The end of a marriage can be emotionally, physically and financially draining. But, with the right checks and balances, the impact can be greatly reduced.
If you are in a situation where one party did not contribute as much as the other, you, or they, may feel justified in holding back money. The main breadwinner may panic when faced with rehabilitative support (while the partner with no means of supporting him or herself upskills or looks for a job) and child maintenance.
Many struggle with the desire to end a bad relationship with a “let them have it all, I just want out” attitude. This is a huge mistake. You owe it to yourself and any children to remain on a secure financial footing.
Beware of insisting on keeping the home in lieu of any other financial consideration. If you have a large bond and you have to take responsibility for it you may find it is too big a burden – a house is not an asset if it is fully bonded.
Know what you have
The day you realise divorce is on the cards is the day you need to start getting your affairs in order.
• Make a list of joint assets and liabilities. Call your financial advisor and request an update.
• Also request to be alerted to any changes requested by your spouse.
• If you have a home loan keep an eye on the statement to ensure no money is being moved out of the bond.
• If your spouse is a business owner make copies of the financial statements and/or bank statements pertaining to the business.
Stash some cash
One of the biggest issues facing many during divorce is cash flow, especially for those who do not have jobs. It is vital to find a way to build cash reserves.
• Start putting away small amounts, reel in your spending and look for assets you can sell.
• Find a part- or full-time job.
• If you do not have your own bank account or any credit or retail cards in your name, get a move on. You need to establish a credit record.
Now is the time for cool heads. Find a lawyer you are comfortable with and ask them what you can reasonably claim. If you try and claim more than your fair share, you could find yourself with legal bills that may exceed the assets you are trying to claim.
So what can you claim?
What you end up getting depends a lot on the type of marriage agreement you have.
• An ANC (ante nuptial contract) with accrual means that what you went into the marriage with is yours and, depending on the split, you will get a portion of the assets accrued while you were married.
• An ANC without accrual means that whatever assets were accrued after the marriage are owned solely by the person who bought them.
• If you get married in COP (Community of Property) your assets will be split down the middle regardless of who accumulated them. A word of warning: you will also share all liabilities.
Revisit your investment strategy
• If you have investment and life insurance policies make sure you rewrite your will, change the beneficiaries on your insurance policies, and if necessary, review your retirement plan documents.
• If you have no policies in your own name but your soon-to-be ex has a policy with you as the beneficiary do try to keep that in place. If your partner is adamant not to keep you as a beneficiary then he/she should name the children as beneficiaries.
• If you have no retirement account in your name but your partner does, you can claim part of his retirement fund in the divorce settlement. Tempting as it may be, do not touch this money. Rather reinvest it into a retirement account for future security.
For more financial advice, workshops and articles, go to Iona Minton's financial blog here.