While she’s mostly called in for business valuations, she’s also often called in at the end of a marriage. Sometimes it’s to make it easier to draw up a settlement. Sometimes it’s due to suspicions.
“Often at the end of a marriage, someone will have concerns about the balance sheet they’re being presented in terms of what’s available in the pool of matrimonial assets to split,” she says.
“There might be an expectation gap between what they have been told is the wealth in the marriage versus what they might have understood it to be.”
It can be a mistake or a misunderstanding. Or it can be deliberate deceit.
Gary Yan, a partner and family law specialist at Coote Family Lawyers, says many people who walk through his door have been surprised not only by the breakdown of a relationship, but also by their entitlements or lack of them.
These situations can emerge from relationships with an embedded power imbalance. One partner may have significantly more control over the couple’s finances, either as a deliberate decision or due to the other partner’s lack of interest or understanding.
Navigating a busted relationship’s financial fallout can be pretty messy. However, there are steps people can take to avoid a financial imbalance from the beginning and – if necessary – make it easier to divide assets if the relationship does end.
Yan is used to people offering him “random bits of paper that they’ve gathered”.
Their relationship is over and they’ve come to him for help, but odds and ends are all they’ve been able to find to represent their entire financial lives. “Sometimes I might say to them, look, you need to understand what this is.”
This can largely be avoided if, in the earlier phases of their relationship, they established trust and open communication about their finances.
“Money is still a taboo subject for some couples, but they should be able to have a discussion about how they’re going to run their finances, and about their goals,” he says.
This is especially important if one party earns significantly more than the other, or there are plans for one to take time out of the paid workforce to raise children.
“They need to have a discussion about those things and at least have a general understanding about each other and what they’re trying to achieve over the course of the relationship.”
As property prices remain high, it’s also not uncommon for young couples to receive financial gifts from their families to buy their first house, says Yan.
This is something to talk about, and even consider putting a financial agreement in place that covers what would happen to those funds if the relationship were to end.
If money is a tricky topic to bring up, try starting from a place of curiosity, says ex-financial adviser and the creator of the My Financial Adulting Plan, Melissa Browne.
“You might start with a curious question where you ask about the money stories your partner inherited from their parents and then share yours – and compare what’s different, what’s similar and whether they clash or complement,” says Browne, who also authored Unf*ck Your Finance.
“Starting a conversation from curiosity might make you both aware that you’ve been approaching your relationship with money together in an unhealthy way and to work out together what you’d like your new story to be.”
If your partner will not engage in the conversation, or mocks attempts to start one, consider enlisting the help of a financial counsellor, therapist or financial adviser.
Browne also suggests building some financial independence. “This might be through starting to invest in your own name, looking to find more [income and savings] and having discussions with your partner about what you both having equitable financial independence might look like.”
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Power imbalances won’t always present themselves in the early stages of a relationship, and they can emerge over time, particularly as earnings power changes or one member of the relationship exits the workforce.
“It’s more common than people think because money is already something we don’t talk about. We may not realise the power imbalance that we perceive as ‘normal’ is anything but,” says Browne.
“It’s often triggered by one partner earning more than the other, one partner suddenly overtaking the other’s income or one partner no longer working.”
Delbridge says in the cases she sees, it’s often the female spouse who has a “homemaker, parent role” who is at more risk and who may end up on the weaker end of a power imbalance.
But Browne adds that power imbalances can also occur in situations where the female partner earns more.
Analysis of Australian Bureau of Statistics data by the Australian National University in 2021 found that when women earn more than their male partners, the risk of domestic violence increases by 35 per cent. They are also more likely to experience emotional abuse.
Browne – who works mainly with women – has seen instances where women haven’t sought pay rises or promotions due to partners’ attitudes.
The red flags that a financial power imbalance is playing out can be simple: it can be one partner not having total access to all the bank accounts or being given a separate account that acts as an allowance, says Delbridge.
This isn’t necessarily a problem in itself, but problems can occur if along with limited access to funds, they also have limited knowledge of what’s happening within those funds.
Again, addressing this information deficit can begin by simply asking questions such as: “Where does the pay go?” “What’s the income from the rental property, and where is that going?”
Equally important is not signing documents without fully understanding what they mean.
Yan, Delbridge and Browne have seen too many people with gnarled financial affairs simply because they signed documents handed to them by their partners without realising what they were. It’s understandable to trust a partner, and it’s fair to hope that most partners are trustworthy, but it’s still never a good idea to sign documents without understanding them, says Yan.
These could be documents to become a co-trustee of a self-managed super fund, co-director of a business, or even their own divorce settlement.
“You have to have enough knowledge to ... know what you’re reading. No one should be a director of a company or a trustee of a SMSF if they don’t genuinely understand what their obligations are in terms of carrying out that role,” says Delbridge.
“The excuse of ‘I didn’t know what I was signing, it was passed to me at the kitchen table’ doesn’t float from the perspective of [corporate regulator] ASIC or the ATO.”
Signing documents without understanding them can trigger fines or even bankruptcy, adds Browne.
Other red flags include one partner belittling the other’s financial knowledge, wanting to make all the financial decisions and refusing to talk about money. Or one partner telling the other not to worry about the finances or saying it’s under control when the topic is brought up, says Browne, as is an apparent disconnect between the spending in the relationship and the couple’s earnings.
Partners in a well-established relationship should have an understanding of how much money is coming in, where it’s coming from and where it’s going to, summarises Yan.
It’s not only important for division of assets and open communication, it also helps if the relationship does end.
Yan says some people leave relationships without a clear grip of their own spending patterns, their bills and just how much money they need to survive. This can add an extra layer of difficulty when navigating divorce settlements.
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The Federal Circuit Court received 49,625 divorce applications in the 2020-21 financial year, up 8 per cent on the previous year.
Even if a relationship ends amicably, a power imbalance triggered by one partner not understanding the couple’s finances or playing a minor role in making money decisions can have big consequences.
“It may mean the partner who hasn’t worked fulltime, if at all – and hasn’t engaged with the household finances because their partner earned the largest part of the couple’s income and therefore made all the financial decisions – will struggle financially,” says Browne
“[This] is one of the reasons that women over 55 are most at risk of homelessness.”
But there are steps people can take before a relationship ends to try to limit the financial fallout, says Delbridge.
Again, it starts with asking questions about finances in the relationship. Then it’s gathering documents.
“If you have got access to the internet banking, and you can safely access that and have a look at those bank statements, it’s best-case scenario to get a copy of those statements,” says Delbridge.
“The worst-case scenario is you just make some notes on where the income is coming from, into which bank accounts, and where it might be going.”
If there’s a business involved, reading the financial statements will offer an idea of the assets, revenue and profitability. If you can get copies, do that too.
“The sources of information will be tax returns, financial statements and bank accounts,” Delbridge says.
“So if you can safely access that information ... then that will at least be the start of the information that you’re going to need to give to your family lawyer, to then reach some sort of settlement.”
She also suggests doing a financial literacy course can be useful for someone who is completely at sea with their finances.
Yan says consulting a lawyer before the relationship has officially ended can be helpful. Ending a decades-long relationship is overwhelming, and a lack of financial awareness can pose added obstacles.
But a family lawyer’s job is to explain how the legal process works and how assets will need to be declared and divided under legislation.
“That generally makes people feel a bit better about their rights and knowing what their rights are,” says Yan.
“We can also help them with the practical things of working out what to do before they separate.” That can be going to the bank and asking for all the financial accounts in their name. It’s information they’re entitled to, he says.
Speaking to their accountant, or a separate accountant, is also a good idea as the relationship winds down, especially if they have been asked to sign documents.
Professional help can also be important if financial abuse is occurring. Financial counsellors and family lawyers can support people leaving relationships in organising and accessing accommodation.
“If they’re concerned about their ex-partner turning the lights or the taps off, they might need to plan things like making sure they’ve got a separation fund.”
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Once the relationship has ended, seeking legal advice is a priority. If legal advice is too expensive, there are services such as Legal Aid, the Women’s Legal Service and other options.
“There’s always going to be some sort of legal help available, whether it’s the top-end-of-town family lawyer, or legal aid,” says Delbridge.
The lawyers will help gain access to information on income and assets. Court orders may also require former spouses reveal details about their finances.
“If it’s complex enough that you think it may end up before the court, then you need to retain an independent forensic accountant,” she adds.
There are myriad ways to divert funds in a relationship, Delbridge says. It could be asking an employer to split pay between separate accounts, moving money around different bank accounts or purchasing assets and putting them in someone else’s name.
She has seen cases where a wife knew her former husband held a share in his employer’s private company. The husband produced a set of financial statements for the holding company showing that the company had no net value.
“But we saw a line item on the balance sheet which was an investment in other companies. It turned out that ... [there was] this whole network of really profitable entities with a large net value that hadn’t filtered their way onto the balance sheet of what was disclosed – but it was huge, and the former husband’s share of that was worth a significant value.
“That’s an example of something that looked pretty vanilla, but one little thing led to a whole lot of value.”
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