The day you separate, your finances don’t automatically separate with you.
Bills still need paying, someone still needs to cover the mortgage, and if you’ve been financially reliant on your partner, that dependence doesn’t just disappear because you’ve decided to live apart. For a lot of people, this is the moment the practical stress of separation actually hits, well before any property settlement has even begun.
The good news is that the law doesn’t leave you in limbo here. Below, we explain exactly what happens to your income during separation, what your rights and obligations actually are, and how to protect yourself financially before a final settlement is reached.
Depending on your family’s financial circumstances, this can be either straightforward or very complicated. How you deal with your income and pay for family expenses depends on how you and your former partner have been utilising your money and income prior to separation.
For the purpose of this article, we’re focusing on what to do with your income and cash at hand initially, straight after separation, but before you reach a final property settlement.
How to Deal With Income During Separation
If you’re going through a divorce or separation and you’re a homemaker without your own income, or only earning part-time, it can be very difficult to navigate this period, particularly if your ex-partner decides to cut you off financially. And yes, this can happen. If you find yourself in this circumstance during your separation, you should seek legal advice as soon as possible. In family law, there may be provisions that can offer assistance, in particular, an application for spousal maintenance.
What should happen during separation, if you and your former partner are being fairly amicable and reasonable, is that the main income earner continues to pay the bills in the home as has been done in the past. In family law, it’s expected that these arrangements continue as they have been dealt with during the relationship, right up until you reach a final property settlement.
Courts don’t expect separating people to put their lives on hold entirely while a property settlement is worked out, you’re still entitled to provide for yourself and your family in the meantime, but a few categories of post-separation income and assets are treated differently once a settlement is actually being decided, which we cover further below.
The Court in family law can help with these scenarios. However, determining whether it’s worthwhile making an application to the Federal Circuit and Family Court for spousal maintenance depends on your family’s income and expenses.
If you find yourself without an income because your ex-partner has financially cut you off during separation, there are a few things you should do:
- Go to Centrelink to see where you stand with them, they may be able to provide financial assistance.
- Make an appointment with a family lawyer to seek legal advice about your family law matter as a whole. If you have no way of paying legal fees, seek out a family lawyer who provides free initial advice. Collective Family Law Group is a family law firm on the Gold Coast offering a FREE 45-minute initial consultation.
- If you have children, get in touch with the Child Support Agency (Services Australia) to see what you and your children may be entitled to.
Does Your Individual Income Still Belong to You After Separation?
This is one of the most common questions we’re asked, and the honest answer is nuanced.
Your individual income earned after separation generally belongs to you, but it remains part of the overall financial picture until you finalize a legal property settlement. Courts don’t expect people to go into a state of suspended animation the moment a relationship ends, you’re entitled to keep earning, spending, and managing your own money in the meantime.
But that doesn’t mean post-separation income sits completely outside the process. If your matter eventually goes before the court, your income and expenditure can still be scrutinised, particularly where spousal maintenance or child support is in dispute, and this applies whether all his or her income is paid into a separate bank account or kept in a shared one.
This has played out in real cases. In one Full Court decision, a husband received a $9 million redundancy payment after separation and argued it shouldn’t form part of the property pool. The court disagreed, in part because his wife’s ongoing role as primary carer and homemaker had supported his ability to keep earning at that level, even after separation.
Post-separation windfalls can be treated similarly. In another case, a husband won $5 million in the lottery after separation and argued the winnings were entirely his, only for the court to award his former wife 15 per cent of the prize, around $750,000, in recognition of her earlier contributions and support during the relationship.
What Happens to Your Income During Separation?
Our clients often ask questions regarding their own income, such as whether they’re allowed to put their own income into their own account instead of a joint account.
The answer is yes. During separation and divorce, you are entitled to direct your income to a new account if you want to. It’s advised that both parties continue to pay the bills as per usual, and continue the financial arrangements you had prior to separation, if at all possible.
Your income and expenses are likely to change when your relationship ends, particularly once you’re running two households instead of one, so it’s worth reviewing your budget realistically rather than assuming everything will carry on exactly as before.
What Happens to Joint Accounts When Separating?
If you have joint accounts, you both have the right to access them. If there are large amounts of funds in joint accounts, it’s a great idea to protect those funds, either by freezing the accounts or changing them so both parties need to sign an authority to access the money.
This is a protective measure during separation and divorce, so the funds remain available to both parties for distribution as part of your property settlement.
If you don’t do this, there’s nothing stopping either of you from withdrawing money, which can lead to a wastage of your capital and, therefore, less to distribute. Our article on financial and non-financial contributions covers how the court treats situations where one party has depleted shared funds.
If you distribute funds before a final settlement, this can also cause issues, since one party may use their funds for everyday living expenses while the other saves theirs, creating an imbalance before a final settlement. This is worth being aware of as you go through your separation and divorce.
What Happens to Mortgage Accounts When Separating?
The same principles that apply to joint accounts apply to joint mortgage accounts. If you have a redraw facility on your mortgage, it’s a very good idea to freeze it, so your funds are preserved during your family law proceedings.
Home loan repayments for a jointly owned property generally remain the responsibility of both parties, regardless of who moves out or who ends up living there day to day. Some people, upon separating, are respectful about how they’ll deal with joint funds and happily continue with their accounts as they were. Others become insecure or selfish, which can lead to draining funds from joint accounts, resulting in wastage and unnecessary stress.
Property and Income Acquired After Separation
It’s a common misconception that anything acquired after separation is automatically off limits in a property settlement. In reality, there’s no blanket rule excluding it.
Courts have confirmed that property acquired after separation, including an inheritance received years after a couple split, can still form part of the property pool available for division, since the pool is generally assessed at the value it holds by the time the matter is actually resolved, not frozen at the date of separation. This is precisely why delaying a property settlement carries real risk.
If the combined pool grows in value, or either party acquires more assets or income in the meantime, that increased value is what ultimately gets divided, and the reverse is true if the pool shrinks.
Time Limits for Finalising Your Property Settlement
While it can be tempting to delay dealing with property matters during an already stressful separation, there are time limits that apply.
If you were married, your property settlement generally needs to be filed with the court within 12 months of your divorce order taking effect. If you were in a de facto relationship, you generally have two years from the date of separation.
Missing these windows doesn’t automatically bar you, but you’ll need the court’s permission to proceed, which isn’t guaranteed.
Our guide on negotiating a property settlement covers this process from start to finish, and if significant time has already passed since your separation, it’s worth reading our article on property settlements after long separation.
The Real Financial Impact of Separation
Separation affects people’s finances differently, and the research on this is genuinely worth knowing.
University of Melbourne research analysing Australian households found that men tend to experience a 5% reduction in disposable income after a relationship breakdown, while women’s household income drops by close to 30% on average.
The disparity is largely driven by caregiving responsibilities and reduced workforce participation during the relationship, which is exactly the kind of imbalance that spousal maintenance and future needs provisions in family law are designed to help address.
If you’re not sure where you stand financially during your divorce and separation, seeking independent legal advice from an experienced family lawyer is a great idea.
Speak With a Family Lawyer
As previously mentioned, Collective Family Law Group offers all our clients a free 45-minute initial appointment. This appointment can be via Zoom or in person at either our Brisbane or Gold Coast family law office.
To take advantage of this, please contact us or call 1300 225 393.
This article is general information only and does not constitute legal advice. For guidance specific to your circumstances, speak with a family lawyer.
Frequently Asked Questions
What happens to my finances after a divorce?
Your day to day income and expenses generally continue as normal immediately after separation, you’re entitled to direct your own income into your own account and manage your everyday finances. However, the overall property pool, including income and assets acquired after separation in some circumstances, remains relevant until a final property settlement is reached, so it’s important to get legal advice early rather than assuming your finances are entirely separate from the process.
What are some important things to consider when separating from your spouse?
Protecting joint accounts and mortgage redraw facilities from being drained, understanding your entitlement to direct your own income into a new account, being aware of the time limits for filing a property settlement, and getting legal advice early are all important. It’s also worth considering how children, if you have them, will be financially supported through Services Australia and the Child Support Agency, separately from your own property and maintenance matters.
How long does it take to financially recover from divorce?
This varies enormously depending on individual circumstances, but research shows the financial impact is rarely symmetrical between partners, with women, particularly those who took on caregiving roles, generally taking considerably longer to recover than men. Finalising a fair property settlement as early as reasonably possible, rather than leaving finances unresolved for years, tends to support a faster financial recovery for both parties.
What are some common mistakes people make in divorce?
Common mistakes include delaying a property settlement for too long, not protecting joint accounts or mortgage redraw facilities from being drained, making informal agreements about property or income without formalising them through consent orders or a binding financial agreement, and assuming that income or assets acquired after separation are automatically excluded from the property pool, when in many cases they aren’t.
