Have you recently separated? Are you putting off discussions about your family law property settlement because it all seems too hard?
Separation or divorce is not something you experience every day. When it happens you may suddenly find yourself having to deal with tough decisions about how your hard earned assets will be divided. The whole process may seem overwhelming.
When navigating this unfamiliar process many people make mistakes that cause the process to drag on much longer than it should. Mistakes can also cost you thousands in a settlement or dramatically increase your legal costs.
Fortunately, it doesn’t need to be this way.
If you want to avoid these pitfalls in a family law property settlement there a few things you must do
- Prepare a list of what you own
Before you do a property settlement, you need to have a complete list of what you and your former partner own. This should include joint assets but also anything owned in your individual names. For this step, it doesn’t matter whether you owned the item or asset before you were in a relationship or acquired it whilst you were together. Just make a full list containing everything either of you own. Your list will need to include any debts that you have as well as any superannuation.
- Identify the value of your assets and liabilities
This may seem simple enough but what each person believes something is worth may vary dramatically. If you can’t reach agreement it’s best to use the valuation of a third person. For a vehicle, it may be as simple as researching the red book valuation or obtaining a valuation from a car dealer. With a house, you can engage a qualified valuer. The valuation should be at the current date, not just what something was worth when you separated. If the value of something has changed significantly the reason for the change may need to be investigated.
- Our furniture is insured. Can’t we just use the insurance value?
The simple answer to this is no. Furniture is valued at second hand value not replacement value. The insurance value will be replacement value as new – not second hand.
- Know what type of superannuation interest you have
Superannuation in Australia is treated as an asset for the purpose of a property settlement. The value of your superannuation will depend on what type of superannuation interest you have. An accumulation interest it a bit like a bank account – the amount of superannuation you have in the fund is what it is worth. If you have a defined benefit interest however specific rules may apply and you may have to get your superannuation valued before you can do a property settlement.
- Identify any special contributions either party has made
Because contributions are relevant in a property settlement it will help negotiations if you identify in advance what assets and debts each person had at the start of the relationship and any particular gifts or inheritances either party received during the relationship. These are not necessarily taken into account “dollar for dollar” but in a general way. Any gifts or inheritances received very late in a relationship may be particularly important.
- Don’t rely on handshake agreements
You may reach agreement with your former partner but unless you formalise it properly it is not binding and can’t be enforced if someone later breaches it. We have seen numerous people over the years who reached an “informal agreement” with their ex-partner without getting legal advice. When the other partner refused to follow the agreement the other partner was generally very surprised to hear that the other person can’t be compelled to follow the informal agreement.
- Get Legal Advice
We can’t stress enough how important it is to get legal advice before finalizing your family law property settlement. Your agreement may seem simple to you, but we have acted for many people fixing up mistakes that have been made. Often people just don’t understand what they are signing or the full implications of their agreement. It is much easier to identify problems before agreements are finalised rather than try and do it after the event.
Don’t wait until it’s too late. Mistakes can cost you thousands. Want more information? Contact us today.
You may also want to download our eBook “How to separate and protect what matters most to you”.