Careful consideration of how the Court approaches the division of property post-relationship is extremely beneficial.
The application of the steps the Court will take when considering your situation can give you the knowledge to negotiate a property settlement without having to resort to Court action. This is the preferred and most efficient outcome, as it will minimise the financial cost and emotional stress that is associated with litigating a property dispute. Unfortunately, in situations where one or both parties are not prepared to negotiate realistically, or a party refuses to make proper disclosure, Court intervention may be the only way to progress a dispute.
The courts have confirmed that there are four main steps they take when determining a property dispute, specifically:
- Valuing the asset pool
- Assessing each party’s contributions
- Identifying the needs of each party
- Consider the practical effect, is the proposal just and equitable?
Over the next few weeks we will look at each of those steps in more detail. The first step is to create an asset pool. This requires the identification and valuation of the property, liabilities and financial resources of the parties to the relationship, as at the date of negotiation or the hearing rather than the date of separation.
The Courts take a broad view of the definition of “property”. Property includes assets of either or both parties, including:
- Real estate
- Cash, money held in bank accounts and term deposits
- Investments such as shares in public and private companies
- Furniture and personal effects
Liabilities are also taken into account when determining each party’s asset pool, including car loans, mortgages and credit-card debt.
If a value cannot be agreed between the parties, an expert will need to be engaged to value the item. Real estate should be valued by a registered valuer who will consider recent sales of comparable properties. Forensic accountants are used to value interests in private companies and trusts. Generally, the valuer must be independent. Where court proceedings have commenced the Courts have specific rules about the valuation process.
The Court must also consider the ‘financial resources’ of the parties. This can be money or assets over which a party has influence or control or (in some circumstances) prospective entitlements, for example, family trusts, inheritances or the property or income of a party’s new spouse.
Over the next three weeks, we will examine the remaining three steps in further detail. These steps are necessary to ensure that all the assets of the relationship are accounted for, and distributed between the parties in a fair way. Careful consideration and an open-minded approach of these steps can give parties who are willing to negotiate and compromise the ability to settle the matter efficiently, whilst reducing legal fees and the costs of valuations.
Stay tuned for next week’s article on the next step; determining each party’s contribution.
If you would like further information please contact Andrew Crooke a member of our Family Law Team at Murdoch Lawyers on 07 4616 9898.
Prepared by Andrew Crooke