How To Protect Your Finances If Your Relationship Breaks Down

Last year when rumours confirmed the marriage between glamorous actress Demi Moore and heart throb Ashton Kutcher was on the rocks, I bet the last thing that entered your mind was what would happen to their $290m estate. You may have been angry that Ashton cheated on Demi, or you may have fantasised about him being a single man again. I doubt whether this or other high profile breakups have caused you to stop and think about protecting your own assets in case of a relationship breakdown. Generally it is not until something happens that we actually look at what we should do, and this situation is not restricted to relationship breakdowns but applies to any contract weenter into including buying a house, insurance or opening our credit card account.

Ladies, we need to be informed about the “what if” scenarios, meaning what if my soul mate turns out not to be so or what if I lose my job and can’t pay the mortgage, as the statistics are not good. In Australia the statistics show that around 50 per cent of marriages end in divorce, and I suspect in Hollywood, they are probably a lot worse. Therefore regardless of how much we are in love there is always at least a 50/50 chance that the relationship would not have a fairy tale ending.

In Demi’s case, she has been around the block before with actor Bruce Willis, and therefore unlike some of you I would say she is well informed and understands the importance a contract that you can have drawn up by a lawyer which stipulates who gets what if a break up occurs, it’s called a pre-nuptial. Demi had a lot to lose as it was reported she pocketed around $50m from her first divorce, and may have accumulated additional assets of around $100m.

Now you may be thinking that because you don’t have a fortune that setting up a pre-nuptial agreement is not something you need to consider, however, think about how hard you work for what you have, and how quickly someone could take it from you if you don’t protect it. Protecting what you have is essential if you have children from another relationship, after all you will want to protect them from any unforeseen events or situations.

Further, what a lot of people don’t realise is how you don’t have to be married to lose your shirt. Just by being involved in a relationship and living under the same roof for 12 months can put your assets at risk. If you are in this position, or know someone who is, then you could be gambling with your future security.

There are a number of ways you can protect your assets, one is to have a pre-nuptial agreement, the other is to make sure when you buy assets like property you buy them in a trust structure. Buyingimportant assets in this way, means the assets are not held in your name asthey are held “in trust” for the beneficiaries of the trust (being you, your kids and family). The important thing is that you hold legal control over the assets. Remember as with any financial decision, it is important that you do your own research before you enlist someone who claims to be a professional.

Whether you set up a trust or get a pre-nuptial, when it comes to marriage who said a piece of paper doesn’t mean much doesn’t know what they are talking about.

Janine Cox is the Senior Analyst at Wealth Within, a private investment company specialising in managing direct share portfolios through their Individual Managed Account Service. Contact her at info@wealthwithin.com.au.