Nobody plans for his or her marriage to fail, but the upside of splitting up – if there is one – is that you can definitely plan for your separation to succeed. Whether you have taken up arms or just fallen out of love and are now trying to salvage a friendship out of what’s left, there are potential financial and real estate related risks you are both exposed to that should be addressed.
We get it – divorce is expensive and often logistically difficult, especially if there’s animosity between the two of you. It’s also important to be mindful that, for some couples, staying married can be an appropriate arrangement as they may be seeking more time and space to work through their issues. However, the choice to avoid what you think might be a horror in the short term, could become much more challenging over the years, or even decades as an alternative. If you’ve separated on good terms this could still be the case – separating as friends is ok in theory, but people change and once new partners and new children come into your lives, things can get more complicated and expensive. There are numerous risks you may be exposed to by staying married, so think about what applies to you and decide if divorce may in fact be worth the hassle after all.
1. Bills and debt will take on new meaning
Shared responsibility for expenses was the case during your marriage and will continue to be the case as long as you stay married. Rebuilding your life after separation takes time, but the process begins immediately. On the practical end of the scale, think about things like paying the utility bills, school fees, insurance premiums, car payments and the mortgage. All of these expenses still need to be taken care of and if you lived on one income as a couple, things can get very tricky, especially if some of them are duplicated now across two households.
In addition to working out the logistics of how these common expenses (as well as the everyday ones like groceries and petrol) will be paid, there is also the complication of communication completely breaking down. If one partner moves out (or is forced to leave) they could refuse to continue to pay their share of the mortgage on a home they no longer live in. However, they remain legally obliged to service the mortgage while legal avenues are pursued, which could take months. If you are now without the supportive income of your partner, you not only have to find money to pay the mortgage and a lawyer’s bills, you may end up losing the house and destroying your credit rating in the process.
When reading the below hypothetical examples, it is important to note that the examples should be read as possibilities and not certainties.
Hypothetical Example 1: Joe and Lisa*
Marriages fall apart for a number of reasons but the discovery of a previously unknown habit is a common one. Take the example of Joe and Lisa. Joe had been a self-employed tradesman for a number of years and when they had their first baby, they both decided it was a better financial decision for Lisa, who had an academic career, to go back to work. Joe stayed home to take care of the baby and the running of the household, but over the next couple of years become increasingly depressed and disillusioned. Lisa worked long hours and travelled a lot and they became increasingly distant from each other. Joe started to occupy himself with online gambling to fill the hours he spent alone. Because he was taking care of their finances, Lisa had no sense of their dire financial situation, until the power got cut off and they argued about why Joe hadn’t paid the bill.
Joe’s months of stress trying to hide the truth were finally released and he revealed to Lisa that he had a gambling addiction and had racked up $27,000 worth of credit card debt. The dishonesty was too much for Lisa to bear and she left. Lisa depends on Joe for child care, Joe depends on Lisa for financial support. Together they are now almost $30k in debt and because Lisa had taken on the role of primary breadwinner, she is not in a position to state that she doesn’t have to pay this debt. Oh, and they are still separated but unfortunately not divorced , so Lisa gets to share Joe’s gambling debt whether she likes it or not. Of course, this example would highly depend on whether Lisa is an account holder to the credit card. Being married does not automatically link finances and responsibilities.
2. Your Home Becomes a Turf Battleground
If the decision to separate was amicable, sometimes couples will choose to keep living together until they sort out future plans. In the cases where it was less than friendly, one person may choose to leave, or the other may refuse to go. Battle lines are drawn, the house paperwork is dug out regarding co-ownership and the dispute begins. The fact is, you both still own the house, so until you change that fact, nobody wins and both of you are potentially allowed to be there. While one spouse stays on, the other can theoretically come and go as they please. Plus, in some places you may not be entitled to change the locks, so you may not even be able do that to stake your claim (and we do not suggest this as a positive course of action either).
There are any number of possible dynamics that could be at play, and if the person paying the bills is the one who had to move out, you can bet they will not let you forget it in a hurry. If there are children involved, sometimes that can work out better for the partner left behind as the house is then seen as a family home – the mortgage gets paid and they get to stay by default because the kids are there. But if that’s not the case and someone else is paying a mortgage on the home you once shared, that they no longer live in, things may get more difficult.
Hypothetical Example 2: David and Peter*
David and Peter were married ten years ago in the Netherlands and have 2 children together. They separated 18 months ago and (until recently) have not been able to be granted a divorce in Australia because they were not married according to Australian law. After the separation, Peter stayed on in the house with the children and David moved in with his new partner. Peter made it difficult for David to see the children as regularly as he would have liked to, so David would drop into the house when convenient to make sure the kids knew he was still around. From David’s perspective, this was a good solution as the kids could see him every day for breakfast, or after school, or at bath time, as he could manage. But for Peter the situation became intolerable. He didn’t want to see David at all and he resented the imposition into his privacy every day.
Peter rented a 2-bedroom apartment and moved out with the children and told David he wanted to sell the house. On realising they had moved out, David and his partner moved into the house and David now refuses to go ahead with the sale. Peter won’t let the children go back to what was once their family home and David is having difficulties seeing his children because he no longer has access to the house they live in. It’s complicated and with neither of them backing down, the ones that suffer the most will possibly be the children.
3. The possibility of losing a windfall
For some couples, getting divorced is something they accept they’ll eventually do but then they never quite get around to the doing bit. This is all well and good until something happens and in these kinds of cases, a surprise windfall of cash could be your greatest regret. There have been examples regarding post separation wealth – people winning the lottery or gaining an inheritance, only to see their long-lost spouse pop up, with their hand out for their share. If you are currently providing financial support to a child in your spouse’s care, they can apply for the payments to increase, commensurate with your financial situation. Or they could possibly make a claim, because you were married and that’s how it goes. Their success is not assured, but it can’t be ruled out either.
It’s not just lotto wins either. Separation can give you a new motivation to create a whole new version of your life and with that can come success and great fortune. Your increased income can give your ex grand ideas for restructuring your current shared financial contributions. Or you may have just lost the battle for that thing you have been fighting against due to lack of funds. Possibly the most distressing example of this risk applies to those who are separated so long, you forget you never got divorced – until someone gets an inheritance. Thirty years later your ex appears and despite modern logic and rational thought, is possibly within their rights to try and claim a share of your beloved parent’s life savings.
Hypothetical Example 3: Lotto winner
A man and his wife had separated but never divorced and their child was under 18 and in the mother’s full-time care. At the time of separation, the couple had few assets and an arrangement was made regarding child support. A few years after separating, the husband was lucky enough to win a considerable amount of money in a lottery. Because they were still married, the wife was able to make an application for property orders – the court awarded the property to her without hesitation because his financial circumstances had changed.
4. After death claims on wealth
Modern marriage comes in all shape and sizes and it’s far more common to have been married more than once these days than it used to be. Many couples who married too young, realised quickly that they had made a mistake and moved onto find a richer more fulfilling relationship with someone else. It’s easy to see, in these instances, how the philosophical choice not to marry again contributes to neglecting to divorce your first spouse from all those years ago. However, realising your young spouse was not the person you thought they were, can prove you right after you die and they step forward to make a claim on your estate.
Unless you clearly stated your intentions in your will regarding their entitlements, your ex may make a claim on the estate. Despite having built a family, shared many happy decades with your defacto partner and maybe even benefited from them nursing you to your death, their chance for financial relief after you’ve gone could be in jeopardy, if you are not divorced. Your beloved family could be left with very little, because divorcing that person you were married to – for a year or two back in your 20s – never seemed important enough.
Hypothetical Example 4: Priscilla, Adam and Louisa*
Priscilla and Adam were married in their early 20s after a whirlwind summer romance, backpacking along the east coast. Things turned bad very quickly once they returned to normal life, moved in together and faced the realities of the daily grind. They agreed the marriage wasn’t working and went their separate ways. Priscilla went on to join the police force and soon after, met Louisa and the two started a relationship. They went on to build a house together, have 3 children and had just welcomed their first grandchild when Priscilla was killed while on the job on a high-profile case. Her estate was awarded compensation and the incident was reported on the news.
Adam had followed a different path, struggled to find a career and was in financial difficulty, when he heard the news of Priscilla’s death from a mutual friend. He got some advice from a friend and, on the off chance that he might have some entitlements, started to pursue a claim on the estate. Just when Priscilla’s family thought things couldn’t get any worse, they did. Regardless of the outcome of Adam’s claim, at a time when they wanted to grieve in peace, the family were dragged into an unpleasant situation with a nearly complete stranger and the overlooking of an important detail like divorce had the potential to change theirs and Adam’s lives.
5. The past is never far behind you
As has been outlined, there are plenty of financial and reasons why you should consider getting divorced, but possibly the most important is for your own mental and emotional wellbeing. In the early days of separation, emotions rule decisions. Spouses are either so filled with emotion that they’re unable to act rationally, or so defeated by the failure of the marriage that they are left with nothing but emptiness. Sometimes these behaviours are the motivating factor in making sure the divorce happens and in other instances, refusing to divorce becomes strategic so a spouse can maintain control and try to dictate outcomes that may never come to be.
Marriage has the potential to bind two people and their financial choices together, while divorce undoes the ties that bind in clean and appropriate ways. Separated couples often have no say in how their shared assets are being managed by their spouse, how the money in the shared bank account is being spent, or what kind of purchases can go on the joint credit card. Your ex can take their new lover out for lavish dinners at your expense, or decide to remodel the holiday house out of spite, because you refused to for so many years. The best choice for both parties is to make a clean break, divide the assets and get a divorce. Putting the past in the past gives you the opportunity for a fresh start, to pursue other paths and to build up both your personal and financial capital and set yourself some brand new and exciting goals for the future.
Hypothetical Example 5: Jack and Natalie*
Jack and Natalie had been married for 14 years and during this time Natalie struggled with mental illness. Despite numerous attempts at treatment her health continued to deteriorate and she told Jack she wanted him to move out of the family home. It was unclear to Jack whether this was something that Natalie truly wanted, or a symptom of her ill health so he agreed to the separation in principal. He moved out and Natalie stayed in the family home with the children. Jack moved in with his brother and over the next 12 months, continued to support Natalie and the children emotionally and financially.
Because he was not in the house to monitor Natalie’s behaviour he often learnt about things after it was too late, such as utilities being disconnected because he hadn’t received the bill, or Natalie spontaneously booking flights for her and the children on their joint credit card. She started to spend much more money that she previously had, on items that neither her or the children needed, yet wouldn’t buy essential such as food, or fill the car with petrol. She called him on at least 3 occasions to go and rescue them from the side of the road, because the car had run out of fuel. Jack started to become anxious and frustrated at the situation.
Jack’s brother and his partner had a baby and Jack knew, by this stage, that he and Natalie would not reconcile so he needed to find a place to live. He couldn’t financially afford to run two households and Natalie’s spending was getting worse. He discussed selling the family home and moving her and the children to something cheaper, but she refused. The only possible way for Jack to improve this situation for him, his children and for Natalie was to bring the situation to an end, so he was left with no choice but to pursue divorce proceedings .
In closing…
It’s important to recognise that the examples quoted in this article are risks, not absolutes, and that the purpose of this article is not to provide legal advice or encourage divorce. Everybody’s circumstances are individual and must be considered with the utmost caution. Most people enter into marriage because of traditions and love and of course the big fancy weddings, but at the end of the day it should really be taken seriously for the binding business arrangement that it is. The fight for same sex marriages across the globe is not just so ‘gay people can have weddings too’. It’s to enable individuals to have the same privileges their friends and family have, to put structures around their financial decisions and to be able to offer the same sense of support and security to their partners and children that everybody else has. There is something to be said for short-term sacrifice for long-term gain after all. It’s true, divorce is costly and stressful, but once it’s over, so is everything else and a new chapter of your life can begin.
DISCLAIMER * Examples given are hypothetical and the stories detailed are not intentionally based on any real-life situations. Any similarities are purely coincidental.
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DISCLAIMER The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions. Click here for full Terms of Use.