With cost of living increasing and interest rate rises, it is not uncommon for people considering separation to hold off on drawing a line in the sand or for others who are already separated, to hold off on moving forward with their financial settlement.
In more economically certain times we saw that generally people felt comfortable to make the call to separate, knowing that if they needed to sell a property, they would be able to sell it relatively quickly and that there would be enough money to go around. However, more recently, we see there is some trepidation about what the property division may look like, given the uncertainty about what is ahead economically.
For people separated or considering separation, naturally the concern is ‘Will our assets be worth more now or later?’ and ‘While your asset pool may be worth less than it did six months ago, will it recover or will it diminish over the coming months?’
If you are in this situation currently, be aware that in Family Law the total asset pool for division is the value at the time you formally finalise your property settlement. That is, as part of the negotiation process when valuations are obtained, or if agreement is unable to be reached, at the very end of the process. It is not the value of the asset pool at the date of your separation. That being said, there are circumstances where it is not wise to put things on hold without seeking advice from a family lawyer and your financial advisors, first.
Hold Off or Continue the Property Settlement Process?
Given the uncertainties, depending on your specific situation and any particular assets you may want to retain, pausing the property settlement process without first obtaining advice may be detrimental to you in the long term.
What we want to avoid wherever possible is for your combined asset pool to diminish significantly. Or, if that is not possible, to crystallise those losses to avoid further losses. To do this requires thinking outside the box and positive problem solving by your family lawyer in conjunction with your other trusted advisers.
The industries you work or have investments in, can have their own unique risks so seeking specialist advice is vital. Early advice will help ensure you will be aware of those risks, giving you insights and knowledge to make better, more informed decisions.
The reality is that as time progresses and depending on the issues affecting you, your former partner or any business interests, the situation may change further or there may be little to divide if a financial settlement is delayed. In a number of circumstances we have seen outcomes like these that could have been avoided had one spouse achieved a ‘clean break’ financially from the other earlier on.
It is important to know that starting, continuing and finalising a property settlement does not mean that you 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 and move past the negotiation component instead of having it in limbo for months or years on end. It is still possible to negotiate and formalise a property settlement but not necessarily crystalise any potential losses immediately – by implementing aspects of the agreement at a later time when it may be mutually advantageous for you to do so.
Minimise The Losses
Where there is economic uncertainty coupled with budgets under more pressure with the cost of running two separate homes, holding assets may create further financial pressure. While no one has a crystal ball that tells us what may happen in time, if you are holding off on progressing a property settlement, be mindful that there is no guarantee that time will mean that any losses in value of property will be made up in time.
Whereas if you move forward now, there is some certainty about what your asset pool looks like and you are able to move forward in the other parts of your life too. Most people don’t want to have to continue to negotiate and share their financial information across another financial year so progressing now might not only be a wise option from a financial perspective, but a personal and business perspective as well.
As specialist family lawyers we often work closely with our clients’ accountants and financial advisors to determine the most effective strategies given their unique situation, asset pool, business interests and the state of the economy and markets.
What is often unclear is that when you seek family law advice, you are always in control. Seeking initial advice to support your decision making does not mean you need to do anything you do not want to. Nor does it mean you now have a lawyer from start to finish. You can tap into advice as and when you need it.
With family law advice comes an awareness of the possible risks that may exist for you. Conversely, it will provide you greater certainty and confidence that any decisions you make will be made from an informed standpoint.
Holding off on seeking advice about the pros and cons of separation or the property settlement process, is far more risky than not. If this sounds like you, now is the time to seek out the advice of a family law specialist followed by your trusted advisors and together we can provide certainty at a time where many things are inherently uncertain.
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 (07) 3007 9898 or secure a time by filling in our confidential form here.
Disclaimer: The content in this article provides general information however it does not substitute legal advice or opinion. Information is best used in conjunction with legal advice from an experienced member of our team.