In the absence of a financial agreement entered into previously, upon the breakdown of a marriage or de facto relationship the parties are entitled to adjust their finances through a financial settlement. This involves a division of the net assets of the parties, and dealing with the liabilities.
The end result is that the parties will no longer jointly hold any assets or liabilities together, and are each allocated their share of the net assets.
To make an informed decision about any settlement proposal each party needs a clear understanding of what assets and liabilities exist, and of the financial circumstances of each other.
In every financial settlement there is an obligation upon the party to make full and frank disclosure of their financial circumstances. Financial disclosure involves each party verifying their financial circumstances with the production of personal financial documents.
Court orders or financial agreement?
It is often better - cheaper and less stressful - to try to achieve a settlement without court intervention.
If a settlement can be negotiated, it needs to be made legally binding. Two mechanisms are available, including court orders, which can be obtained by consent, or entering into a financial agreement.
The first issue is what is it that the party seeks to achieve by way of their new financial arrangements? Secondly, and more importantly, what financial arrangements are going to be feasible for that party?
For example, a party might seek to retain a property which is subject to a mortgage as part of a new financial arrangement. The major issue will be the capacity to refinance and service the new mortgage. Parties should address these issues with their bank manager, financial adviser or accountant, so that they know what to instruct their lawyer to seek.
What are the assets worth?
The next matter to consider is whether there are any issues concerning the valuation of any assets. If so, then formal valuations are sought.
Prior to entering into a financial settlement, it is always advisable to seek independent legal advice on:
- The technical method the law uses to determine your entitlements;
- what is your likely legal entitlements; and
- the processes involved to achieve a financial settlement.
At Craddock Murray Neumann, we deal with all these aspects in a financial settlement and work out a plan to deal with a financial settlement appropriate to your case.
For assistance with Family Law matters, phone Dominic Wilson, Managing Partner of Craddock Murray Neumann, on (02) 82684000. Our senior Family Lawyer is certified by the Law Society of New South Wales as an Accredited Specialist in Family Law.
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