Contrary to popular belief, the action of ‘keeping the lawyers out of it’ is often the catalyst for a troublesome property settlement.
The key to a streamlined property settlement is to only make agreements that you know will be final. Conflict occurs when one party does not maintain their end of what they agreed to and it is not exclusively experienced by those with ill-intentioned former partners. In fact, it regularly happens to people who truly believe they had reached a good outcome for all involved.
In my experience, this perception of the other person ‘changing their mind’ tends to happen when two well-meaning people make arrangements without having sought professional advice first. It is only after professional advice that they are able to see that what they have agreed to is problematic for them, or their children, in the long-term.
When people agree to a property settlement with or without advice from a lawyer but prior to it being formalised, it is called an ‘in principle’ agreement. That is, it is agreed to in principle but is has not formalised by a financial agreement or by an Order of a court. Therefore it is not binding and either party can back out of the agreement.
I often come across people who started out having made decisions about their property settlement together, who tell me that when they researched online they discover the need to formally document their intentions. That need to get the agreement formalised is how they come to us. It is during that process they sometimes learn that what they have agreed to is well below their entitlement or there are aspects of it that my be unworkable in a practical sense.
This is where negotiations can become difficult as the other party will resent the party resiling from their “agreement” .
An example of this was where I was representing a husband. He and his former wife reached agreement at mediation. Afterwards, his wife pulled out of the deal. From that moment, it was then very difficult to try to get him to move on paying her any amount more than had been agreed in the mediation. Whilst I believe he may have been open to offering her more had it been asked for during mediation, he took a moral standpoint of: ‘You’re reneging on the agreement. I thought it was over. We agreed. I’m not prepared to move.’
Another example was with a client I’ll name Nicholas (not his real name). Nicholas came to us after he had already been to mediation with assistance from another lawyer. It appeared as though he hadn’t received fulsome advice about the process and the range of entitlements, and agreed to a settlement with which he ultimately wasn’t happy. Nicholas came to us to get a second opinion and it appeared that what he had agreed to was well below his entitlements. Having already completed the mediation with a result, his former wife was not prepared to negotiate as in her mind, that was what had been agreed to. The matter then went to trial.
It is so much harder to shift the expectations of your former partner once you have come to a result in mediation or have made a verbal agreement. When both parties agree to what they believe to be a good decision and one person gets advice to the contrary, it is significantly more difficult to negotiate.
An important step to take in addition to obtaining legal advice before entering into property settlement negotiations is to ensure that you are able to carry out any proposal you put forward. This may mean obtaining accounting advice or speaking with your bank about your ability to refinance before you put a proposal to your former partner. If you and your former partner agree to something and then you later find out there are significant tax consequences that haven’t been taken into account or that you can’t refinance a property, this can lead to the deal falling apart and ill will in negotiations.
Many times people inadvertently prejudice their position by the actions they take before obtaining legal advice. They may take a step before seeking legal advice thinking they are doing the right thing and later realise it may not have been the best step to achieve their desired outcome. One example of this is if you intend to retain the family home but you temporarily move out because the situation becomes untenable in some way. Moving out can severely impact your ability to get back into the family home on an interim basis. Another instance is where one person in the relationship has either been kept in the dark or is unaware of their financial position. If you are that person and you leave a relationship without that information, and the other person is not forthcoming with that information, that can significantly slow down the process. Determining the asset pool is the starting point for any property settlement so if you are not aware of some key factors, you may be putting yourself at a significant disadvantage. Understanding the process and what is involved before you make the final decision to separate puts you in a place where you can make informed decisions.
Sometimes people view going to a lawyer as a last resort or view seeing us as the outcome of a communication breakdown or failure to agree on their part. Instead, I encourage you to be aware that the benefit of seeking advice early, even if only for an initial consultation, may be all you need. We can give you insight into your likely range of entitlements and your best-case and worst-case scenarios. Knowing what is involved in the process and what needs to be taken into account before agreeing to anything with your former partner will lessen the chances of remorse about your property settlement.
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