Divorce - The Wealth Destroyer

by Andrew Newman
in General
26 Mar 2010 | 0 Comments

The splitting of marital property following a much publicised divorce in the United States could instantly "mint" a new billionaire and a new entrant on Forbes magazine list of the 400 wealthiest Americans, according to a recent article in the magazine.

However in what family lawyers often call "house and garden" property settlements following the breakdown of a marriage, divorce is not a creator of wealth - it's a potential destroyer of wealth.

One of the common financial fallouts from a marital property settlement is that carefully laid plans to save for retirement may be overturned. This is despite the fact that the Australian Family Court can split superannuation savings along with other assets.

The latest available divorce statistics available from the Australian Bureau of Statistics (ABS) show that the median age for divorce in 2008 was 44 for men and 41 for women.

However family lawyers say it is not unusual for couples to divorce after 30 years of marriage - perhaps on the eve of retirement or in early retirement. So much for their retirement planning!

Many people would not realise the high proportion of Australian marriages that end in divorce. It's staggering.

There were 118,756 marriages in 2008 (again the latest available figures) against 47,209 divorces. This suggests that the divorce rate could be around 40%. And these statistics do not, of course, include the failure of de facto relationships. (The Family Court of Australia recently gained the power to preside over property disputes between separated de facto [including same sex] couples.)

Other ABS statistics show that more than 36% of marriages involve at least one spouse who was previously married.

Given the effect that the breakdown of a relationship can have on personal finances, it is little wonder that the Australian Financial Planning Handbook, published by Thomson Reuters, includes a lengthy chapter on family law issues.

It seems that couples who are fortunate enough not to separate (or divide their assets) have made a sizeable step towards wealth protection.

The following article has been sourced from Vanguard Investments Australia Ltd.

Important Information

The information provided is general in nature and does not constitute financial advice. While we have taken reasonable care in providing this information, it should not be construed as being specific to your investment objectives, financial situation or particular needs. It's important for you to consider these matters before making any financial decision and we recommend you seek financial advice.

Divorce - The Wealth Destroyer

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