“Getting divorced carries enormous financial implications, but by being proactive you will be able to avoid unnecessary, costly mistakes that could negatively impact your future financial well-being,” she says. “This means empowering yourself with knowledge, not being afraid to ask questions and making sure you understand all your financial options and their various implications in order to make the best possible decisions both during and after your divorce.”
With this in mind, Smit thus offers a simple financial survival guide with six key tips for women to successfully navigate the process of untangling their finances from a partner:
Check what marital regime you are married under. Your first step when embarking on the process of getting a divorce should be to check what marital regime you are married under, and how this will affect you financially should you exit the marriage - for instance whether you are married in or out of community of property, and whether the accrual system applies.
Carefully re-examine your financial information. Gather together the details of your and your spouse’s assets and liabilities, as well as your income and expenses. This will inform your financial strategy both during and after the divorce, so the more detailed and accurate the information you are able to obtain, the better.
If retirement benefits are part of the settlement, it is also important to make sure that you understand the legislation around the valuation of these assets when it comes to divorce, as they differ according to the type of retirement product. It is also critical to reinstate medical scheme in your own name if you will no longer be covered under your (ex) husband’s medical aid.
Cut back on your expenses. From a financial perspective, divorce not only entails a splitting of assets, but also the additional expense that comes with running two separate homes. This means, realistically, you will usually need to consider a cutback in lifestyle.
Work through your expenses carefully, looking for places where it will be the quickest and easiest to make cuts and savings. Habitual spending is often the hardest to change, but with a fresh perspective and an understanding of the importance of saving, making these tweaks will be easier.
You could also consider downscaling your home, as while there is often an emotional connection to a family home, it is important to remember that downscaling comes with immediate savings in terms of rates, insurance, staff requirements and utilities.
Make savings deliberate. Recent Statistics SA figures reveal that, on average, women are expected to outlive men by nearly a decade, meaning that your savings will need to last for longer. To ensure your comfort and financial security into your retirement, it is therefore critical to make saving and investing a top priority. The easiest way is to treat your savings as simply another monthly expense by setting up a debit order, rather than saving whatever is left in your bank account at the end of the month - if anything. If savings aren’t deliberate, they tend not to happen.
Check that your children will be adequately provided for. Make sure that your divorce settlement document deals with the potential death of a partner, especially if maintenance is involved. In many cases, a life cover policy is put in place for the period under which the spouse is obliged to pay maintenance.
It goes without saying that you will also need to amend your will to reflect your new marital status and change any previous bequests that no longer meet your wishes. Furthermore, it’s vital to ensure that both you and your spouse have nominated guardians in your wills.
However, it is worth noting that minor children may not receive inheritances, meaning that any proceeds from your estate would be paid into their guardian’s account. If this is not your wish, you could instead consider setting up a testamentary trust that is to be formed upon your death for the welfare of your children. Also consider setting an age of inheritance or making the request that trustees use some discretion in this regard, as in many cases 18-year-olds lack the maturity or sense of responsibility to manage their inheritance wisely.
Consult the professionals. Obtain the guidance of a specialist family law attorney to help you to obtain the best settlement possible, as well as a professional financial adviser to help you plan your long-term financial future and avoid costly financial mistakes. It is vital that you select an adviser with whom you feel comfortable and trust implicitly.
- Supplied/ PERSONAL FINANCE