When a relationship comes to an end, often one of the most important issues to resolve between the two people involved is how to divide their property.
Some ex-partners come to an agreement about how to divide their property and superannuation without ever needing the assistance of a lawyer, some seek the assistance of lawyers and finalise their property settlement through one of the many forms of formal negotiation available, whilst others require the assistance of the Family Law Courts to finally end their financial relationship.
From my perspective, it is almost always better for everyone involved if ex-partners are able to negotiate their property settlement without incurring the expense (both financial and emotional) that comes with lengthy Court proceedings. With Court matters that are decided by a trial often costing each partner upwards of $50,000 in legal and associated fees, this is essentially at least $100,000 less that you and your former partner have to spend on your children’s upbringing or your retirement. Of course, there are situations where recourse to the Family Law Courts is the only viable option.
It is a sad fact that people separating often have to make hugely important financial decisions in a situation where they are suffering through grief and are often driven by emotion. For anyone that is going through the emotionally draining experience that is the end of a significant relationship, one of the hardest things to do is to step back and look at things in an objective light. I don’t think many people would argue with me if I said that it would be easier to make some of the most important financial decisions of your life in a period of emotional serenity, however this is not always an option.
Having helped many families through this process, I would suggest that following tips will benefit you in many ways when you are negotiating your property settlement:
Tip 1: Know What You Want Your Life To Look Like In 5 Years Time.
The end of a relationship is an important time to really think about your future, and where you want to be in 5 or so years time, both financially and personally.
If you can picture where you want to be in 5 years’ time, it can give you a great starting point to figure out what you really need out of your property settlement, and how you can make your hopes a reality.
Discussing your goals with a financial planner can be very useful, as they should be able to set out with you the steps that you will need to take to make your goal a reality and ensure that you have a realistic understanding of your financial future.
Every person’s goals are different, and knowing yours should shape the approach you take to negotiating your property settlement.
Tip 2: Think About Your Ex-partner’s Concerns.
While it is always hard to put yourself in someone else’s shoes when going through such an emotional event as a separation, considering what your ex-partner actually needs or wants out of your property settlement will likely make the negotiation process much easier.
I have been involved in a number of property settlements where being able to meet their ex-partner’s needs has lead to a much better outcome for our client.
One example that comes to mind is where there was a significant age gap between our client and their former partner, who had the majority care of their two children and a significantly lower income. In that circumstance, our client could meet the needs of his former partner by proposing that she retained a number of income earning assets so that she could meet her day to day needs, while he retained the vast majority of his significant superannuation interests, which he could access in a year or so when he finally retired from his very well paying job.
Another example is where one half of a separating couple has re-partnered and is living with their new partner. If the other person hasn’t re-partnered and is renting they may be more interested in retaining a property than a share portfolio of an equivalent value, as the property meets their immediate need for shelter and may enable them to avoid the potentially long and difficult house hunting process.
Many people, at separation, are very worried about how they can even survive day to day. If you can propose some way of assisting your ex-partner’s transition to a new future, through payment of some of the expenses for your children, or in other ways, it may be that this will ease some of your ex-partner’s concerns and expedite your settlement.
Tip 3: Look At Which Assets Are Most Beneficial To You.
This is the follow up to what I discussed above about looking to the future. I hear of many people wanting to, for example, keep 70% of the property pool, or divide everything equally, or to keep the house, without really considering what that actually means for them.
If you showed me your property pool and said to me that the most important thing was retaining 60% of the pool, I’m pretty sure I could come up with a proposal that entails you keeping 60% but doesn’t meet any of your needs, is completely unattractive to you and would make you reconsider if “60%” was actually what is important.
I often tell clients to look at which parts of the asset pool really work for you both now and into the future. Even if they have the same value on paper, some things are more beneficial to you than others. For example, some assets have a far greater chance of appreciating in value or earning an income for you than others. It is pretty rare for a car to be worth more the week after you drive it out of the showroom.
Obviously, every person’s specific circumstances are different and it would be beneficial to most people to meet with their financial advisor or financial planner to discuss which assets are most beneficial for them to retain.
When you are negotiating your property settlement, worry about those things that will significantly impact your financial future. There is normally no point getting hung up on who keeps the washing machine or fridge. If you have a lawyer acting for you, arguing about a fridge will quickly be more expensive than buying a brand new one.
You will get through this. Property divisions are a bit like death and taxes, if a significant relationship ends, they are almost inevitable. No matter how painful it is, you will wake up one morning, know it is over and not have to worry about it anymore. Just try to make sure the cost of getting where you end up is worth paying.
While I hope the above is helpful, it is no substitute for independent legal advice specific to your circumstances.
If you have any concerns about these issues, please get in touch with me (or another member of our fantastic team at Brisbane Family Law Centre) on (07) 3862 1955 or by emailing me at [email protected].