It could be easily argued that the greatest threat to wealth creation is not tax, but divorce. This is a belief that can be in many cases true when discovering the huge fees that are associated with assessing family property settlements as a result of the breakdown of a marriage.
Money in many cases can contribute towards the breakdown of a marriage. Marriage itself is very similar to a business partnership between two people. A divorce is an economic division of assets, so partnering up is a business proposition. A survey conducted by Relationships Australia discovered that money, or the fighting over money, was one of the single greatest causes of relationship breakdown.
Overall, a larger number of women than men rate financial woes as the main cause of divorce, according to its research. The research conducted by Relationships Australia showed that 37 percent of women cited financial stress as the cause of marital misery, while 30 percent of men expressed the same view. It makes sense therefore as a topic of good money management to examine why this is so and to put up some simple remedies to avoid getting into trouble.
Furthermore, not only is money a contributing factor in pretty much all of the decisions a family makes it is also associated with some very fundamental questions. First of all, the questions overriding almost everything in relationships is, ’Do you love me? Do you care about me as much as I care about you?’ So, inevitably a lot of the struggles between couples over money are really about the relationship.
Another reason money impacts the breakdown of a relationship could be due to the conflicting opinions and attitudes the couple has towards money and how it is spent. For example; The husband, might come from a family background where extravagance is a way of enjoying life. The wife on the other hand might see lavishness as morally suspect. The ultimate reason for disagreement then has to do with their respective learned experiences from their childhood and the attitudes that their parents had towards money and the conversation their parents had with them about money when they were children.
In regards to managing their finances Brad Gunn says that there are a number of common mistakes that Australians often make when they are planning to divorce.
“When getting a divorce people often forget that you have two separate financial situations now rather than combined financial resources with your previous partner. Now you might have two residences and two sets of electricity bills, not one. Your budget needs to adjust to your changed circumstances,” says Brad Gunn.
“Don’t forget that lesson that you learned early in life is that emotions and money don’t mix well. As with feeding your emotions with junk food has a regretful consequence (no matter how yummy at the time) so too does emotional decisions with money. Going out and maxing out your credit card neither deprives the other party of their share nor does it improve your personal situation,” continued Mr. Gunn.
Despite the many advantages of seeking professional advice, Brad Gunn contends that there are still a large number of Australians who don’t make any effort to get any professional financial advice when going through a divorce. He believes that this is a major concern.
“The failure to purchase quality advice often ends up costing you much in the long term. Remember that getting advice is ultimately about accessing the experience of professionals that have seen it all before and have learned many lessons. You must decide if it is cheaper to purchase professional advice and experience, or if you are going to personally and directly ‘buy’ that experience the hard way. Think of gaining financial advice like servicing your vehicle. Do you get a mechanic to do it, or do you try and do it yourself?” says Brad Gunn.
One of the most challenging parts of getting a divorce is trying to figure out how each of your assets will be managed after the separation.
Even after you and your spouse have divided your assets with a legal team, there are still a number of issues that must be resolved and discussed.
These issues include; Changes in levels and sources of income, continuing to work towards your long-term financial goals, adjusting your monthly budget to address a new set of needs, finding ways to adequately provide for your children (if you have them) and responding to the legal consequences of getting divorced.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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