Tips for deciding when and how to work out a property settlement
Seeing the whole landscape helps make informed decisions
Dividing assets between you
You have separated and it is time to work out who gets what, assuming there are things worth dividing between the two of you. Sometimes parties are lucky and have nothing to divide up, which means there is nothing to argue about. Although there are probably other things these separating couples argue about, its just the lawyers do not hear about these people.
Anyway how do you go about working out when to do your property settlement?
There is no right or wrong approach to doing this.
Just like there is no right or wrong time to do it.
A right time
Some people obtain legal advice and plan what they are going to do before they leave their spouse, others wait a few days, weeks maybe months and others again wait years before they decide to think about a property settlement.
There are other people who stay away from lawyers and believe them to be the enemy, only out to make money. Advice is sourced from friends, mates, acquaintances, strangers, books and social media. Sometimes the saying you get what you pay for applies to legal advice as well. What you do with the information gathered will be up to you.
If you are shying away from legal advice because you may not like what it is, you should reconsider. Being armed with all the information can be beneficial.
Legal advice can be part of the information gathering process. Lawyers are not necessarily the enemy.
When you chose to finalize property matters will probably depend a little on your individual circumstance.
If you have the luxury to wait, there is no harm in waiting a little, or at least until the emotional turmoil is over. Decisions made during highly emotionally charged times are not always the best decisions one makes.
For example, the wife who has been left for another woman will feel totally distraught, with little to no self confidence or self worth and will be very vulnerable. The wife in such a case may want to wait till she has come to terms with the fact the relationship has come to an end and that it has come to an end because her husband has found someone else.
It can be tough times for the person who has been left and did not see the separation coming. In some cases the other party tries to take advantage and more or less bully them into a settlement.
No harm in stopping to smell the roses along the way
Deciding to sell an asset
Some people of course do not have the luxury of being able to wait, as there are mortgage payments to meet, as well as rental payments (maybe) and personal loans to be paid out. In some of these cases one party may not work and the other cannot afford to make all the payments and tough decisions about selling real estate have to be made.
Remember that even if you have not agreed how to divide up sale proceeds this will not stop you from agreeing to sell an asset. As long as everyone is aware that any net proceeds of sale need to be deposited into a joint trust account with a solicitor, there is no risk in selling off an asset. When the storm has passed and everyone can think a little clearer, with less emotions in the way, the proceeds of sale can be divided up.
In some cases selling the asset will preserve the asset pool as opposed to diminish it. It may be that one of you is unable to continue to meet the mortgage payments and very quickly the mortgage goes further and further into arrears and ultimately the bank sells the house. In such a case it is better to agree on strategies to sell the house to preserve what little equity there may be in the house and make sure both of you end up with something rather than both of you ending up with nothing.
When making a decision take off your blinkers
Things to do before agreeing to anything
Most importantly work out what the asset pool is.
Lawyers always use the phrase asset pool. The asset pool refers to the property, be it cash, shares or real estate (to name but a few) that is available to be divided up between the two of you.
1. Make informed decisions
With separations being such highly emotional times it can be tempting to simply rush into any negotiations with your ex spouse without being informed.
Remember the saying an informed decision is a good decision.
Arm yourself with as much information as possible, particularly with respect to values of items of property and what property there actually is, be it in joint names or in the names of the parties.
Other information you may wish to gather should include cost of housing in the area you want to live in, cost of rental if you can only rent, or the cost of a car if you need enough money to buy yourself a car.
There is also no harm in going to a lawyer to discuss with them how the legal system works, how much court proceedings cost as opposed to attending mediation and decide for yourself if you need a lawyer or if you can face your ex in negotiations yourself.
Access any joint bank accounts to see what the balance is in them (as well as mortgage statements or credit card statements) as opposed to simply believe your ex what he she tells you.
2. Try to work out what you need long term
This may be a little harder in practice than it sounds in theory. But you should be in a frame of mind to work out where you want to live and if you may be in a position to purchase something like a house (or car). It can help to discuss with the bank how much of an income you need to borrow if you have a certain percentage for a deposit, or how much of a deposit you would need to be able to borrow and how much if anything can you borrow.
Alternatively you may want to speak with a financial planner who can help work out ways for you to invest what money you might get.
If there is a lot of debt you can obtain advice and assistance from debt counselors. There may be ways to reduce debts by way of negotiations with the organization/person who is owed money.
3. Try not to think about percentage
Sometimes people get stuck on what they are worth. It is not unusual for people to go and see their lawyer and ask how much am I worth? As you can appreciate this question cannot be answered with a specific figure. There is no magic math table setting out what one is worth. Particularly in Australia family law is about discretion.
Thinking about what you need may be a better starting point to what are you worth. At the end of the day property settlements are not about compensating someone for years of marriage. Property settlements are about making sure both parties end up with some of the assets of the relationship.
Remember the big picture is important
Learning about mediation
Final words of wisdom
Court proceedings are expensive. If you have an idea of what you need and want out of the asset pool you may wish to consider mediation.
Remember mediation is a voluntary process and no one can force you to agree to a proposal.
Attending mediation may be a good starting point for you to see how much room for movement there is by both of you. After all the option of going to court is still open to you if mediation fails.