As Insolvency Practitioners, our expertise also extends to assisting legal practitioners and their clients in Family Law, Commercial Disputes, and Minority Shareholder Actions. We have acted as an adviser, witness, counsellor, mentor, expert witness, information processor, and analyst in various legal disputes in the State and Federal Court Systems, acting for both plaintiffs and defendants. In our line of work, we think that between us, we’ve just about seen and heard it all. While we get tremendous joy from being in a position to help others, we would be lying if we said we love every part of what we do. Out of the many things we hate about what we do is encountering the inevitable – seeing people suffer emotionally, financially, physically and mentally.
Amongst the many stories, divorce is quite popular. Divorce proceedings can be a stressful and emotional time for all parties involved. From an insolvency practitioner’s perspective, it is important to take steps to protect your money and assets during this process. By the way, when we talk about “protecting” your assets, we are not suggesting that you hide them from your lawyers or spouse! It’s more about making the breakup simpler and easier to manage, avoiding unnecessary waste and costs, and ensuring a fair distribution of those assets. Remember that, as in most legal proceedings, everyone loses something in family law proceedings, and there are no outright winners.
Here are some ways to protect/preserve your money in divorce proceedings:
- Keep track of your finances – Start by creating a comprehensive list of all your assets, including bank accounts, investments, and property. Make sure to include details such as account numbers, balances, and any joint ownership. If you receive financial contributions from family or friends, ensure they are documented as loans or gifts specifically to you. This can help clarify ownership and prevent these funds from being included in the matrimonial property pool.
- Consider keeping separate financial accounts – maintaining separate bank accounts can simplify financial matters during proceedings. While joint accounts are common, having individual accounts ensures that your personal income and savings are clearly distinguishable.
- Consult with a lawyer – Seek the advice of a qualified lawyer who specialises in family law. They can help you understand your rights and obligations under the law and advise you on the best course of action to protect your money and assets.
- Be transparent with your spouse – It’s important to be open and honest about your finances during divorce proceedings. This includes disclosing all your assets, income, and debts to your spouse and their lawyer. It’s not just a case of morally doing the right thing, all parties in a family law case have an obligation to make full and frank disclosure of all information relevant to the case. It is inevitable that your spouse already knows about most of the assets. The costs of proceedings and investigations are often worse than disclosure and agreement.
- Protect your credit score – Ensure that all joint debts are paid on time or consider closing joint accounts to avoid any negative impact on your credit score.
- Consider a prenuptial or postnuptial agreement (usually also known as Binding Financial Agreements) – These agreements can help to protect your assets in the event of a divorce by outlining how assets will be divided and any financial support that will be provided.
- Use trusts wisely – trusts can be an effective way to protect assets, but they must be set up correctly. Courts have the power to investigate and reverse transactions involving trusts if they suspect attempts to hide assets.
- Get up to date – While you review your finances and records, it’s also a good time to ensure your estate plans are up-to-date and reflect your current situation. This includes wills, power of attorney documents and any other legal arrangements.
- Seek professional help – If you’re struggling with debt and financial distress because of divorce proceedings, seek the help of a professional insolvency practitioner. They can help you develop a plan to manage your finances, negotiate with creditors, and potentially avoid bankruptcy.
Overall, protecting your money in divorce proceedings requires careful planning, open communication, and a willingness to seek professional help when needed. By keeping track of your finances, consulting with a lawyer, being transparent with your spouse, protecting your credit score, considering a prenuptial or postnuptial agreement, and seeking professional help, you can improve your chances of protecting your money and assets during this challenging time.
A divorce can not only be emotionally damaging, but the financial impacts may extend beyond the loss or separation of assets. For example, if the bank is forced to sell the family home, this may impact your ability to borrow in the future. Proper planning can help to mitigate this risk.
We have extensive experience in the financial aspects of commercial and family law matters. For a no-obligation discussion on how we can help you negotiate and manage your financial position through difficult times, please contact one of our team at DVT Mcleods.
