Found yourself suddenly single? A financial planner can help.

The transition period after finishing a relationship, getting a divorce, or passing a spouse is an unfortunate time when big financial decisions about the rest of your life must be considered and carried out. Usually, it’s a lot to suddenly take in, and making these important life decisions while you’re experiencing these stresses and emotions can make the weight of these choices feel enormous, which in turn creates pressure and additional stress and emotion.

Generally, clients are advised to wait a while before figuring out how to manage the longer-term financial transition. Unfortunately, as difficult as it might be, some time-sensitive matters need immediate attention.

Knowing this will be a stressful time for you, concentrate on addressing the urgent financial matters that require immediate attention first. Then, allow yourself time to heal before diving into less pressing financial decisions that are best made later.

Prioritising Your Initial Decision-Making

Your circumstances leading up to this point will be unique, and everyone will have a different “to-do” list if you’ve found yourself suddenly single, but here are some important financial matters to initially consider:

Update accounts

As soon as your status changes due to a relationship breakdown or the death of a partner, you will need to contact your bank, brokerage, or other financial institutions where jointly held accounts are held and change them to your name. For widows/widowers, obtain several copies of your spouse’s death certificate to assist in the account updating process. For divorcees, you’ll need to provide the necessary signatures and guarantees to financial institutions to change account ownership. You should also follow up on any accounts that may not be in your name but may include you as a beneficiary.

Cash Flow

Some of the immediate decisions you will have to make will likely be regarding cash flow. If your spouse was the primary earner, you may need to make lifestyle-related decisions to accommodate a lower monthly income. It can be helpful during this transition period to sit down with a financial planner to review your cash flow situation and how to adjust your spending to avoid accidentally (or quickly!) going into debt.

Check your life insurance policy

If your partner or spouse had life insurance through an agent or their employer, you, as the surviving spouse, can expect to receive tax-free payments within one to six weeks after the institution has been notified. If you're divorced, it's a good idea to update the beneficiary on your own life insurance policy or consider getting new coverage for yourself and your children.

Update your health insurance policy

It’s extremely important to inform your health insurer of a change in your living circumstances, such as a separation or a divorce, as soon as possible. The health insurer will need to make changes to the policy details to ensure the cover is still relevant and applicable to anyone remaining on the policy, assuming it is a couples or family policy.

It’s worth noting that only the primary policyholder can add or remove anyone from their policy, so if the policy isn’t in your name, you won’t be able to make this change. In these instances, your spouse or former spouse would have to remove you if they’re the primary policyholder.

If you now find yourself without health insurance and your employer has the capacity to offer insurance plans, consider moving your cover with them to capitalise on any added bonuses or a new individual plan that may be more cost-effective.

Collect benefits on retirement savings

In the event of death, the individual’s retirement savings accounts (RSAs) will pass to the surviving spouse if that individual is named as the beneficiary. Typically, RSAs will pass along to the surviving spouse, even if a beneficiary is not named. However, the transfer of assets could be delayed and costly. It’s best to speak with a JSA Financial Planner to understand the tax implications of inherited RSAs before assets are moved.

In the event of divorce or separation, individuals could have a legal arrangement as part of the divorce settlement that acknowledges the recipient’s right to receive a portion of the spouse’s retirement account balance. RSAs are divided through a one-time distribution in a court-approved transaction from one spouse’s account to the other.

Creating a Long-Term Financial Plan

After attending to the most urgent concerns, take the necessary time required to consider your longer-term plans to help protect your financial well-being.

Build a solid budget (and stick to it)

It sounds simple, but this is the best place to begin your financial planning. Start by creating a list of your essential daily expenses (e.g., bills, groceries, mortgage), and then create another list of any outstanding debt you may have. Once your essential expenses and debt obligations are understood and met, you’ll have a clearer picture of your cash flow budget and spending tracking and begin to develop money mindfulness.

When you’ve worked out the financial demands to maintain your lifestyle, determine whether your income and savings will cover them. If things look challenging, you could consider ways to streamline your spending or reduce loan payments. You may also be worth considering the potential savings from downsizing your home if it makes sense for you to do so. Many options are available to you and a JSA Financial Planner can help identify the best one for you.

Limited Investment Knowledge

One challenge that many suddenly single people face is not having a lot of experience or knowledge when it comes to investing. This is especially true where the spouse manages all the family finances, and it’s quite the challenge to go from never having made an investment decision to having to make them all.

Luckily, this is one of the easiest challenges to overcome, and with some input and guidance from your JSA Financial Planner, you’ll soon be a confident and capable investor. We happily take the time to teach you about investments and verify that you know what you’re doing before making any decisions and that they are open and honest about any potential conflicts of interest.

Explore Government benefits

The Australian federal government provides several payments to help when a loved one passes, with the type and amount depending on your individual circumstances. When you inform the government about a partner or spouse’s death, they can advise if you’re eligible for some financial assistance and how much you can receive based on your circumstances.

If your partner or spouse has passed, you may be entitled to a lump sum bereavement payment. To be eligible, you both needed to be getting an income support payment for at least the previous 12 months or a pension. The amount paid usually equals the total you and your partner would have as a couple minus your new single rate. It’s calculated over a 14-week bereavement period, which starts on the day your partner dies.

If you aren’t getting a Centrelink payment and your partner has died, you may be eligible for an income support payment such as JobSeeker Payment or Youth Allowance. There is also a Centrelink bereavement payment that can be given to the deceased's spouse or de facto partner. Talking to your JSA Financial Planner beforehand is best to confirm if you can claim these payments through Services Australia online.

Added benefits to you and your loved ones

Changing to a legally single status can be a complicated financial process, but taking all the necessary steps to ensure your paperwork and accounts are in order is important. Additionally, as you update your policies and accounts, remember that now is a good time to ensure beneficiaries are listed correctly so that you can also protect your loved ones.

Get advice from a JSA Financial Planner

If you’ve found yourself suddenly single and the road ahead to financial independence looks uncertain, contact the friendly team at JSA to discuss your financial planning needs. We’re here to help guide you through.