By Gianna Huesch
Financial Separation: A recent story in the UK discussed how separating without going through the formality of getting a divorce can have unforeseen financial repercussions, and while the British system is different to Australia’s, some of the warning are relevant to Australians too.
The UK story looked at a case in the English courts where a couple were married for three weeks and then had been separated for three decades. After the husband died, the wife legitimately made a claim on some of his estate, because as the judge ruled, they were still married when the husband died.
Here in Australia, there are time limits for making applications to the courts for property settlement or spousal maintenance: within one year of a divorce becoming absolute for married couples, and within two years of a de facto relationship ending. Applications outside the time limits are only granted in limited instances.
But what about the time period after separation and before divorce? Similar to the UK situation, until a separated couple is divorced, the parties’ finances are still linked. If your spouse is jointly responsible for your mortgage, you are at risk if they move out then stop paying their share of the mortgage. The house could be repossessed and your credit rating affected. How you and your spouse jointly legally held any property is very important: whether you were listed as “joint tenants” or “tenants in common”, for example, has major implications as to what happens to property on one party’s death and whether a will has effect. It’s usually recommended that separating parties arrange to sever “joint tenancy” of any properties so that “tenancies in common” continue instead.
Also mirroring the situation in the UK, after separation, separated parties still have the right to live in the house they previously shared with their partner. Even if one party moves out, they are legally entitled to come back. Seeking an injunction through the courts is the only way to remove this right of access to the home.
Separated individuals are also reminded to be careful when it comes to joint bank accounts or shared credit cards. Banks need to be advised of the separation if the primary holder of a credit card wishes to remove a secondary party from the card or to cancel the card altogether. You may be able to apply to the court freeze accounts until there is agreement between parties as to next steps.
Post separation wealth is also something that needs to be considered. If one party builds up assets in the period after separation, and the other party is determined to be ‘in need’, this may affect a future settlement.
Making a will can head off some issues, by using it as a way to explain why an estranged spouse should not be a beneficiary, such as because the deceased has a new partner or dependants.
We always recommend having a financial advisor go through all the issues relevant to your separation, especially where there are situations involving new partners and families.
Read: http://www.telegraph.co.uk/money/consumer-affairs/financial-dangers-separation-without-divorce/
If you would like family law advice in relation to your separation or divorce, please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact us to arrange a free first conference.
