How to protect your assets in a divorce: 11 top legal tips

There are a lot of things to consider when you’re leaving a relationship, from custody arrangements to living arrangements. But one of the most important is how to protect your assets.

Whether you’re in the middle of a divorce or considering it, or you’re just entering into a new relationship, now is definitely the time to think about how to protect your assets (if you haven’t already). In fact, the earlier you consider this, the better position you’ll be in should you ever find yourself in the midst of a divorce or separation. 

So, we’ve pulled together our top 11 tips to help you protect your assets in a divorce in Australia. 

1. Consider a prenuptial agreement (binding financial agreement)

If you’re just entering into a new relationship, it’s a great time to think about a binding financial agreement (BFA), probably better known to you as a prenuptial agreement. 

While a lot of people bristle at the thought of a prenup, they’re fantastic for setting out expectations when it comes to your assets and your partner’s assets, and the gold standard for asset protection in divorce. Many people are getting married later in life and often have acquired assets and savings prior to their marriages that should remain theirs if the marriage were to end. 

A prenup can lay out how you want these to be handled from day one, eliminating unnecessary conflict and making separation easier and quicker. 

2. Keep clear financial records

Keeping clear financial records from the get-go means that you’ll always have a good idea of your assets, including what is yours, what is your partner’s, and what belongs to the relationship. 

If you do decide to separate, having clear records will save you time and money, as the court will require documentary proof when dividing the property pool. It also means that you’ll be aware if your ex-partner tries to conceal, dispose of, or waste any assets without your consent. 

3. Identify all your assets (the property pool)

It’s important that you can identify all your assets when you’re separating. If you’ve kept great financial records, this step might be very easy and should include taking inventory of all your marital property. Some things this could include are:

• Earnings
• Savings
• Gifts
• Inheritances
• Real property like homes
• Vehicles, like cars, boats and trailers
• Non-financial contributions, like childcare
• Improvements to your property
• Support of a partner

A family lawyer will be very helpful in this process.

4. Maintain separate bank accounts

Having separate bank accounts makes separating much simpler (financially). However, most couples do share bank accounts, and that’s OK too. Once you decide to separate, it’s a good idea to open a separate account in your own name and start putting your own income into that account. 

This doesn’t necessarily mean that your ex-partner won’t get a share of this money if the Court determines that’s the fair and equitable decision. But it does make it easier to move forward following your split.

5. Change your will (and all your beneficiary nominations!)

In fact, a review of your estate planning should take immediate priority. Many married couples have their spouse as their designated beneficiary on accounts, and in some cases you might not have to even name them in order for them to be the beneficiary.

It’s important to speak to someone about your estate who can help you understand what needs changing. You’ll certainly need to update your will, but also your insurance policies and your superannuation. And there may be additional items that need specific attention in order to protect your assets. 

6. Close joint credit cards

Close any joint credit cards as soon as you can. While the process of dividing up the property pool can usually tidy up any misuse of funds or overspending, it’s much cleaner if you separate debt and potential debt as soon as possible. You definitely don’t want to risk being on the hook for your ex’s spending if you can avoid it!

7. Contribute equally to household expenses

This one seems a little strange, but when you contribute equally to household expenses both during the marriage and the separation, it actually protects your own assets. This is because when it comes to dividing property, the Court focuses on what is fair and equitable. Equal contribution generally plays into equal division, which keeps things clean and straightforward.

8. Document gifts and inheritances

Many individuals will receive gifts of money or an inheritance from family, and sometimes these can be quite substantial. The general rule is that all assets will form part of the property pool when you divorce or separate. However, documentation can make it clear to the Court that these gifts were intended for your use alone, which may impact their ultimate division.

9. Don’t hide your assets

Hiding your assets during a divorce or separation is illegal. While we want to embrace asset protection from your spouse, it must be done in the right way. 

The Family Law Act 1975 requires that you and your ex provide a full and frank disclosure of ALL your assets, including earnings, savings, and even gifts. Hiding any assets at all could lead to severe consequences, including imprisonment. 

If you suspect that your ex might be hiding assets, get in touch with our team right away. There are ways of uncovering hidden assets, but it can be a complex process, and professional legal advice is essential!

10. Don’t pay your ex’s debts

If your ex has debt in their name alone—perhaps a credit card or personal loan—don’t make repayments for them. It can be difficult enough to prove that debt accrued during the life of a relationship should belong to only one party, and your payment of debt you believe does fall into that category could muddy the waters. 

This doesn’t mean you won’t be required to take on some of this debt during a property division if the Court believes it was for the benefit of the relationship. However, it can make it easier to make a clean division if you don’t make those repayments. 

Of course, if you have joint debts—for example, if both your names are on the mortgage—you are legally responsible for those repayments, and you must continue to make them. You can also speak to your lender about refinancing any of these debts in order to have them in one person’s name alone. 

11. Seek legal advice

If you’re looking to understand asset protection from divorce or separation, don’t go it alone. Divorce can be complicated, and property division adds to those complications. Understanding your rights and obligations can help you protect yourself and your family and see you getting the best outcomes for your situation.

[CTA]Our team are expert family lawyers with a wealth of experience in divorce and property division. Our job is to understand the ins and outs of divorce, including the emotional challenges and sensitive nature of family disputes so we can help you in the best way possible. Get in touch with our team today!

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