Some of the uglier errors end up playing out in court. They include thinking financial gifts from family are sacred and hiding assets in convoluted structures for legal reasons like trusts and expecting the court can't touch them, says family lawyer Jamie Burreket, of Broun Abrahams Burreket. The third mistake is giving over control of money matters to only one partner.
1. Pooling gifts
"More and more commonly, parents are loaning or advancing monies to children to help them acquire real estate," Burreket says.
That's all well and good when the couple is together but if they separate, things often take a nasty turn when the parents want the money back.
"You have this awful situation where mother and father-in-law are in the family court litigating against their daughter-in-law," he says.
Burreket's advice is make any cash advance a properly documented loan, not a gift, or take a direct interest in the property (ie, become co-owners). Or if it is a gift, be very specific in writing about who the gift is for.
2. Too much tax focus
When it comes to trying to be clever about how you're structuring your wealth for tax avoidance, Burreket advises steering clear of this.
"Many people structure their affairs for tax purposes or insolvency reasons. Lawyers come in and say 'I put everything in my wife's name in case I got sued' and you have to say 'that's unfortunate because there's a two-to three-year wait in the family court in Sydney," says Burreket.
"And while there are exceptions and interim measures you can take, the starting point would be you presently own nothing and until that final hearing and a property alteration is made, your wife owns everything."
3. Eyes off the money
Burreket says the most important piece of advice he would give to both members of a couple is don't lose your networks. "Your best asset is─and will always be─your capacity for personal exertion or income. I wouldn't rush to give up your career. Raising kids is very important, but you should also keep an eye on your career as well," he adds.
Divorce lawyer Marilyn Hauptmann, of Swaab Attorneys, has another piece of important advice for women: watch the finances, always.
"We see women all the time who allow their husbands to control the finances – and we're talking professional women, lawyers, professors, medical specialists, not housewives," she says. "They still seem to allow their husbands to control the finances and at the end of the day they have no idea."
This may seem an obvious area for caution, but in practice it's not. Hauptmann says it's important to be across your super, mortgage, investments and general debts, so that you don't have to play catch-up if things go awry.
This article was originally published by the Australian Financial Review.
This article represents the views of the author only and do not reflect the views of AMP.
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