When marriages break down, most people focus on the emotional and legal aspects. But as accountants who frequently assist clients through divorce, we see a different perspective. One that could save you thousands.

As accountants, we're often the first to know about an impending divorce. The telltale sign? A spouse who has never shown interest in financial matters suddenly requesting "the last five years of tax returns for the whole family group."

This usually indicates they've already spoken with a family lawyer who needs this information to understand the financial history and structure.

Let us break down all the things we think you should know before filing for divorce. 

What is the divisible asset pool in divorce?

Divorce proceedings revolve around what's called the "divisible asset pool", think of it as one giant bucket where everything owned by both parties gets thrown in:

• The family home

• Investment properties

• Superannuation balances

• Business interests

• Shares and investments

• Trust assets

• Personal possessions

Many people don't realise how comprehensive this pool becomes. It's not just the assets you jointly own, but potentially everything in your name, your spouse's name, and sometimes even family structures.

Tax implications of divorce settlements

One of the most significant yet overlooked aspects of divorce settlements is tax implications. These can dramatically affect the actual value of what you receive:

Unrealised Capital Gains: Taking property that's appreciated significantly in value? You might be inheriting a substantial tax liability when you eventually sell.

Share Portfolios: Those BHP shares worth $10,000 on paper might only net you $7,000 after capital gains tax if sold.

Business Assets: Business valuations, many spouses who run the business walk away with just the business and no property. All their share of the pool can be tied up in the business. 

Good family lawyers involve accountants early to identify these issues, but many don't – leading to settlements that look fair on paper but are highly uneven after tax is considered.

How business valuations work in divorce

When a family business is involved, things get complicated. Generally, the spouse who operates the business will keep it, with the other spouse compensated through other assets like the family home.

This requires professional business valuation, which itself can become a battleground if both parties hire separate valuers with different methodologies and outcomes.

Emotional decision-making in divorce

Divorce is emotionally charged, which often leads to financially destructive decisions. We've witnessed clients spend tens of thousands of dollars arguing over items worth a fraction of that amount.

These disputes can drag on for 2-4 years, with endless emails and letters between lawyers (all billed at premium hourly rates), often without reaching any resolution.

The harsh truth: the longer the battle, the more of your combined wealth goes to legal fees rather than providing for your future.

Documentation required for divorce settlements

By the time you reach mediation, you could be facing 500+ pages of financial documentation. Each party must disclose all assets, requiring extensive paperwork:

• Company constitutions

• Trust deeds

• Property valuations

• Financial statements

• Tax returns

• Superannuation statements

Understanding your situation thoroughly before mediation day is crucial for making informed decisions when offers are presented.

How to handle difficult lawyers in divorce proceedings

Remember: you can't control which lawyer your ex chooses, even if their approach frustrates you. Some lawyers take an unnecessarily aggressive stance that prolongs the process and increases costs.

The uncomfortable truth? The guaranteed winners in prolonged divorce battles are the lawyers themselves. Court proceedings can easily exceed $100,000 just for the process – money that could have been split between both parties.

Final Thoughts

When facing divorce, ask yourself this difficult question: Would you rather compromise and give some money to your ex-spouse (even if it feels unfair), or give that same money to lawyers who ultimately benefit most from your conflict?

As accountants who've seen the aftermath of thousands of divorces, we encourage clients to:

• Focus on the financial end game rather than winning every battle

• Understand the tax implications before agreeing to asset splits

• Choose advisors who will tell you what you need to hear, not what you want to hear

• Consider what you truly want: to prove a point regardless of cost, or to move forward with your life

Protecting your wealth during divorce isn't just about fighting for every dollar – it's about making strategic decisions that preserve as much of the pool as possible for both parties' futures.

The most effective divorces we see aren't the ones where someone "wins" – they're the ones where both parties retain the maximum possible wealth to start their new lives.

Want to discuss how to protect your financial position during divorce? Let's chat.

Disclaimer: This is general advice. You will need to take specialist advice that takes account of your own personal circumstances.