Making a financial fresh start (or: how to bounce back financially after a separation)

Written by Money Empire

May 29, 2017

When you’re dealing with a separation or divorce, the last thing you want to be thinking about is money. Unfortunately, that’s often one of the things that needs the most attention – and one of the things that can cause the biggest stress.

So what do you need to know about coping with your finances throughout separation – and how can you make sure that you’re setting yourself up for the future in the best way possible? Our advisers share a few of the things that we think are most important to keep in mind when you’re going through tough times.

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 You’re not truly separated until you’ve signed the dotted line

Until a separation agreement is signed, you and your spouse are still technically married. That means that any joint accounts, joint assets, or even individual debts still belong to both of you.

To keep things simple, try to close any joint accounts as soon as you can – keeping in mind that you both need to be there in person to close a joint account, so this may not be the easiest thing. Otherwise, try to reduce the limits on any credit cards and remember that…

It doesn’t have to get messy

If you’re one of those couples who goes through a separation totally amicably, splits everything fairly and has no problem deciding who gets what, well done! But if you’re like most people then it’s highly likely that some of the issues leading to your separation will also affect how you both deal with each other while you’re separating your finances.

Wherever you can, try to keep things as fair and amicable as possible. There’s nothing worse than fighting over absolutely everything so, if possible, try to negotiate who will move out, whether someone will buy the other person out, and how other assets will be split as peacefully as possible. Property law (usually a 50/50 split) hits in when you’re unable to agree, so being able to agree on solutions yourselves means you get more control over the outcome. And don’t forget to…

Think about any ongoing outgoings

While you’re going through a separation, your bills could be the last thing on your mind. Try to make sure there’s enough money put aside to see you through until an agreement is signed (and after!), whether that’s for mortgage payments, to pay off other debt, or to cover business outgoings. Speaking of which, make sure you…

Think about who else is involved

Did your parents chip in to your house deposit, or did his parents lend you money to start a joint business? How will your kids be affected by your finances being split up? Consider who else will be affected by the split, and make sure they’re included in conversations if necessary, or at least considered in terms of how they can be least affected. 

It’s not just about the house

When you’re married or have been in a de facto relationship for many years, your house isn’t usually the only thing you share. Consider your other assets – do you have joint bank accounts or investments? How about a joint business? Are you likely to lose a source of income when you split as well?

Beyond your assets, consider any debt you may share – even if the debt is owned by only one of you, the other is still liable until you’ve signed that separation agreement. Or do you have life insurance policies that would provide a payout to the other person? Consider whether you need to change or replace any policies. Whatever your joint financial situation, make sure you…

Get some help

Honestly, you’re dealing with enough when you’re going through a separation to have to feel like you’re on your own financially too. Pull in a financial adviser and a solicitor as early as you possibly can. If you’re looking to buy out your partner, we can help you put together an effective and fair proposal. You’ll get the support you need to figure out the tricky stuff, make sure you’re going to be okay financially, and feel like you’re not alone on the journey. Most importantly, we can help you…

Look ahead

Getting separated doesn’t have to mean going back to square one. Even if you can’t buy out your partner from your joint assets, you can still get back into the property market using some clever mortgage structuring, things like the KiwiSaver second chance homebuyer withdrawal, and a blueprint for how you’ll service the mortgage. Even if it feels hard now, you can still build your empire.

If you’re not sure where to start, or you’re overwhelmed at the mere thought of doing anything else, reach out to us. We’ve got your back.

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