Financial Settlements

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. 

Disclosure

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. 

Approach

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.  

Advice

Prior to entering into a financial settlement, it is always advisable to seek independent legal advice on:

  1. The technical method the law uses to determine your entitlements; 
  2. what is your likely legal entitlements; and  
  3. 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.
 
Further information
 
For more information on this topic click on the Articles tab at the top of this page or the related services list to the right.
Family Law - Costs and offers to settle in property proceedings
Date: Oct 02, 2015

The general rule in family law matters is that each party bears their own costs of the proceedings. However, the Court has discretion to depart from the general rule and make any other order with respect to costs it considers “just”.

Property settlement after a short marriage
Date: Oct 01, 2015

As we know, couples can separate at any stage of their marriage. Some marriages last only a few years or even months. How will family law principles regarding property settlement apply to such marriages? Will short marriages be any different from longer marriages?

Sole occupation of the family home after separation
Date: Sep 01, 2015

It is not uncommon in family law disputes for one party to seek that he/she remain living in the family home, to the exclusion of the other party, while the parties negotiate property settlement.

Dissipation of joint assets post-separation
Date: Jul 20, 2015

Often our clients report to us that, following separation, their ex-partner or spouse has spent some, or all, of joint funds, before property settlement has been finalised, or that the other party has disposed of an asset that existed before separation and has used the proceeds for his/her sole benefit.

Penniless partner: bankruptcy and family law property disputes
Date: Jun 08, 2015

In certain circumstances in the past, a situation could arise where a spouse facing family law property proceedings would file for bankruptcy or be declared bankrupt (the Bankrupt), with the result of becoming a “penniless partner” of a non-bankrupt spouse (the Spouse), whose claim might then be defeated in the Family Court property settlement proceedings. The only salvation for the Spouse was to apply to the Federal Court for annulment of bankruptcy on the grounds of some abuse of process.

Changes to the Credit Reporting System in Australia
Date: Sep 14, 2014

The move towards a more comprehensive credit reporting system was finally realised by the commencement of the long-awaited reforms to the Privacy Act on 12 March 2014. As well increasing the amount of information available for use in credit reports, the reforms will have an impact on the way such information is collected, used and disclosed by imposing significant new privacy responsibilities on credit providers and credit reporting agencies.

Property Consent Orders
Date: Aug 06, 2014

There is an obligation on Family Court judges to be satisfied that any property orders they make are just and equitable, notwithstanding they are made by consent.

Stamp Duty Exemption on a Property Transfer
Date: Jan 26, 2012

Parties may also be entitled to a stamp duty exemption if the Court makes Orders requiring a transfer of property.

Inheritances and Gifts in Family Law, how are they treated?
Date: Nov 01, 2011

Consider this example: John and Jill have been married for 10 years and have recently separated. Around 2 years ago Jill’s father died and Jill received an inheritance of $100,000. These monies were deposited into a joint bank account and have been used by the parties to assist in the purchase of a property. Now that the relationship has broken down what becomes of Jill’s inheritance?

Family Dispute Resolution
Date: Oct 11, 2011

If you are in dispute with your partner regarding the care arrangements for your child you are required, by law to engage in what is called Alternative Dispute Resolution.

Do I need a pre-nup?
Date: Oct 06, 2011

In Australia couples who are considering living together, as a de facto couple (whether same sex or heterosexual) or are considering marriage have the option of entering into an agreement to protect their assets in the event they separate. This agreement can protect not only assets in existence now, but also assets the parties purchase throughout the relationship.

Financial contributions: My Spouse made more money than me; does that mean I won’t get anything in a property settlement?
Date: Sep 05, 2011

Often, especially in long relationship, one party is the traditional ‘breadwinner’ while the other stays home to care for children, or to maintain the home. The primary homemaker may only work part-time, or may not work at all. So what does this mean if the couple separate? What does each party get?

Financial Settlements – How is the Split Determined
Date: Mar 29, 2011

Financial settlements in both marriage and de facto relationship cases have been dealt with on the same basis since March 2009.

How does a judge assess credibility
Date: Mar 28, 2011

A small minority of family law cases require a decision from the Court, whether it involves parenting or financial issues. Where there is a different version of facts given by each party, one of the tasks of the Judge hearing the case is to make findings of fact. In other words, which version of events does the Judge believe to be the correct version.

Financial Settlements – How is the Split Determined
Date: Aug 22, 2010

The purpose of a financial settlement is to bring to an end the financial relationship between the parties, by dividing and allocating their net assets, so that nothing is left in joint names.

Superannuation in Financial Settlements
Date: Aug 22, 2010

Most working Australians have some superannuation and for many their superannuation can be quite a substantial part of their financial future. Before 2002, dealing with superannuation entitlements often posed problems in family law financial settlements because there was no ability to divide them. The outcome usually was that the party with the greater superannuation would get a lesser share of the other property to compensate for the other party not being able to access the greater superannuation fund.

Trusts: Can you trust a Family Trust?
Date: Aug 22, 2010

When a family is blessed with some wealth, it is not uncommon to find a family trust involved.

Which Court Do We Go To?
Date: Aug 22, 2010

There are a number of courts which can deal with family law matters, whether parenting and/or financial matters between couples, whether marriage or de facto relationships. Choosing the right court can save time, money or both, and the choice is one which family lawyers have to make all the time for their clients.

Property of the Marriage: What Assets are Available
Date: Nov 15, 2009

Upon the breakdown of a marriage one of the issues that needs to be addressed is a financial settlement. This involves dividing the assets, liabilities and superannuation of the parties whereby each party is allocated their share of the net assets, with the end result that none of the assets and liabilities are held in joint names.

Property Settlements: How are the entitlements determined
Date: Nov 15, 2009

In every financial settlement after the breakdown of the marriage, a four step mythology is used to determine the entitlements of each party. When lawyers give advice to clients as to their entitlement or likely settlement, they have an obligation to do so based how they think the Court may apply the four step mythology given the information and instructions provided by the parties.

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