For some people, separation and divorce is all about the money.  For others, it is only after it’s all over that the real impact of their financial decision-making (or non-decision-making) hits home.  Unfortunately, the long-term financial consequences of separation can be missed because of emotion, concern for children, the practical realities of moving house, the need to ‘get it over with,’ a lack of understanding about money and budgets, and fear.

So how can you and your spouse about the emotional pitfalls and negotiate a settlement the takes into account the way your family has been living, how you wish to live, and how you can afford to live in the future?

When it comes to a financial settlement there are three areas you and your spouse will need to consider:

  • Property settlement. This is the division of your assets (what you own) and liabilities (what you owe) and is usually defined as a percentage in the traditional legal process.
  • Child support. This is an ongoing payment made by the higher-earning parent to the lower-earning one to fund your children’s expenses, if using the government formula.
  • Spousal maintenance. This is financial support provided to a spouse who is unable to support themselves and is usually paid as a one-off lump sum or occasionally as a weekly or monthly payment in Australia.

When it comes to who gets what, the focus in the world of Family Law is on percentages, rather than what different assets will actually deliver to an individual.  Sure, the Family Law Act requires that the future needs of each person be considered, but that is for the limited purpose of making a percentage adjustment.

Instead of thinking about percentages, consider the advantages of settlement negotiations being driven by values, interests and goals for the future.

Separation and divorce can have long-term financial consequences due to emotional factors and lack of financial understanding. To negotiate a settlement, consider property division, child support, and spousal maintenance, by focusing on values, interests, and future goals rather than percentages of the split.

This excerpt is from ‘Breaking Up Without Breaking Down’ – Dr Tina Sinclair, Tricia Peters

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