Financial uncertainty is one of the most stressful aspects of separation. Questions about joint accounts, who pays the mortgage, and what you are entitled to can keep you awake at night.
This guide covers the key financial considerations during separation. We explain your rights, your obligations, and how to protect your position without doing anything that could harm your case.
Joint Bank Accounts: What You Can and Cannot Do
Your legal rights to joint accounts
If you hold a joint bank account with your partner, you generally have equal access to the funds in that account. This remains true during separation. However, what you can legally access and what you should do are not always the same thing.
Should you close or freeze joint accounts?
Closing a joint account typically requires both parties to sign. Freezing an account or amending the requirement for joint signatures to withdraw funds may be possible on the instructions of one party. For this you will need to speak with your bank. This can be a sensible precaution if you are concerned about large sums being withdrawn without your knowledge.
However, before taking any action, consider the practical implications. If bills are set up to come out of that account, freezing it could cause payments to bounce. Communication with your partner, where safe and appropriate, is usually better than unilateral action.
Opening your own accounts
You are entitled to open a bank account in your own name at any time. Many people find it helpful to set up a separate account for their income and personal expenses during separation. This provides clarity about your individual finances and makes it easier to budget independently.
What the court considers reasonable
If your financial matters end up before the Federal Circuit and Family Court of Australia, the Court will look at how both parties handled money during the separation. Using joint funds for reasonable living expenses is generally acceptable. Withdrawing large amounts to hide from your partner, or spending recklessly, is not.
Keep records of all transactions from joint accounts during separation. This documentation can be important if disputes arise later.
Protecting Assets Without Breaking the Rules
What protecting assets actually means legally
Protecting your assets means ensuring you receive your fair share of the property pool when the time comes for settlement. It does not mean hiding money, transferring property into someone else’s name, or disposing of assets to prevent your partner from claiming them.
The difference between protection and hiding
There is a clear line between legitimate asset protection and improper conduct. Documenting what assets exist, keeping records, and seeking legal advice about your entitlements are all appropriate steps. Moving money to a family member’s account, selling assets below market value, or failing to disclose assets during legal proceedings are not.
Common mistakes that damage your case
Courts have broad powers to trace assets and penalise parties who attempt to hide or dissipate the property pool. If you act improperly, you may end up with a smaller share of the assets than you would have otherwise received. The short-term gain of hiding money is rarely worth the long-term consequences.
Asset preservation orders
If you are concerned that your partner may dispose of assets before settlement, you can apply to the court for an asset preservation order. This is an injunction that prevents either party from selling, transferring, or otherwise dealing with certain assets until the property settlement is resolved.
Bills, Debts, and Ongoing Expenses
Who is responsible for what during separation
There is no automatic rule that determines who pays which bills during separation. If you have joint debts, both parties generally remain liable to the creditor regardless of any private agreement between you.
Mortgage and rent obligations
If you have a joint mortgage, the bank will hold both of you responsible for repayments. The fact that one person has moved out does not change legal responsibilities. If mortgage payments are not made, both parties’ credit ratings can be affected.
Many couples continue to share mortgage payments during separation, even if only one person remains living in the property. However, this is not always possible, and accordingly, other couples reach an alternate repayment arrangement pending final property settlement. How these contributions are treated in the final property settlement will depend on a range of factors.
Utilities, insurance, and household bills
Utility accounts are usually in one person’s name. That person remains responsible to the provider for payment, regardless of who is living in the property. If you are the account holder and your partner remains in the home, you may wish to negotiate how these costs will be paid pending final property settlement occurring.
Credit cards and joint debts
Joint credit card debt remains the responsibility of both parties until the debt is paid or formally transferred. If only one person’s name is on the card, they are solely liable, even if the other person incurred the charges.
School fees and children’s expenses
Ongoing expenses for children, including school fees, extracurricular activities, and medical costs, need to be addressed during separation. These may be dealt with through child support arrangements or direct agreement between the parties.
Understanding What You Are Entitled To
Why there is no automatic 50/50 split
A common misconception is that upon separation parties’ entitlements are automatically equal. This is not the case. In Australia the court considers a range of factors to determine the parties’ entitlements to property division, which is dependent on the specific circumstances of their relationship.
The four-step process
When dividing property, the court follows a four-step process:
- Identifying and valuing all assets, liabilities, and financial resources of both parties
- Assessing the contributions each party made (financial and non-financial, including homemaking and parenting)
- Considering future needs (such as care of children, age, health, and earning capacity)
- Determining whether the proposed division is just and equitable
Factors that affect your entitlement
Your entitlements will depend on factors including the length of the relationship, the financial contributions you each made, non-financial contributions such as caring for children or maintaining or improving the home, your future earning capacity, who will have primary care of the children, and each party’s age and health.
Why early legal advice is so important
Without understanding what you are entitled to, you may agree to arrangements that are less than fair. Early legal advice can help you understand the likely range of outcomes, so you can negotiate from a position of knowledge rather than uncertainty.
Temporary Financial Arrangements
Many couples establish informal financial arrangements during separation to manage day-to-day expenses while working toward a permanent settlement. These arrangements can be helpful in the short term but should not be treated as final.
Child support during separation
Child support can be arranged privately between the parties or assessed through Services Australia. The amount is generally based on both parties’ incomes, the number of children, and the care arrangements.
Spousal maintenance considerations
Spousal maintenance is financial support paid by one party to the other. It is not automatic; the party seeking maintenance must demonstrate that they cannot adequately support themselves and that the other party has the capacity to pay. This can be arranged by agreement or ordered by a court.
Why informal agreements should be temporary only
Informal arrangements offer no legal protection. If circumstances change, or if your partner simply stops complying, you may have limited recourse. Consent Orders or Financial Agreements provide certainty and can be enforced if necessary.
Financial Red Flags to Avoid
What not to do
- Empty joint accounts or transfer large sums without discussion
- Hide assets or income from the other party
- Stop paying agreed expenses without warning
- Sell or dispose of assets at below market value
- Make large purchases or incur significant debt without reason
What you should do
- Document the current balance of all accounts and assets
- Keep records of all financial transactions
- Communicate in writing where possible
- Seek legal advice before making major financial decisions
- Continue to meet reasonable obligations
Getting Professional Help
When to involve a family lawyer
A family lawyer can help you understand your entitlements, protect your position, and work toward a fair settlement. Early advice is often more valuable than advice sought after problems have developed.
Financial advice vs legal advice
A family lawyer can advise on the legal aspects of property division, but is not a financial adviser. If you need advice about superannuation, tax implications, or investment decisions, you may benefit from consulting a qualified financial adviser as well.
Cost vs value of early intervention
Some people delay seeking legal advice because of concerns about costs. However, the cost of advice is often far less than the cost of making uninformed decisions that affect your financial future. A single consultation can provide clarity and direction that often saves you money and stress in the long run.
Take Control of Your Financial Future
Managing finances during separation is challenging, but you do not have to figure it out alone. Understanding your rights and obligations is the first step toward protecting your financial position.
Our family law team provides practical advice in plain English, helping you understand your options and make informed decisions. We are here to support you through this process with compassion and clarity.
Book a confidential consultation to discuss your financial situation during separation.
