7 common divorce settlement mistakes women make and how to avoid them

Long-term relationships usually accrue many assets. Property is perhaps the largest, but there’s also cash, investments, vehicles, superannuation, perhaps a family trust, even businesses if one or both of you are self-employed.

Walking away from a relationship with your fair share means thinking about both your current needs and your long-term future. Failing to balance these needs will likely see you make one (or more) of the following mistakes, which could see you playing catch up forevermore.

Here are seven common divorce settlement mistakes women make, and how to avoid them:

1. Settling too early

Many people – women especially – accept a settlement offer to “just get it done”. Moving on is healthy, but doing so prematurely usually means doing so with a lot less to your name.

However, I’m not advocating the other extreme – dragging things out endlessly to squeeze your ex for every cent possible – because only the lawyers win in this scenario.

If you’ll become a newly single woman, it’s important to stand up for yourself and not accept less than you’re worth or legitimately entitled to. Use your logical brain here instead of your emotional brain.

2. Fixating on the family home

Sadly, as a financial adviser, I have seen too many women forgo cash and other assets specifically to retain the family home – and then not be able to afford to keep it.

This is particularly true of newly single mums trying to maintain stability for their children. Consider any mortgage owing and other upkeep expenses as part your settlement, and ensure you get enough money to cover them.

Alternatively, push for ownership of an investment property that is more manageable on one income and make that your new home, or sell everything and start over.

3. Forgetting about superannuation

Contrary to popular belief, “what’s yours is yours and what’s mine is mine” doesn’t apply to superannuation. It’s a joint asset like any other. This matters to women especially for two reasons:

1. The gender pay gap and super pay gap means women typically have less super than their partner.
2. Women do the bulk of unpaid caregiving for children and elderly parents, meaning time out of the paid workforce with no or limited employer contributions.

You may be entitled to a portion of your ex’s super, paid into your own fund, adding thousands of dollars to help fund your retirement.

4. Not updating estate plans

Having survived a divorce/separation, do you really want to hand it all back to your ex once you’re gone – and leave any future partner you have out in the cold? This could happen if you don’t update your estate planning, including:

• revising your will
• changing/making power of attorney and guardianship provisions
• updating beneficiaries in your super and any trusts/companies.

The last point about updating beneficiaries is particularly important – these are treated separately from your will and so are easily overlooked.

5. Forgoing pre-settlement advice

I recently heard of a woman who was advised not to seek financial advice until after her financial settlement. Yet, waiting until then could have severely restricted her settlement negotiations and her understanding of the long-term implications of any offer she received.

Getting pre-settlement advice arms you with information to make informed decisions before signing on the dotted line resulting in hopefully better outcomes. Otherwise, your  post-settlement advice may clean up costly – preventable – mistakes.

6. Taking the wrong advice

Speaking of advice, where you get it from is just as important as when. Family and friends mean well, but unless they are qualified and practicing professionals, their advice about financial and legal matters could inadvertently do more harm than good.

So too can following the words of influencers on social media or in books, who are generally not qualified in the subject and may be pushing their own agenda (such as undisclosed paid endorsements for a particular product or service).

This isn’t just legal advice – your financial adviser and accountant can give you clarity over your current financial and tax situation plus the longer-term impacts of any settlement offer.

7. Repeating old mistakes

Remember the old saying “fool me once, shame on you. Fool me twice, shame on me”? Sadly, many people don’t learn from the experience of a relationship breakdown to implement adequate safeguards and clean up any past mistakes.

That includes:

• Building strong financial foundations, such as an emergency fund, a working spending and investment plan, and adequate insurance coverage.
• Maintaining financial independence, such as your own bank account and credit card.
• Creating a pre-nuptial agreement should you enter a new serious relationship (de-facto couples are treated the same as married couples after living together for two years).
• Having your own rather than joint advisers – e.g. financial adviser, accountant, lawyer etc.

Otherwise, you could find yourself back at square one if your next relationship isn’t the “happily ever after” you had dreamed of. That’s a repeat scenario best avoided.

Disclaimer: The information in this article is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of people, institutions or organisations the owner may be associated with in a professional or personal capacity unless explicitly stated. Helen Baker is an authorised representative of BPW Partners Pty Ltd AFSL 548754.