How stay-at-home parents can financially navigate separation

What happens when someone who has spent a good part of their life dedicated to raising kids and making a home, separates from their partner?

Stay-at-home parents are often almost entirely reliant on their spouse for financial support. So, when a separation occurs, not only are they losing a relationship but they are potentially losing their financial lifeline.

But there are some things a stay-at-home parent can do to protect themselves in this situation, both before and after separation.

Before separation

1. Maintain individual bank accounts

Too often, couples only have joint accounts into which income is paid, bills are paid from and savings are accumulated.

While this can be convenient as a couple, after a separation, it can give one spouse the opportunity to restrict the other’s access to funds.

Maintaining individual bank accounts is a good way to minimise the risk of potentially being “cut off” financially.

2. Make sure you know your family’s financial position

It is common for one party to assume control of the family finances. However, not being actively involved and aware of the details of your family’s financial circumstances (including the location of assets/liabilities, contacts, logins and passwords) can create a difficult pathway to obtain and determine what assets are held and where funds are kept.

Be sure to protect yourself by maintaining access to all financial records, including historical records.

3. Hold assets in joint names

Where assets are held in joint names, they can’t be disposed of or dealt with, without both parties’ consent.

Where an asset is held in the sole name of the stay-at-home parent, that is even better.

After separation

1. Ensure your assets and funds are protected

Banks will often quickly lock down joint accounts when advised of a separation, to prevent one party from withdrawing significant joint funds.

Accounts holding significant funds, such as savings accounts, offset and loan redraw accounts, should be immediately restricted to require both parties’ authority to transact.

If you’re a stay-at-home parent with no other access to funds, it’s a good idea to secure a reasonable amount of funds to ensure self-sufficiency, at least in the short term and until financial matters are resolved.

In many family law matters a party who is not the registered owner of a property will attempt to lodge a caveat to protect their interest. However, legally, a family law claim to a property does not create a caveatable interest. Instead, you’ll need to seek out specialised family law advice to determine how best to lawfully protect your joint assets.

2. Child support and children’s expenses

Generally, the sole income-earning spouse will continue paying children’s expenses after separation without issue, to minimise disruption to children.  However, this is not always the case.  There are two kinds of financial support you may be entitled to, for your children:

• Periodic child support which is paid weekly or monthly to the stay-at-home parent to assist with the general everyday costs of housing, feeding, clothing and educating children;
• Non-periodic child support usually covers out-of-pocket expenses such as private school fees, extracurricular activities, medical expenses and the like.

3. Entitlement to ongoing financial support

In addition to child support, as a stay-at-home parent you may be entitled to receive spousal maintenance from your former spouse.

An entitlement to spousal maintenance is assessed on a number of factors, including the stay-at-home parent’s reasonable expenses, their capacity to earn income, and the income-earning spouse’s capacity to pay spousal maintenance, after taking into account their own reasonable expenses, and child support payable.

4. Make sure you secure accommodation

Deciding where parties will live is often one of the first steps following a separation. There may be a battle about who remains in the family home. But a property registered solely in the name of one spouse does not automatically entitle that party to remain living there. This is a common mistake.

Before moving out, a stay-at-home parent should secure financial support from the income-earning spouse to cover accommodation and living costs. Financial support for accommodation will be considered a spousal maintenance payment.

5. Remain amicable, co-operative and reasonable where possible

Working together with your former spouse to reach an agreement about interim financial support, children’s arrangements and a final property settlement, provided it is safe to do so, is obviously the ideal, and most cost-effective situation.

Often, pursuing financial support can cost a lot more than what a party ultimately gains, so it is important to have reasonable and realistic expectations. Where one income previously supported one household, but now needs to be stretched to cover two, this may result in necessary lifestyle changes and a lowering of expectations.

Family dispute resolution with experienced and reputable practitioners can be an inexpensive way to assist parties who simply need an independent, impartial person to help sort out the financial arrangements in the wake of separation.

6. Understand your rights and entitlements

Seeking specialised family law advice early in the piece is key to strategically preparing for and managing the financial arrangements arising from separation.

If parties seek legal advice too late (after things have turned sour, and the opportunity to take steps to be financially protected has passed), this will likely result in escalated costs and conflict.