A relationship breakdown may be unplanned or unexpected. Often, it throws into chaos those plans you had to build a property portfolio or wealth with the support of your partner. You may not have made much headway into your mortgage. You may have lingering personal debts. You may have reduced your income to be a stay-at-home carer for your children.
A family law property settlement places your financial situation and your former spouse’s financial situation under the microscope. This can sometimes be confronting. Decisions must be made about how you and your former spouse will move forward, now that the relationship has ended.
The process of achieving a just and equitable property settlement can be even more challenging for separating couples, lawyers and the Court to deal with, where the resources and property of the parties are limited. High debt levels, your income earning potential, your ability to fund the costs of re-housing and your ability to borrow on your own, comes into play.
Family lawyers and the Courts generally talk about the “percentage” each party retains in a property settlement. Often, this approach is not appropriate where the asset pool is small (a net asset pool of less than $500,000 in family law speak) because in dollar terms, one party retaining 5% or 10% more than the other may not make much difference.
In the recent case of Bevis & Bevis, the Court determined how to divide an asset pool between a husband and wife after 29 years of marriage. The parties had very little – the Court described their total assets of approximately $11,500 (excluding superannuation) as “miniscule”. The trial Judge noted that the notion of giving one party 3% more than the other was “almost meaningless.”
The reality is that in cases where there is a small asset pool, the options you have to divide your property may not offer a lot of flexibility. For example, you and your spouse might have amassed a healthy amount of superannuation, but that is not going to be too helpful to you if you cannot access it and really need cash so you can buy your partner out of the house or pay down debts.
This lack of flexibility means that couples facing this scenario should bring a “commercial mind” to the property settlement and be flexible themselves when it comes to negotiations. Sound financial and legal advice at an early stage is critical. It will provide you with advice tailored to your individual situation which may assist you to make informed decisions about your financial future.
The content of this article is of a general nature and should not be taken to be legal advice.
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Jacquelyn Curtis is an Associate at DDCS Lawyers, 18 Kendall Lane, NewActon, Canberra ACT 2601 and can be contacted on (02) 6212 7600.