The demands of people working in the medical profession are unforgiving. Long hours and rigorous demands of the job can lead to poor work-life balance, sometimes placing undue pressure on family relationships.
Medical professionals comprising doctors in training, GPs, surgeons and specialist practitioners are considered high income earners, often accumulating a significant asset base throughout their careers. In the event of the dissolution of a relationship or divorce, the process of separation can take both an emotional and financial toll on those who experience it, resulting in lasting long-term consequences. However, with a considered, prudent approach to the handling of your finances, the fiscal impact can be minimised in the event of divorce. And while that is by no means a total peace of mind solution, managing financial settlement after divorce can mitigate some of the stress and trauma experienced in the process of separation or divorce.
Review insurance policies
In the event of a separation or divorce, it would be worthwhile to review your general insurance policies including car, home and contents, and personal insurances such as income protection, trauma and life insurance – especially if you have dependents. It is important you review the beneficiary of your insurance whether it is within your superannuation or not – especially if it is your ex-partner. Depending on where you are in Australia, superannuation may be either a non-estate asset (meaning it lays outside of your will) or could form part of your notional estate. It can divided by agreement or, if parties fail to agree, by court order. It is important to understand the implication as they pertain to your jurisdiction.
Prepare for the complexities of the legal system
Critical to understanding your obligations in the event of divorce or dissolution of the relationship is the expertise and skill of your legal advice. You will need to engage a family lawyer to negotiate custody arrangements and family support obligations. However, it is important you also structure your estate to reflect your new relationship status – this is not the domain of a family law expert and best undertaken by a legal expert in estate planning and wills.
Estate planning and Wills
One of your primary requirements in the event of a legal separation or divorce is to review and alter your will. The will you prepared when in the relationship (where often the spouse receives the bulk of the estate in the event of death) will still apply if you do not change it. You will need to review your current will or make a new will factoring in changes to beneficiaries and also likely nominate a new power of attorney (both financial and medical). Importantly, you may also need to appoint a new Executor of your Estate. In the event of divorce, your ex-partner is no longer legally able to be your Executor – if this is not changed by you, the court will appoint an Executor who may not be aware of your wishes in relation to your estate.
Division of Property
Tax benefits including asset rollover may apply to you if transferring an asset to a spouse following the breakdown of a relationship. It’s critical you understand the tax implications relating to the division of property.
Protection of your medical practice
The way you structure your private practice will be a determining factor in your ability to protect your business asset. There are a number of options relating to business structures that are effective in minimising exposure to personal assets including business assets, trademarks and risks incurred with running a medical practice.
Division of liabilities
While it is not always front of mind, having all your key financial documents organised and in one place (either in hardcopy or digitally filed) will make the process of division of liabilities far more streamlined. Documents of this type include savings and transaction accounts, all utility bills including electricity, gas, mobile and internet (home and business), credit card statements, paperwork relating to property, paperwork relating to investments, and tax records.
Peace of mind can reduce the impact of divorce
While the law varies from state to state, having a comprehensive understanding of liabilities and exposure to risk in the event of many future possible scenarios, including separation or divorce requires careful consideration and planning. In the event of divorce, especially for people who are time-poor (and certainly doctors and other related medical professions fall into this category), the desire to have matters finalised as quickly as possible can mean important – and sometimes critical – details are overlooked. While no one wants to think about divorce, with considered and organised planning around your finances, negative impacts on cost and decision-making can be minimised, reducing some stress and difficulty during this more often than not traumatic experience.
Is your financial situation resilient to the impact of separation or divorce? A consultation with one of our medical financial specialists can ensure in the unlikely event of the dissolution of your relationship, you interests are protected.
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Disclaimer: * The information contained in this site is general and is not intended to serve as advice as your personal circumstances have not been considered. DPM Financial Services Group recommends you obtain personal advice concerning specific matters before making a decision.