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Property Settlement

The issue of dividing property can be emotionally-charged and prone to argument between the parties. The asset pool, contributions and relevant future issues must be identified and assessed before any action in regards to property settlement can be taken. Get legal advice – knowledge is power.

Following that, there are a number of options available to parties:

1) FACE-TO-FACE NEGOTIATIONS

Where the estranged spouses negotiate directly with one another.

PROS

  • Often a speedy resolution
  • Minimal expense

CONS

  • Often unfair bargaining power between parties
  • Fear and intimidation
  • Emotions can cloud realistic expectations
  • Legal ignorance or misinformation can unfairly limit one party’s outcomes

2) NEGOTIATION VIA A LAWYER

Where a Family Lawyer negotiates on the party’s behalf.

PROS

  • Advice is based on knowledge of the law and each party’s rights and entitlements
  • No emotional manipulation is possible
  • Time to consider the options and get advice before responding
  • Awareness of tactics and issues to avoid/manage
  • Strengthens your bargaining position
  • Having experienced negotiation skills and a legal knowledge guides the best direction
  • Someone else is taking the responsibility and pressure
  • Protects from intimidation

CONS

  • Legal fees – although they are usually less than expected

In Family Law, division of property is generally managed according to the following steps:

Step 1 - Identification of interests of the parties in all assets, liabilities and financial resources

It does not matter in whose name these items are held. A full list of the items and their values (or estimated values) needs to be ascertained. Whilst most people understand what assets are, they often underestimate what can be included as assets - business interests, superannuation entitlements, tax refunds due to a party, or debts owed by third parties. Similarly, people often do not realise that liabilities can include taxation liabilities, which in some circumstances, can be quite substantial. Financial resources can include an interest as a beneficiary under a Will or trust, a life estate in property or a third party or workers compensation claim.

Step 2 - Assessment of Contributions

Contributions can be financial or non-financial. They can be made by a party directly or indirectly, or made by a third party on behalf of a party to a marriage. Contributions considered are:

Initial contributions

Those made by each party at the commencement of cohabitation (i.e. assets held by them prior to cohabitation). It is important to note that for long term relationships, less weight is placed on these ‘initial contributions'.

Contributions made by parties during the period of cohabitation
These can include:

  • sole contributions by a party through inheritance, a compensation claim, gifts, interest free loans or physical assistance rendered by family members (e.g. when building a home)
  • contributions from earnings of a party or through the performance of the role of homemaker and primary parent. It should be noted that Courts most often regard the role of parent and homemaker as being an equal contribution to that as breadwinner.
  • other non-financial contributions such as performance of maintenance work around the home, performing the role of owner/builder, or working to renovate or improve property.

Contributions after separation

Contributions after separation are rare if a property settlement occurs shortly after separation. However, if property settlement occurs well after separation, such contributions may become relevant. Common contributions include:

  • contributions to mortgage repayments
  • performance of improvements to property
  • receipt of a redundancy payment, inheritance or other similar lump sum.

In some cases, where one party fails to meet an obligation (for example, to pay child support, forcing the other party to draw on capital in order to meet living expenses), a Court may determine that the defaulting party has made a negative contribution to the property since separation and may take this into account when assessing entitlements.

Step 3 - Adjustment of the parties' interests in property following a consideration of Section 75(2) factors

These factors relate to those set out at Section 75(2) of the Family Law Act 1975 . Broadly, they include:

  • consideration of the age and health of the parties,
  • the duty of the parties to support children or other persons,
  • income earning capacity of the parties,
  • the financial resources of the parties and other relevant matters as circumstances dictate.

Often, the party that has the duty to support children also has a lower income earning capacity and less financial resources than the other party. In those circumstances, they may receive a percentage adjustment in their favour.

MAKE AN APPOINTMENT
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ABN 65001889317

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