personal, guidance during the most fragile time of their lives.

As a financial planner she's helped people who have had to deal with investments, insurance, credit cards, superannuation, and property purchases, sales or rentals for the first time.

"Sometimes its gut-wrenching what people are going through," Ms Menschik says.

"It's a very stressful, emotional time, and sometimes it's hard to get people to focus on what they can do now and ... look at the big picture, but start to take little steps.

That planning and those small steps would be so much easier if the couple kept comprehensive financial records from the start of their relationship to its end, Ms Menschik says.

"If you start at the beginning of a relationship, one anticipates that it will go well," she says.

"I don't think most people go into a relationship and get married and think `oh yeah, in five years time I'll chuck it all away'.

"It's still wise for many reasons, not just for divorce, for people to make notes, keep track or have a plan on their financial situation ... you should be doing that anyway, your normal budgeting and your mortgaging and your (financial) position."

If the break-up comes, don't think that just because you've been the main breadwinner with the biggest superannuation policy and the most contributions to the mortgage, that you'll walk away with the lion's share of the loot.

The family courts approve the division of assets according to the needs of the parties.

The court may give special consideration to, say, an inheritance, held by one of the couple, but it may not.

"Everything goes into the pot," Ms Menschik says.

"All of the assets go in the pot, all of the liabilities go in the pot under family law. Hopefully people reach a financial settlement without going to court because the court costs can be expensive."

Ms Menschik says a good family law solicitor is invaluable.

"Sure they are trying to get the most for their client or give up the least on behalf of their client, but they're realistic and if you have to go to mediation and eventually to the courts - nobody really wants that."

Over recent years, the Family Court has allowed superannuation to be taken into account when dividing assets, despite it being locked away until retirement age.

Usually, the husband, as the main earner, has the bigger super fund, but if he retains it, he can't get at it until he retires.

Now the courts allow the super funds to be split and moved. The wife may also have the problem of being unable to access it, but at least it becomes an appropriate part of the division of assets.

"That's been beneficial in family law," Ms Menschik says. "As opposed to somebody having huge super and nothing else and the other not having enough super to retire on."

Sorting the financial future of the children is when divorce proceedings can get nasty.

Some couples realise the children are the most important aspect of the marriage and ensuring they have a stable future is paramount, Ms Menschik says.

But some couples don't.

"Parents make a mess of it. They bring the kids in, they use them as tools against one or the other, you know... tell your mother she's blah, blah, blah, tell your father... " she says.

Divorce settlements should be signed off in a contract, formally documented so that one of the parties doesn't come back, sometimes years later, and say they want a slice of assets of which they weren't earlier aware.

In Australian courts, the settlement works in the form of a decree nisi, a court order that doesn't come into force until required conditions are met.

Then there's the decree absolute, which is the final binding contract.

Interestingly enough, Ms Menschik gets quite a few referrals to help recently widowed women who, she says, are in a very similar situation as divorcees.

"One of the biggest things I have to stop most women from, occasionally it's men, but mostly women, when they receive a reasonable sum of money, they want to give some to their kids.

"And I say `no, no no, no, no. You are going to need this for the rest of your life'."

Ms Menschik is not against some money going to the children, but she says it should be through a formalised no interest or low interest loan so the money can be documented and taken into account in, say, divorce proceedings.

She says that undoubtedly the biggest trap in divorce proceedings is failing to get professional advice, with one partner bullying the other and claiming to have all the answers.

"You need to go for proper professional advice," she says.

"It might cost, but you need to feel that at the end of the day, you've done the best that you could for yourself without being greedy and without being taken advantage of."