Carolyn Devries is the founder of New Way Lawyers, Australia’s first non-profit law firm which provides full family law advice and representation based on the principles of excellence, care, accessibility and innovation.
In this interview, Carolyn shares her expert insights on managing finances after divorce. With a focus on family law, she addresses common misconceptions about financial settlements and offers practical strategies for achieving financial independence post-separation. Carolyn’s advice ranges from understanding the full spectrum of assets and liabilities in divorce settlements to actionable steps for resetting one’s financial course.
Carolyn, splitting up can really shake up a person’s finances, right? What’s one big money myth you keep bumping into with folks just starting the separation process?
One of the most common myths following separation is that people think that property and financial settlement simply involves dividing any equity in the family home or other real properties. In reality though, all assets and liabilities, in either the parties’ sole names or joint names, are included for division.
The definition of assets is quite broad and includes collectables, motor vehicles, savings in bank accounts, shares, cryptocurrency, interests in businesses and superannuation. Likewise, the definition of liabilities is also broad and can include mortgages, car loans, personal loans and lines of credit, credit card debts, tax debts and HECS debts. For a fair and equitable division of property to occur all assets and liabilities need to be considered.
So, after a breakup, people can still feel tied up with their ex’s finances. How do you help someone cut those strings and start handling their money solo?
After separation, couples want to be able to move forward independently with their finances. People often have an expectation that financial independence from their partner can happen in a matter of days or weeks, but this isn’t the case.
Even when parties are amicable, 4-6 months is a normal time frame for resolving property and financial matters so having realistic expectations is important. Each situation is unique, but normally the following steps are part of the process of moving toward financial independence.
- Understanding individual rights and entitlements to property and financial settlement – the easiest way to achieve this is to speak with a lawyer who practises exclusively in family law.
- Evaluating alternative options for structuring property and financial settlement – again a family lawyer can explain and provide advice about the options but at the same time it can be helpful to speak to a financial planner and even have the financial planner and family lawyer collaborate to achieve the best outcome from both a legal and a financial perspective.
- Determining and achieving a formal property / financial settlement. Where it is safe to do so, parties may have direct discussions or attend mediation and reach agreement about the details of settlement and then have a lawyer formalise the agreement by way of consent orders or a binding financial agreement. This is the easiest and most cost-effective approach. Where the situation is less amicable, or more complex, negotiations may need to occur through lawyers, or an application may need to be made to the Court for the Court to determine property / financial settlement.
- Implementing and giving effect to the terms of the property / financial settlement.
Once the terms of property / financial settlement have been formalised by way of a Binding Financial Agreement, Consent Order or Court Order the terms need to be practically implemented.
For example, if there is a split of superannuation between the parties the relevant notice and documentation needs to be given to the superannuation fund, or if one party is to retain real property the property needs to be transferred into the name of that party along with the mortgage being financed.
I’ve heard teaming up with different experts during a divorce can be a game-changer. Got any stories where this teamwork approach really paid off for someone?
Obtaining multi-disciplinary advice following separation, for example legal advice, accounting advice, financial advice and mortgage broker advice can be helpful and can result in improved outcomes.
Pairing accounting advice with legal advice means that any tax implications such as capital gains tax can be correctly factored into settlement so there is no unwanted tax debt down the track. Combining financial advice with legal advice means that an individual’s financial goals can be factored into the legal perspective.
With one client that was helping we were able to structure the property / financial settlement so that they were able to continue to receive an income tested pension from Centrelink which would otherwise have been cancelled. In another situation, we were able to achieve an outcome where a client retained the former matrimonial home in lieu of regular ongoing child support payments.
There is no one size fits all approach to property / financial settlement; the best outcomes are those that are tailored to the individual circumstances.
After the papers are signed and everything’s official, what’s the first money move you’d tell someone to make for their new chapter?
One of the tips we give to people who have formally resolved their property and financial settlement is to put together a new budget and set some new financial goals and aspirations. When setting new financial goals and aspirations it is important to not only have short term goals and aspirations but also longer term goals for say 10 and 20 years time.
Another piece of practical advice that we give is to consider consolidating separate super funds into a single fund and to update the nominated beneficiaries on super funds.
Debt’s a tricky beast after you’ve gone solo. What’s your go-to tip for people looking to get their debts straight and start fresh?
Meeting expenses on a single income can be tough when interest rates and the cost of living are high. It can be helpful to look at options to consolidate credit card debt and personal debt. Engaging with a mortgage or loan broker can be helpful as well, particularly with ones that work with individuals post separation and offer loan products that factor in income from child support payments and parenting payments.
Last question before we wrap up: let’s talk growing your nest egg after a divorce. Any beginner tips for someone just dipping their toes into investing post-split?
It can feel overwhelming when thinking about investing after separation particularly when finances may be tight but start with something small – it doesn’t have to be big. If you haven’t invested before, start by learning about investing. There are lots of books, free seminars and courses aimed at educating people about how to invest – education and knowledge is the starting point.