Four Simple Steps to Financially Survive Separation
In this video, Page Provan Director and Accredited Family Law Specialist, Stephen Page shares four simple steps on how to financially survive separation.
G’day, I’m Stephen Page from Page Proven Family and Fertility Lawyers, and I’m talking today about four simple steps to financially survive a divorce.
These are engaging four people to help you through the process. The first one is pretty obvious, and that is you engage a family lawyer. Now, there are any type and number of family lawyers. Anyone can hang up their shingle and say that they do family law.
It’s important to get the best one you can get with your money, and if you have the ability to get an accredited family law specialist like me, because the better you get, then the cheaper it will ultimately be, because you’ll have the strategy and the tactics to work out how to get in and out as quickly as you possibly can.
But family lawyer is not the be all and end all. It’s now over twenty years since superannuation can be split. So what used to happen many years ago, was that husbands would typically get the super but no house, and the wives would get the house but no super. Because in a traditional marriage, most of the super was in the husband’s name. Now, life is much more complicated.
How much super should you have? Should you be focusing more on superannuation or on having a house and other assets? And even if you have a lot of property, it’s still important to focus on this stuff because you’ve got to get the mix right.
It’s not just the percentage, it’s not the cash payment, but it’s having that that mix right. So who do you get? You get a competent, honest financial planner who works hand in hand with your family lawyer, and then the third person you get is a mortgage broker. Most of us, when we go through a split, have to get a home loan. Now, you can go to the bank and I’ve had clients do that. But there are so many products out there that you want to make sure that you don’t pay too much, and you also do a reality check.
Interest rates at the moment are very low, they’re going to go up sooner or later. You want to make sure that you aren’t set up to fail, that at some later stage, if and when interest rates go up, you’ll survive that. So you talk to your mortgage broker about, how much can I borrow?
What’s realistic? How much can I borrow that’s not too much so that I can survive it, and you put that in as part of your planning, along with your family lawyer and your financial planner, and the last person you should be talking to, and this isn’t strictly about surviving the divorce, it’s afterwards.
What if you die? What if you die before you get divorced, and you haven’t sorted out your estate? And I’ll just give this illustration, you’ve got a plan for your estate, you’ve got to look at your super, you’ve got to look at your life insurance, and you’ve got to look at your will. So if you have a lot of money, you go off to a proper estate planner, that’s a lawyer’s, that’s all they do.
But in conjunction with your financial planner, if you don’t have so much, you go to your financial planner and you also talk to your family lawyer, if your family lawyer does wills, and you’ve got to look at whether you sever joint tenancy.
Husbands and wives who own property together typically own it as a joint tenancy, which one of the features of that is, if one of you dies, the other automatically gets their share.
Now, there may be an advantage or a disadvantage in severing the joint tenancy, and if you don’t sever and you die, then your property does not fall part of your will. Instead, it goes automatically to the other party, who often may be the last person you want it to go to.
About 30 years ago, I had a court case, which I’ll just tell you about because it illustrates the point. It was a Friday afternoon, and the two lawyers, myself and the other lawyer and our respective clients, I was for the wife, and the husband were sitting around this table and we were trying to cut a deal. It’s what we call a roundtable meeting or a roundtable conference nothing magical about that term is just we were sitting in a room and trying to cut a deal and it was on a Friday afternoon, and we were trying to do it then because Monday morning was our first day in court.
My client had gone to court, she’d filled to seek sixty percent of the property, and this particular afternoon, I’m asking the husband about this boat. It was a 50 foot boat, and he gave me an answer that I’ll never forget, which was, it’s owned by a man in Sydney.
Now, I knew I was straight out of university and I was young and green, but this was a case of liar, liar, pants on fire. We didn’t settle. Monday morning, she phones me up, my client phones me up and says, I’m not going to court. Now, being young and not listening terribly well, I started to yell at her because she was required to go to court and we’d get into trouble and eventually I stopped and she said, will you listen to me? Or something to that effect. She was right, of course, I was wrong, I had to apologise to her.
He died on Saturday, and he was the husband, a not very trusting man, and he carried his little attache case with him everywhere, which included his personal papers, such as his will. He hadn’t changed his will. My client got one-hundred percent, not sixty percent.
So it’s important to have a will. It’s important to ensure your other estate planning is taken care of as part of those four people, the family lawyer, the financial planner, the mortgage broker, and the estate planner. Life enabled, life simplified.