With the Australian Institute of Family Studies reporting a fivefold increase in divorce among couples who have been together for 20 years or more, Heather Moore, Head of Accounting at Knight, joined Monika Kos in the Channel Nine studio to discuss what this means for the couple and their individual financial health.
A divorce’s impact is heightened when more wealth is at stake. Couples who have lived, worked and accumulated shared assets over decades now find themselves having to consider stretching the income from these assets to cover two households. There are often more complex financial issues to consider for separations later in life. Assets held for many years may be carrying large latent capital gains, which should be considered in the asset division conversations. A long-standing family business may be one of the main assets of the couple. An understanding of the options available for dealing with a valuable business in this scenario and the potential opportunities for effective tax planning is critical to maximising the outcome for the couple.
“It’s particularly important to make sure you get the division of assets right the first time. Due to silver couples having less time left in their working lives, it places more of a financial strain on the individuals if the proceedings are drawn out, resulting in hefty legal costs, which erode the pool of assets,” Heather explains.
In Australia, it is common for a couple in this age group to have had one partner, typically the wife, who dedicates years to raising their children and looking after the household, resulting in lower earning capacity and superannuation balance. The outcome for each individual must consider these factors to ensure a fair and equitable split.
“I recommend that couples seek out advisers who are not only experienced in the division of assets during a divorce but are committed to a process without going to court if that is what you want. If you engage a family lawyer who is specifically trained as a collaborative professional, they will be able to bring in other collaboratively trained financial and coaching professionals to the team. This will smooth the process and help you avoid the emotional and financial costs of lengthy proceedings,” Heather explains.
With the rising cost of living on many Australians’ minds, Heather emphasised the need for good support and advice, “At the end of the day, good advisers who have the right experience, skills and mindset will help you to achieve the best outcome in the shortest time frame.”
Knight is with you every step of the way. If you’re dealing with the complexities of divorce, our experienced team is ready with the support and advice you need.
Reach out for a consultation today to plan your next steps towards financial well-being.