This article was published in The West Australian Newspaper on Monday 9 October 2020.
When a relationship breaks down, often the two most contentious issues surround the care arrangements of children and the financial settlement.
This is a time of heightened emotions, and the fear of the financial unknown only adds to the mental burden of a relationship breakdown, as we often have an emotional connection with money, safety and security.
Most often, the first professional couples will seek when considering a separation is a family lawyer. They want to ensure they are properly represented, that they can navigate the maze that is often the Family Court system, and that they have their rights properly represented when it comes to their fair share of the assets, and the care arrangements of the children.
Not only will they handle the mediation, negotiation and court proceedings if required, they will also co-ordinate the various other professionals required to present your case such as accountants, property valuers, psychologists and financial advisers.
The decisions you make and the outcomes achieved now can change the course of your lifestyle for decades to come. Given the complex nature of separation, the collaboration between family lawyers and financial advisers is essential.
In many households, there is one dominant financial partner. They handle the family finances, have a good understanding of the household budget, investments, and the sometimes intricate web of entities that hold them. This often puts them in a much stronger financial position, both before and after the settlement.
If you have taken a back seat in managing the family finances, you’re about to be thrust into the driver’s seat, so it’s important you learn all about superannuation, investments, tax, income streams and budgets.
By working with a financial professional, you can increase or regain your bargaining power. There won’t be any lingering doubts about “is there anything I’m missing?”. This kind of analysis allows you to negotiate and make adjustments in the division of assets with a clear understanding of your post-separation financial needs.
Even the most informed people allow emotion to creep into their financial decision-making. Family lawyers know only too well the irrational decisions people make when emotions run high. A client may have a particular fixation on an asset, or a firmly held belief about what constitutes a fair financial settlement.
A financial expert can provide an objective assessment and reality test expectations, with research and financial modelling. This allows you to establish your post-separation life goals, and create a plan that you can live with.
One of the fears a client will present in a property settlement is “is this enough?”. Often the work and earnings prospects of a couple vary greatly, and the settlement will form the vast majority of one of the couple’s current and future financial resources. In a case like this, guesswork is not good enough. You need to know exactly how much you need.
A good financial adviser will model all the possible scenarios and let you know the impact of the various options available to you. With the right modelling and financial evidence, the case for a suitable property settlement is improved.
During a divorce, your lawyer may become the person you speak to more than anyone else. They will support and guide you through one of the most difficult times in your life. But once the case is settled, the contact ends.
This sudden removal of a trusted confidant can leave you feeling vulnerable. However, the relationship with your financial adviser continues well beyond the settlement of your case, and can provide much-needed continuity of trust and familiarity.
Having a well-rounded team of experts will give you an objective and informed perspective during a time where many people feel overwhelmed with the decisions before them.
Most family lawyers have a wide network of professionals they can call upon and can facilitate an introduction to a trusted financial adviser. Getting them to work together to achieve the best possible financial objectives during and after the separation may prove to be your best investment yet.
Tamara Arapovic is a senior associate at Lavan, Raymond Pecotic is managing director at Empire Financial Group.