Source : the age
Real Money, a free weekly newsletter giving expert tips on how to save, invest and make the most of your money, is sent every Sunday. You’re reading an excerpt − sign up to get the whole newsletter in your inbox.
Growing up, I was, like many people, told that a whopping 50 per cent of marriages end in divorce. Being 12 years old, I didn’t really question it, other than to think that it all sounded pretty grim and wondering if the failure rate was so high, why people opted to get married in the first place.
Turns out that 50 per cent figure was a complete furphy based on dodgy statistics and projections that for some reason stuck, likely because it did sound so astounding, plus it made for good conversation.
Splitting assets during a divorce can be tricky and time-consuming.Credit: Monique Westermann
In reality, divorce rates aren’t anywhere near that high. The Australian Bureau of Statistics doesn’t provide a flat percentage figure, but its “crude divorce rate” in 2020 was 1.9 divorces per 1000 residents. Overall, the divorce rate has been trending down since 1990.
What’s the problem?
However, there are still some 50,000 divorces granted every year, and each one of those brings a great deal of both personal – and financial – anguish.
Extricating your assets from another person’s can be an extremely complex and time-consuming process, made more so the longer you were married. Plus, any disputes about the process can leave you paying even more for lawyers and the like.
What you can do about it
So if you want to better understand what happens to you and your partner’s assets during a relationship split, read on:
- What happens to my assets? Following a relationship breakdown, a couple will go through the unappealing-sounding process of a “property settlement”. Genevieve Morgan, family law principal at Barry Nilsson, explains this is a division of all assets and liabilities each person has an interest in, be they owned individually or jointly. “Common categories include houses, land, cash, shares/investments, jewellery, furniture, cars, superannuation and interests in businesses,” Morgan says. “Each party has an obligation to disclose all assets, liabilities and financial resources they have an interest in and must provide any relevant information and documents to the other person.” Despite how they are often depicted, settlements should not necessarily be exactly 50/50, Morgan says, and couples should consider various factors including the contributions made by each person during the relationship, age, health, care of children and earning capacity.
- What about if we weren’t actually married? According to the law, this makes no difference, explains Michael Tiyce, principal at Tiyce and Lawyers. Generally, couples who have lived together for a minimum of two years without separation are considered “de facto”, and are afforded all the same rights and obligations as married couples. One thing is different: married couples have 12 months to file for a property settlement after separation, where de facto couples have two years.
- What about my super? When it comes to divorce, you super is considered the same way as any other asset, Morgan says, and can be split either by court order or by agreement. Generally, couples will calculate the total value of their super and work out a split, often considering differing balances, additional contributions, each of your financial positions, and non-financial contributions such as taking time off work to raise children. You can also opt to defer your decision until a later point, such as your retirement, or you can also choose not to divvy up your super at all. However, just because you split your super, doesn’t mean you’ll magically gain access to it: it is still subject to all the laws that govern superannuation and won’t become available to you until you retire. If in doubt, Morgan recommends seeking legal advice.
- Should I get a pre-nup? They’re awkward, complicated and often viewed as being only for the rich and famous, but pre-nups are becoming increasingly popular in Australia as more parents look for ways to cordon off future inheritances from divorce disputes, Tiyce says. He believes more couples should definitely consider a prenuptial agreement. “Pre-nups, or financial agreements as they are referred to in Australia, are absolutely worth considering, especially for second or subsequent marriages, or where families contribute to the property of a party to the marriage.” Pre-nups are legally binding and enforceable, but can be set aside if they’re not created properly, so seek legal advice if you plan to get one.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
