Sort out the re­la­tion­ship

Money Magazine Australia - - ASK PAUL -

QI

am 46 and have re­cently sep­a­rated from my hus­band. We have two chil­dren aged six and nine who are still liv­ing with me in the fam­ily home but who will also be spend­ing plenty of time with their dad once he moves into new ac­com­mo­da­tion.

The sep­a­ra­tion is am­i­ca­ble and at this stage all our fi­nances are still shared.

I earn about $80,000 a year and my hus­band about $90,000. My su­per is around $110,000 and my hus­band has about $135,000.

Our fam­ily home is worth about $975,000 with a mort­gage of $275,000. We have two in­vest­ment prop­er­ties: a re­cent pur­chase worth $315,000 with a mort­gage of $285,000 and the other worth about $750,000 with a mort­gage of $500,000. This sec­ond prop­erty is neu­tral after tax, and the plan is for my hus­band to move into it, which will leave us out of pocket about $25,000 a year. All loans are cur­rently in­ter­est only, with an off­set ac­count at­tached to our prin­ci­pal place of res­i­dence.

We have ac­cess to about $335,000 in eq­uity in our home loan as a buf­fer/in­vest­ment money, with which we were plan­ning to buy another prop­erty. But that is now not go­ing to hap­pen. What should my fo­cus be now? Is in­vest­ing some of the $335,000 in shares a good or bad idea? Or do I need to play it safe and make some changes.

Sorry to hear about your sep­a­ra­tion, Kim, but glad it is am­i­ca­ble. Quite frankly, I don’t want you to do any­thing right now. Am­i­ca­ble is a great thing in a sep­a­ra­tion but I cer­tainly do not know, and you may not know at this stage, whether this a tem­po­rary sit­u­a­tion or whether it will move to a di­vorce and a fi­nan­cial set­tle­ment.

If the sep­a­ra­tion is per­ma­nent, it will be hard for you to make in­vest­ment de­ci­sions un­til you have a fi­nan­cial set­tle­ment. Un­for­tu­nately, things do not al­ways go smoothly as as­sets are sep­a­rated. Equally, as­sum­ing you will keep your fi­nances shared in a longer-term sep­a­ra­tion does not seem re­al­is­tic to me. If ei­ther of you “re-part­ner” it could be rather com­plex.

Per­sonal re­la­tion­ships come before money. For­tu­nately, you have been very suc­cess­ful at build­ing as­sets, mean­ing both of you would be in a strong po­si­tion. But un­less I am miss­ing some­thing, my view is that you need to sort out the longer-term na­ture of your re­la­tion­ship first.

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