Ending a relationship

What should you do when things don’t work out?

Get organised

Going through a divorce or separation isn’t easy. Although it’s tempting to ignore the financial side of things as you deal with your emotions, the earlier you understand your options, the clearer your financial decisions will be.

You can make a start on understanding your position and organising your finances by:

  • listing your assets (eg house, car or boat)
  • listing your liabilities (eg home loan, credit card or personal loans)
  • knowing how much you both earn (you can find this information on payslips or tax returns)
  • having details of investments and savings (eg bank statements or superannuation statements).

How are the assets divided?

The way assets are divided can be one of the most difficult issues to resolve when a couple separates or divorces. Sometimes this process can go on for years.

It makes no difference whether you are married or in a de-facto or same sex relationship—everyone is legally entitled to a fair share of all assets when a relationship ends.

Some people prefer to avoid lengthy disputes by choosing to forgo some of their entitlements. The trouble with doing this is that it may have significant financial consequences down the track. It’s important to be armed with all the information and be on your toes so that the decisions you make are sound.

Working out what you are entitled to can be complicated, which is why it’s so important to seek professional help and really understand what your entitlements are. Then you’ll be in a better position to make realistic plans for the future.

Don’t forget that the final distribution of assets will vary from person to person.

Just to be clear, when it comes to property settlement:

  • Property includes all assets that are owned individually, jointly or by a family trust. If the house is in your spouse or partner's name, it will still be considered part of the settlement.
  • Married couples can apply for property settlement before they are divorced.
  • The Family Court will weigh up the contributions made during the relationship and the future needs of both people when considering a fair division of property.
  • Despite the myths, women do not automatically get everything.
  • If you leave the house, you will not lose your entitlement to a share of the house or other property.
  • If you are married, superannuation is now included as part of the overall property assets. Any super held by one or both parties is part of the property settlement that you and your spouse or partner will have to negotiate and probably divide.

What happens to your super?

Any super accumulated during the relationship is likely to be considered to have been accrued jointly (especially when children are involved). So even if one partner did not contribute to super for many years, they may still be entitled to a percentage of the other partner’s super. Seeking legal advice can help you understand what you may be entitled to.

Even though super is an asset, it is legally treated differently to other types of assets. A separating couple can value their super interest and split the super benefit into their own names. Of course, it’s important to remember that super is still subject to preservation rules, and cannot generally be accessed unless a condition of release is met, like retirement.

A separating couple can:

  • sign a formal agreement to split their super
  • seek consent orders to split super, or
  • if they cannot agree, seek a court order to split it.

The Family Court has a Family law and superannuation fact sheet that explains how the law deals with super on the breakdown of a marriage or de-facto relationship.

Moving forward

Because one household has now turned into two, this can mean considerably less household income for many people, plus the fact that expenses are no longer shared.

If you have always been budgeting, you’re in good shape. You’ll know how important it is to revise your budget with changing circumstances. But if you have never budgeted, you’ll need to start.

Listing your income and expenses is a vital first step and will help you weigh up what you can and can’t afford. Don’t forget that child support payments (if relevant) will likely be either a source of income or an expense to you. The DHS Child Support website includes useful tools to estimate your child support payments, a budget tool and details of financial counselling services.

Financial counselling and help with budgeting is available online free of charge from sources such as the Salvation Army and Financial Counselling Australia. ASIC’s MoneySmart website also has a lot of useful information.

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Important information

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It’s important to consider your particular circumstances before deciding what’s right for you. This information hasn’t taken your circumstances into account. 

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.