Don't Get Angry, Get Prepared

This week, the ABC’s 7.30 program is presenting a 4-part investigative series titled “Why Women Are Angry”¹. The first instalment, which aired on Monday 30 August, explored income inequality, and featured a retired woman named Lyn, who found herself with significantly less superannuation and assets as a result of her divorce after a 30-year marriage. The episode highlighted the many financial disadvantages faced by Australian women and Lyn’s story illustrates how women can be especially vulnerable as a result of relationship breakdowns, even if they’re the one who has earned more or brought more wealth to the relationship.

Statistics tell us that women make up 47% of the workforce in Australia.² We also know that women are entering corporate or professional services jobs such as law, accounting, and finance in greater numbers than previously recorded, and that often the graduating year groups for bachelor’s degrees in these disciplines are more than 50% female.³ Add to this the fact that many other professional roles have always been filled primarily by women, such as nursing and aged care, and teaching and child care.

Additionally, the average age of first-time mothers is increasing⁴, and the number of women who are purchasing real estate on their own is also on the rise⁵. What these trends suggest is that more women than ever are building careers, developing their income-earning potential, and acquiring assets and financial resources on their own, either before being in a relationship or independently of their partners if they are in a relationship. This means that when women do find themselves in a committed relationship, they are introducing assets and financial resources which, ultimately, their partner may benefit from.

So how do women future-proof themselves from the possible negative financial consequences of a relationship breakdown? How can they ensure that the assets which they worked hard to acquire independently are not lost or overlooked?

Assets which are introduced by a party at the beginning of a relationship are treated as a financial contribution. Financial contributions are relevant when determining how to divide up the assets and financial resources of the relationship after a separation. The weight to be given to these types of contributions will depend on the length of the relationship. The longer the relationship, the less significance the contribution may be given. It is also important to be aware that assets which one person introduces to a relationship will usually be counted as part of the pool of assets to be divided at the end of a relationship, even if that asset is owned individually by the person who introduced it, and not jointly by both parties.

There are options available for people who wish to protect the assets and income which they have worked hard to acquire, which may include:

Entering into a Binding Financial Agreement (often colloquially referred to as a pre-nup) before marriage or during a de facto relationship to determine how assets will be divided in the event of a separation;
Ensuring estate planning is up to date and a current, valid will is in place;
If parents are loaning money to their adult child to assist with a property purchase, ensuring that there is a formal loan agreement in place; and
When jointly purchasing real estate, registering ownership on title to reflect the disparate contributions made by each person to the purchase.

There are still many strides to be made in the fight for gender equality, and it’s not romantic or optimistic to think about the possibility of an intimate relationship coming to an end. However, by arming themselves with advice and putting measures in place early on, just in case, women may be able to protect themselves from the risk of future financial loss, and save themselves a little bit of anger in the process.

For more advice about how you can future-proof your assets, contact Amelia Higgs.

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Don’t Get Angry, Get Prepared