In the midst of this pandemic and change to life-as-we-knew-it, some of your clients were already going through significant change of their own. They had either recently separated or were part way through their plans to divorce.
Considering the current economy it is likely that many will think it is wise to hold off on moving forward with their financial settlement. The question in their minds is likely to be….
Could our combined asset pool be worth less right now and potentially recover or could it diminish over the coming months?
People in this situation need to be aware that in Family Law the asset pool is to be looked at the time they finalise a property settlement not as and when a couple separates. That being said, our immediate advice is to not put things on hold without seeking family law advice first. Given the uncertainties and depending on what their specific situation is and what particular assets they may wish to retain as part of a settlement, pausing any proceedings without first obtaining advice may well be detrimental in the long term.
There are pros and cons to pausing depending on how each person is positioned and what they wish to keep. The very first discussion people in this position should have is with a specialist family lawyer. We work closely with our clients’ accountants and financial planners to determine the most effective strategies given their situation and the current climate.
An asset pool can be made up of so many components – superannuation, stocks, trusts, property, trading businesses etc., there are many variables. By working together with accountants and financial planners like yourselves, and negotiating with their former spouse or their lawyer, where a lawyer is engaged, we can structure a settlement that is tailored to client needs and the current climate. Right now we are structuring financial settlements for our clients that are taking into account the possible fluctuations in assets that may result in the coming months. We have been able to structure settlements that shares risk between the two people.
Naturally your clients in this position may not wish to sell any assets in the current market. Continuing and finalising a financial settlement does not mean that they need to sell assets immediately. Conditions and longer time frames for sale can be considered and included in any financial settlement to create a win/win scenario where possible. It is still possible to negotiate and formalise a property settlement but not necessarily crystalise any potential losses immediately – by implementing aspects of their agreement at a later time when it may be mutually advantageous for them to do so.
What we want to avoid wherever possible for our clients and yours is to have their combined asset pool diminish significantly or to crystalise those losses if it can be avoided. This requires thinking outside the box and positive problem solving by all their advisers, working together to achieve mutually beneficial outcomes. The risks for some affected industries may be long term so we encourage your clients who are in this position to seek specialist advice in family law.
The reality is that as time progresses and depending on the issues affecting any individuals or businesses, for some, the situation may change further or there may be little to divide if a financial settlement is delayed which could have been avoided had one spouse had achieved a ‘clean break’ financially from the other earlier.
These are highly complex times and seeking advice to be able to make the best informed decisions based on your own circumstances and asset pool, rather than holding off may well be their best pathway to future certainty. As always, when seeking professional advice our family law clients are in control. Seeking initial advice to support their decision making does not mean they need to proceed but with family law advice, they can be confident that their actions will be informed ones, assessing the possible risks for them and result greater certainty for them in the long term.
For you as professionals with clients who are separated, we encourage you to communicate the importance of not holding off on these conversations assuming that it’s not the right time to consider their options and the pros and cons which arise. Now is the time for them to enlist the help of specialists and together we can provide certainty in times where many things are inherently uncertain.
Related: Accountants, Financial Planners & Family Lawyers: Working together for the optimal client outcome
Managing a relationship breakdown – what every accountant needs to know about family law
Accountants: How The Family Court Treats Discretionary Trusts
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Phillips Family Law is an award winning Family Law practice serving clients across Australia and abroad. Regardless of where you are in your decision making process, we can make you aware of your options. To discuss your situation confidentially phone +61730079898 or secure a time by clicking here.
