Financial essentials for late life separation

When a long term relationship comes to an end, the financial implications reach well beyond who keeps the house or the car.

Understanding how your assets, superannuation, estate plans and income may change can help you make clearer decisions at a time that is often stressful and emotional. For many people in their fifties, sixties or beyond, these decisions shape the rest of their working life and retirement.​

1. Dividing assets in later life

Couples who have been together for decades often have a substantial pool of assets that now need to be divided. This may include the family home, a coastal holiday place or investment property, business interests, and investments held personally or through a company, trust or self managed super fund. In a property settlement, both jointly owned and separately owned assets are usually considered part of the overall pool, and how they are split depends on a range of legal and financial factors.​

Working out how to unwind these structures can be complex and costly. In some cases, assets must be sold, which might not align with ideal market timing and may trigger capital gains tax that needs to be factored into the settlement. Specialist legal and tax advice is important wherever business entities, trusts or self managed super funds are involved.​

2. Superannuation and splitting balances

By mid to later life, superannuation balances between partners can be quite unequal, particularly if one person has taken time out of the workforce or worked part time. Australian family law allows super to be taken into account separately from other assets and, where appropriate, split between partners under a formal arrangement.​

This can happen in three main ways: a written superannuation agreement, consent orders submitted to the court, or a court order made by a judge. Professional help is often needed to locate all relevant super accounts, correctly value them and decide how any split will work in practice. A split will typically involve transferring part of one person’s super into the other’s super account, rather than paying it out in cash, so the money generally stays in the super system until each person reaches a condition of release such as retirement.​

It is also important to review Binding Death Benefit Nominations linked to your super and any life insurance held inside or outside super. Nominations favouring a former partner may need to be updated so that your super and insurance benefits go to the people you intend in future.​

3. Updating estate planning and control

Separation is a key time to revisit your estate planning. Your will, beneficiary nominations, Enduring Power of Attorney and Enduring Guardianship documents should all be reviewed promptly to reflect your new circumstances, particularly if you would now prefer different people to make financial or medical decisions on your behalf if you are unable to.​

Inherited assets can be another sensitive area. For example, if you have received a family farm or other significant inheritance that you had hoped to pass to children or grandchildren, it is important to understand how this asset might be treated in a settlement and whether any protections are available. Thoughtful planning and advice can help balance respect for family legacies with the legal realities of separation.​

4. Income, expenses and lifestyle after separation

Running two households generally costs more than running one, even if both households are modest. Many bills such as insurance, car registration, rates and utilities still need to be paid in full by each person, whether you end up in a city apartment, a regional rental or a smaller home near the coast. Research on the Household Expenditure Measure used by lenders suggests a single adult’s living costs are around 70% of those for a couple, yet household income after separation may be significantly lower than when you were together.​

The financial impact is not always equal. University of Melbourne research indicates that men’s disposable income falls by around 5% after separation, while women’s can fall by about 30%, highlighting the need for careful planning, especially where one partner has had less engagement with finances or has more limited earning capacity. In some cases, neither person can afford to keep the family home, and selling may be the only viable option if banks are reluctant to provide new mortgages to older borrowers with reduced income. This can mean adjusting to the rental market for the first time in years.​

5. Spousal maintenance and support

Alongside the property settlement, the court may order one person to pay spousal maintenance to the other, separate from child support. Spousal maintenance is financial support paid where one party cannot adequately meet their own reasonable living expenses and the other has the capacity to contribute, taking into account income, earning potential, health, age and caring responsibilities.​

There are time limits to be aware of. In most cases, applications for spousal maintenance must be made within 12 months of a divorce becoming final, or within 24 months of the end of a de facto relationship, so it is important not to delay seeking advice if this support may be relevant.​

6. Impact on Centrelink and concessions

A separation can change your eligibility for government support, particularly if your assets and income are reduced. Some people who were previously above Centrelink thresholds may find that, after the settlement, they qualify for payments such as the Age Pension or other income support, along with related concessions on health, transport and utilities.​

Understanding how your new situation interacts with income and assets tests can help you plan cash flow and housing decisions more confidently. A combination of legal, financial and Centrelink specific advice can be useful to avoid surprises and make the most of any new entitlements.​

7. Drawing on professional guidance

Legal advice is almost always needed in a late life separation or divorce, particularly where property, trusts, businesses or superannuation interests are involved. Legal fees can be significant and need to be factored into settlement expectations.​

Alongside your solicitor, a financial adviser can help you map out how different settlement options might affect your long term position, including retirement income, super, cash reserves, housing and Centrelink outcomes. Bringing financial and legal perspectives together can support clearer, more informed decisions at a challenging time.​

If you would like to discuss how this applies to you, please reach out to our friendly team at Stream Financial.