Financial Implications re Divorce and Separation

Financial Implications of separating or getting divorced

The end of a relationship is never easy, but there are steps you can take to help things run more smoothly and protect yourself financially.

Financial First steps when divorcing or separating:


  • Try to decide together who will stay in the house and where the other person will live  
  • If you’re renting, update your lease contract accordingly;
  • If you own your home (or any other properties) get the lawyer to change the ownership from Joint tenants to Tenants in Common.  Or, if the property is only in your ex’s name, talk to your lawyer about whether you need to protect your potential interest in the property with a caveat.
  • If you have a mortgage:
    • Notify your lender that you have separated;
    • Cancel any redraw facility or ask the bank to get both signatures for a withdrawal;
    • Work out a plan together to cover the mortgage repayments until you’ve finalised the property settlement.

Bank accounts

Work out together if you need to change the way you’re paying bills, debts, rent or mortgage

If you have joint bank accounts – we suggest

  • Open a separate bank account in your name (for your income).
  • Change your PIN and online banking passwords.
  • Close joint bank accounts.
  • Cancel joint credit cards.
  • Cancel any overdraft or redraw facilities on accounts.
  • Remove your name from agreements, loans and bills that aren’t a joint responsibility.


We recommend that you update your passwords on all online accounts and notify any relevant service providers that you have separated and that your former spouse is no longer permitted to access your records.


Review your personal insurance policies –

  • Provide updated contact details;
  • Update the beneficiaries of your policies; and
  • check if the level of cover needs to be updated now that your financial circumstances have changed.



Review your superannuation policies –

  • Update contact details;
  • Update Death Benefit Nominations;
  • Review any insurance policies held within the super policy for appropriateness.


Estate Planning

Getting separated doesn’t impact your will so if you pass away after separation you ex-spouse may still inherit things as per your will and if they are listed as your executor they will still be legally obligated to perform that role. 

However, getting divorced does impact your will but it depends which state you are in.  In some states divorce automatically voids the whole will but in others it just revokes your ex-spouse as executor and disregards any gifts left to them. 

Either way, the best strategy is to update your will for new Executors and beneficiaries.

It is also important to note that divorce does not affect an Enduring Power of Attorney (EPoA). Since an EPoA allows the named attorney to make personal & financial decisions for you, it’s crucial that you also revoke the document if you no longer want your former spouse to be able to make these decisions for you.

If you have an Advanced Health Care Directive it should also be reviewed to see if any changes are needed.


When organising the property settlement:

No one can tell you exactly how your property should be divided. It is important that you seek legal advice.

If your property settlement is determined by the family law courts, after all the evidence is heard, the judicial officer will decide whether it is appropriate to make an order for property based on the facts of your case. If the court decides to make an order, it will decide what is just and equitable (or fair) in your circumstances.

When working out what is fair, the court will look at:

  • your assets and your debts, and what they are worth when added together
  • direct financial contributions by each party to the relationship, such as wages
  • indirect financial contributions by each party, such as gifts or inheritances
  • non-financial contributions to the relationship, such as caring for children
  • future requirements – such as age, health, financial resources, caring responsibilities and capacity to earn

The way your assets and debts will be shared between you will depend on the individual circumstances of your family.

When you are organising the property settlement and any maintenance requirements

  • Watch out for CGT and stamp duty consequences of transferring ownership of assets between parties;
  • If there is a business, company or trust involved watch out for loan accounts, Division 7A loans, and deemed dividends
  • Remember that Child Support Payments received are not taxable but they could impact on the amount of Family Tax Benefits you are eligible to receive.
  • Make sure you are clear on what your needs and living costs are (short term & long term) before finalising the property settlement and any spousal maintenance amounts.


If you need any help with the financial implications of getting separated and divorced please don’t hesitate to give our team a call.

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