In Money on Friday 22nd Mar, 2019

Post-divorce power: Taking control of your own financial future

Mar 22, 2019
Any big life change is a shock but by calling on the resources available to you – including the unexpected assistance your bank can provide – you might surprise yourself with a positive outcome.

Separation or divorce is one of the most stressful life events because on top of the emotional toll it can take on you, your family and friends, it often involves other big changes such as moving to a new home and navigating complex financial issues.

For older couples who share long histories and, even more sadly, a once-shared vision of a future together, starting again emotionally and financially after a breakdown can feel extremely challenging.

But you don’t have to feel alone as you go through the process. Ask for help! Gather your ‘team’ of trusted family and friends, and professionals such as your banker, accountant, lawyer and financial adviser; these people can collectively help you navigate through the tough times and help ensure you come out the other side with a positive view of your future.

One of the key things to consider as you move through the separation process is the need to get your finances in order. (The time around any major life event is a good opportunity to review your finances, as well as the important documents that relate to your future.)

Beyond the first few steps of sorting out your day-to-day money, here are some of the key issues you should consider regarding your finances following a separation or divorce.

Get your own bank accounts

Joint accounts may have been suitable as a couple, but experts advise new singles to set up their own bank accounts – or at the very least – make joint accounts dual-signatory.

According to Neil Herlihy, head of segment experience and acquisition at Westpac, “we see cases that often become escalated and some customers can be open to vulnerability and be shut out by the other partner from accessing their joint funds.

“We suggest that customers, ideally before they go through these type of life events, consider having their own bank accounts, not only just joint accounts, and where possible, to have their own credit card, and some measure of [financial] independence.”

Herlihy also points out that many people change banks altogether during a separation because they fear their ex-partner will still be able to access their accounts but says that’s not necessarily essential.

“It could be that they’re both pretty close to their local banker and they just want to break away from that relationship, or there’s concerns that the other partner could access their funds. There’s a whole lot of concerns some people tend to change banks at this time,” he says.

“We can guarantee the privacy of our customers when they open accounts. And there’s other things people can do – like change individual passwords, request dual-signatory on any remaining joint accounts and set up alerts which tell you your daily balance. “

If your relationship breakdown isn’t amicable, Westpac offers access to a specialist team that can help you manage your money through difficult circumstances. The bank also offers the ability to protect the details of your location from your former partner, change or remove your ex-partner’s access to your online accounts, vary your loan repayments while you reorganise your finances and put you in touch with other supportive organisations.

Update your will and next-of-kin

One of less obvious, but still critical, things to at least consider, is updating your will and any power of attorney documents you may have in place

“If someone has been divorced for 20 years and they’ve not updated their will and something happens to them, their assets could potentially go automatically to their spouse,” Rachel Scharrer, the founder of Divorce Answered, an online resource for people going through divorce, cautions.

It’s also important to update your next-of-kin details on all key documents, Scharrer notes. In many cases, partners list each other as their next-of-kin, and while some splits can be amicable and you may continue to trust your ex-partner to make decisions that are in your best interests, it can be wise to list someone else.

“I recommend that people call any hospital they’ve been to, their doctor and other key service providers and update their next-of-kin details,” Scharrer says. “Similarly, if they’re in an aged-care facility, they’ll need to update their next of kin, because unless you specifically update it, it goes to the last person listed.

“People may want to nominate their children in these situations or perhaps a close friend or another trusted person.”

She acknowledges that this isn’t the case for everyone, though, so the decision is a particularly personal one.

“[Some people] may say, ‘Do you know what? My ex-partner is my trusted person, I know they know my wishes and that I know they’d do the right thing for me if I was unable to make the decision for myself’,” Scharrer adds.

It’s also important to review your superannuation funds and deciding whether to complete a new binding nomination form for each of your funds. This document allows you to nominate a new beneficiary for your superannuation benefits.

Also, be aware that if you’re due to receive funds from a superannuation balance as part of your settlement (under a Family Court order or financial agreement), the money will be transferred to your existing super account or into a new super account, rather than as a cash payment to you. The means it won’t provide an immediate improvement to your day-to-day financial circumstance.

Boost your financial know-how

Even if you’ve always been the main money manager of your family, it’s important to continue to educate yourself about money matters so you can continue to set yourself up for a positive financial future.

“In many cases, for a lot of people who weren’t making financial decisions in the household, they’ll need some guidance or basic education on finances, about how to borrow money and how to run daily financial life,” Westpac’s Herlihy says.

“Westpac has an education area called the Davidson Institute. And on our website we’ve got links to Davidson’s webinars on money basics. There’s webinars on budgeting basic, guidance on getting back on track with your finances, and more complex topics such as financial planning, superannuation and business.”

Government sites such as the Australian Securities and Investments Commission’s Moneysmart website also offers education resources on a range of money-related issues.

Be alert to scams

Older Australians are at particular risk of being targeted by scammers, and what can seem like a fortuitous approach from a friendly ‘adviser’ be particularly tempting if you’re at a low emotional or financial ebb following a relationship split.

“People can be presented with too-good-to-be-true investments and smart people can get scammed and make poorly informed decisions, based on something that’s not as it looks,” says Herlihy.

If you are presented with an investment opportunity, talk about it with family and friends before signing on the dotted line, he suggests.

Herlihy also addresses the sad reality for many older couples who split, only to find their pool of savings and assets depleted, but advises keeping an eye on the future when it comes to financial matters.

“The best guidance we can give is to say there are different ways to get to what you want to get to and people have different sort of appetites for investment risk – whether they want to invest in property or shares or savings accounts to term deposits,” he notes. “There’s different ways of getting there, but it’s really important to know where you need to get to.

“And I think the benefit of getting good advice or guidance when you’re older is that you could start getting a lot of benefits from the government when you meet certain criteria. Superannuation has tax benefits and a lot of it’s quite complex so it’s really the right time to be engaging a professional for advice.”

Things to know: The information in this publication is general information and factual only. It does not constitute any recommendation or financial product advice. It is an overview only and it should not be considered a comprehensive statement on any matter or relied upon as such. You should consider obtaining your own independent professional advice. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

Have you had to start again after a relationship split? How did you deal with the changes?

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.


Leaving a partner can be complex. Help in a separation starts with guidance to safeguard your money, winding down joint finances and ultimately regaining your independence.

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