The end of any relationship can be incredibly difficult. And unfortunately, divorce can also have negative financial implications for both parties – for years afterwards (or even the rest of your life).
With that in mind, to help you navigate life after divorce we’ve taken a closer look at how splitting up can affect your financial health – and what you can do about it.
The financial effects of divorce
Research by the Australian Institute of Family Studies has shown that divorce negatively affects income later in life for most people. In fact, older divorced Australians who have not remarried are much more likely to experience material hardships, report a lower level of prosperity and own fewer assets. They are also typically more reliant on their public pension than Australians who have not divorced.
In general women are more likely than men to experience financial hardship after divorce, due in part to the gender pay gap and the fact that women typically care for children after divorce. Financial support from the ex-partner may help to offset some of these disadvantages, but not all.
On the other hand, Australians who divorced then remarried were found to be very similar to Australians who never divorced for some measures of financial circumstance.
Property split after divorce
One of the main determinants of financial wellbeing after divorce is the way that assets are split and how childcare arrangements work. This can be done:
- Outside of court informally via agreement: this is a low-stress, low-cost way of splitting assets. However, if agreements are not honoured by either party this may not be legally enforceable. What’s more, without legal advice you may not receive a fair portion of assets or any financial support you may be entitled to.
- Outside of court with the help of an experienced family lawyer: This can also be a low-stress, low-cost way of dividing assets after divorce. Generally, both parties will receive impartial legal advice, then a ‘consent order’ will be created to manage the division of assets and childcare arrangements. This will be done in accordance with family law and will be legally binding once it’s formalised by the court.
- Or via the Family Court of Australia: if you are unable to come to an agreement outside of court you may have to attend the Family Court of Australia. The court will then rule on the division of your assets and childcare arrangement according to family law. The court’s decision is legally binding.
When ruling, the Family Court will first value all relevant assets, then value the contributions of each party (including non-financial contributions such as childcare or homemaking). Next they’ll take into account the future needs of each party, considering factors such as age, health, childcare arrangements and their ability to earn income.
Last of all the court will consider the practical effect of the property settlement. In other words, they’ll think about whether the proposed split of assets is fair to both parties – and what effect it may have later in life.
Getting help when you need it
Unfortunately, the negative financial impacts of divorce can be considerable. One of the best ways to protect yourself from them is to ensure that you receive everything you’re legally entitled to under Australian Family Law.
To make sure you do it’s a great idea to speak to a local family lawyer that you can trust as soon as possible. The team of expert family lawyers here at Testart Family Law can provide honest advice so that you always know where you stand – and take care of you every step of the way.
Get in touch now to arrange a free first consultation today.