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  • Paul Barrett, Wealth Manager

The Financial and Legal Burden of Divorce

The inability to prepare for separation and divorce, the dissolution of a relationship – regularly causes significant financial costs to both parties, not to mention elevated mental stress, worry, and time. It may also lead to a conceivable increase in personal conflict and emotional distress.

After enjoying a long-term relationship, many couples are surprised by how interlinked their lives become. Hence, the difficulty they undergo with extricating themselves from each other’s lives can be stunning. This is true, especially if children are born into a relationship or where potentially significant resources and valuable assets have accumulated within the union.

When one party or both decide to end their marriage and apply for a divorce decree, careful financial and legal preparation can lower the overall inconvenience and unpleasant experiences by all parties. Unfortunately, in such circumstances, it is unlikely for both parties to communicate effectively and lawyers may need to be involved.

Practical Matters To Consider

Separation and Living Arrangements

The divorce process begins when you separate from your spouse and does not involve any formal process or paperwork. Much of the time, parties agree that the marriage is over and go their separate ways. Housing and domestic outcomes figure prominently as key stress factors associated with the separation and the first expense that people incur when seeking a divorce is the cost of moving into another home.

In most cases, the subject of who moves out hinges on each partner’s resources and expenses associated with remaining and moving. This incorporates direct costs of moving and other associated costs such as disruption to family ties, friends, and the workplace. There is also the possibility to separate but continue to live under one roof.

However, if you continue living under the same roof after separating, you should get professional advice. Doing this, guarantees you have information on legal considerations and ramifications regarding this type of separation, and its impact on the advancement of your divorce.

Whatever direction you go with your living plans, many individuals seek guidance from a family lawyer to determine their position. That implies there will be initial costs for consultation and any subsequent appointments.

Given that divorce constitutes a major risk of losing homeownership, several studies have examined gender inequality in this risk. By and large, women are more reliant upon their partners and consequently at a higher danger of losses as far as quality and security of housing after divorce.

If spouses who jointly own their home separate, retaining it may require providing for a mortgage and buying the ex-partner’s share — an often-expensive undertaking for women. Hence, there is a more likelihood for them to lose homeownership following a divorce than men are.

It is important that all parties: the separating couple and any children or other dependents included, prepare by considering who is going to live where, and with whom. There is an unlimited number of variations ranging from families living together without the parents as a couple to a complete breakdown of the family unit upheld by a written agreement establishing everyone’s living and visitation rights in advance.

Points to consider include:

  • Before the declaration of a divorce decree, the parties seeking the divorce must have been separated and not living as a married couple, for twelve months or longer. However, for the Act, it is not a requirement to live at separate addresses to declare their separation.

  • In cases where children or pets are involved, agree on the minimum accommodation standard needed to provide a sound and healthy environment for all, and then pursue that objective.

  • Figure out whether the best outcome would be for one party to relocate immediately or if it is in the family’s best interest to continue residing together. This potentially relies upon the financial situation of both parties and the degree of animosity and discord at home to allow for two residences.

Children or other dependents

Ostensibly, the most critical of all considerations when preparing for separation or divorce is the needs of any children or dependents in the relationship. This may incorporate children conceived together or from past relationships. Matters for thought include:

Children and dependents rely on both parents for physical and emotional security. Hence, they must be protected as far as possible from any negative feelings generated by the process. Fundamentally, both parents should set aside their disparities when dealing with their children as courts generally tend to deal harshly with those who put their interests ahead of their children’s.

Children reserve the right to access their loved ones and those who care for them. This right extends out to grandparents and other family members. In cases of physical separation by couples, a stable arrangement should be established to enable each partner access to the children regularly at the earliest opportunity. At first, this kind of agreement does not have to be formal, yet it should serve the best interest of the children or dependents.

Parents who oppose access to their former spouse will realise that the divorce process turns more difficult and expensive. Ordinarily, the Court will not permit one parent to refuse access to the other in cases where there is no danger of aggression or domestic violence to the children.


Much in life relies upon the accessibility and accuracy of documents. In getting ready for separation and divorce, it is fundamental that at least one party readies a complete portfolio of all important documents.

These include:

  • All family documentation must be collected and held together as soon as possible after the parties decide to separate. May include; the marriage certificate; any Wills or other post-mortem instructions; copies of any pre-nuptial agreements, naturalisation and change-of-name papers; driver’s licences, Medicare cards, passports and proof of identification documents; bank books and statements; primary residence lease documents; mortgage documents or Certificates of Title to the primary residence or any other real assets; lease documents for any investment properties with tenants.

  • Documents need to be put together early while one spouse exerts commanding control over the family and in case of animosity who might work to derail the divorce process by declining to cooperate or give information.

In case the original records are not accessible, copies ought to be acquired where possible.


Financial considerations are generally perhaps one of the most divisive and contentious matters any couple will need to consider when preparing for separation. By and large, they will also find that the separation potentially places a significant strain on their joint and separate finances which neither party may be ready to acknowledge.

On the legal front and from a purely economic standpoint, the cost of separation/divorce in Australia can be staggering. Every year in Australia, it is estimated that $3.7 billion is used in legal expenses and $45 million in divorce application fees alone. With figures like these, it is no big surprise the financial effects are noted as perhaps one of the hardest things about the separation/divorce process by (54%) of those that have experienced it.

Divorce most definitely impacts income from investments, especially if assets need to be disposed of or ownership transferred. It may also affect the number of government benefits to be received. The financial impact of divorce can be felt for decades and carry on into older age.

According to the Australian Institute of Family Studies, divorced people aged over 55 have access to less disposable income and fewer assets when compared to their married counterparts. Men also end up worse off, but this contrasts the views of divorce experts, who say older women are the ones who end up missing out financially.

Separating couples should look into the following financial matters :

  • Comprehensively audit and record the details of the family’s joint and separate financial situation in writing. This is important information and will be used by the Court to aid with the settlement process.

  • Include a comprehensive rundown of all significant assets with their estimated or real valuation. It should incorporate any cash revenue from investment ventures, properties, stocks, or other assets and if available superannuation fund benefits by both parties.

  • Decide whether it is suitable to close any shared accounts or to limit cash reserve access to one party.

  • Get immediate financial guidance if the family finances are in dire straits.

  • Develop a budget to help determine if both partners can bear the cost to live separately, take care of the children, and pay requisite bills.

  • Look into the best way to handle mutually-held credit cards or other debt instruments. Often, it is ideal to terminate any joint account as this forestalls any expenditure contentions in the future.


As far as possible, it is important that separating couples keep the lines of communication open to one another. They should also control information – avoid social media and discussing details of the separation in the public domain.

The Court may examine social media posts as necessary and may negatively affect the divorce settlement. Specifically, separating couples ought to abstain from posting anything of a sexual or monetary nature and never make allegations or defamatory statements about their former spouse.

The process of separation and divorce can be difficult and exhausting. It can also take a legal and financial toll, in turn, disastrous to a family. Dealing with the above can mitigate many of the problems. It can also diminish both the cost and effects associated with the process of going through a divorce.


@Paul Barrett of Absolute Wealth Advisers is one of Australia's most experienced Private Wealth Managers. He is a financial expert in high net wealth divorce, estate management and inheritance. Contact him here


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