The most costly mistakes in a divorce are made between separation and a signed legal agreement. Not in court. Not with lawyers. But before that – in that window when you’re left to your own devices and emotions run high.
Step 1: Record the separation date in writing
The day you part ways with your partner is more than a day when you’re dealing with an amicable split. It also has legal implications – symbolically ending the relationship so that you can begin drawing a line under its obligations and commitments in a wider sense.
- No-fault divorces might operate on a 12-month separation rule, but you must be able to prove you’ve been living apart for that long if it’s disputed.
- You can’t apply for a formal property settlement until your divorce application is approved – and some assets are locked in at the date you file.
- Child maintenance and custody decisions reflect the status quo as far as is possible.
Step 2: Run a financial audit immediately
This is often overlooked by many people because it is uncomfortable to think about, however those who wish to take advantage of a situation know that separation leaves you financially exposed and will capitalize on that fact. Revoking any Powers of Attorney you granted your ex-spouse is likely the last thing on your mind, but such powers do not lapse upon separation – get on the phone to your lawyer. Change the passwords on any accounts that are in your name only. With joint accounts, telephone the bank and notify them that you wish to freeze the account. Let them know you would like to apply for a variation which requires two signatures on any withdrawal over $X – the bank has no choice but to accommodate this. You can’t always freeze a joint account unilaterally, but you can implement controls to protect the balance. Joint credit cards are also an exposure point – ask for the limit to be reduced or your name to be taken off the account.
Step 3: Set up a temporary parenting arrangement
Courts take notice of the immediate post-separation period. The parent who keeps the kids in a routine and in school, and who is facilitating the other parent’s time with the children, often stands in good stead.
You actually don’t need a court order straight away. A parenting plan – a written document agreed to by the parents that outlines who the children are with and when – is not enforceable, but it does provide a benchmark and evidence of good faith. Consent orders can memorialize this later on if necessary.
The children’s welfare requires stability. Do not seek to use (or threaten to use) access to the children as a bargaining chip by changing the schedule. This seldom has the desired impact and usually is taken into account in subsequent hearings.
Step 4: Update your Will and beneficiary nominations
Most people underestimate the importance of this step, which can be very risky.
A separation won’t “pause” your Will. If you pass away from when you separated until before your divorce is finalized, your estranged spouse will still be eligible to inherit. The same is true of your Will and superannuation death benefit nominations.
You need to update your Will immediately, as well as your nominated beneficiary on your super accounts and insurance policies. These are separate assets for the family court, and can’t be changed by a consent or court order down the track.
Step 5: Get a legally binding financial agreement – not a handshake deal
This is the point at which all those good intentions, compromises and signed handshakes unravel. In the emotions of a split, it’s common for couples to come to quick and often unofficial agreements about who gets the kids, the furniture, the savings account or the business. Generally speaking, more would prefer not to leave it to chance or goodwill.
Outcomes that are not documented officially are not legally binding. Either party can effectively walk away from the deal at any time. The courts will not defer to the deal or take into account that you both believed it was fair at the time.
Post-separation property settlement is often the largest financial contract that most individuals will ever enter. It is far too risky to leave such arrangements open to handshake or verbal agreement. The Maatouks team can advise on which option suits your circumstances and draft an agreement that’s structured to withstand a challenge. If one of you doesn’t have the completed legal documentation of an agreement after you’ve divided everything and they win Lotto? They may still be in with a shot at the winnings.
Don’t wait for things to settle down
After a separation occurs, the immediate urge is to “sort yourself out” before you “worry about the legal stuff.” The legal stuff can be costly in that limbo time before any orders are made is usually when assets are shifted, agreements are reneged on, and you become increasingly isolated in a state of legal vulnerability. The above five steps are not suggestions to increase conflict or play legal games. They are suggestions to try and make sure you still have some options available to you when it really counts.