Working out how to divide property sensibly

You can begin to negotiate on how to divide the property at any time. If you are married, you don’t have to wait until you are divorced. If you are going to make an application to the court to sort things out, then this needs to be done within one year of the divorce or, if you were in a de facto relationship, within two years of separation. Further information is here.

If you still think there is a realistic chance you could reconcile, hold off on dividing the property, because that step is quite a final one in terms of your relationship.

Dividing the property can be a cause of considerable conflict. Neither person will be as well off as they were together. There will need to be two furnished homes, two sets of appliances, and a multitude of other duplicated costs. It is important to get legal advice, but there are some basic things each person can do to save a lot of time and money before each spouse involves lawyers:

  • Both of you need to know about all the income and all the assets that each of you has. Typically, lawyers will ask for the last three years’ tax returns, and details of the amounts currently in all the bank accounts. You can save time and money by just creating two copies of a file of such information – one for each of you.
  • Draw up, and try to agree on, a comprehensive list of assets and liabilities – with values agreed where possible. Some values will need to be estimates. People often ask a couple of real estate agents to do an appraisal of the sale value of the home. The value of a car can be estimated using websites here or here. Usually, businesses that you own and which employ people will need to be valued professionally. The value of furniture and other household goods is difficult to assess. One way of looking at it is to think of the second hand value for everything, but that is probably too low, because one or both of you is likely to need to go out and get new furniture or appliances. Often, lawyers will adopt a rough estimate somewhere between garage sale value and the insured value of the assets. Another alternative is to try to agree who will take which items of furniture and appliances.
  • You are entitled to get information about your ex-partner’s superannuation for the purposes of working out a family property settlement. You can apply on a Form 6, available from the Family Court website here.
  • When you have worked out the assets and liabilities, put the information on a balance sheet. You can find one here.  Put the major assets like a home, car or shares on the sheet as individual items. A value for the furniture, or for other items such as work tools, can be given as a whole. The balance sheet also requires you to enter into information about superannuation. A reasonable estimate can usually be obtained from the most recent superannuation statement. The form also asks about “financial resources”. A financial resource is  some source of financial support which is not property and not normal taxable income. The High Court of Australia has approved a definition which is that it is “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”.
  • List any significant assets owned before marriage, received by inheritance or as a damages award. Look up your financial records to try to be as up to date as you can be with all this information.
  • Work out, as best you can, the balance of your superannuation account at the time that you began to live together. Find the documentary evidence about that.
  • Try to agree on a chronology of your relationship. When did you meet? When did you first move in together? If you married, what was the date? If you own a home, when was it purchased, for how much and who paid the deposit? Do that with subsequent homes. When, approximately, did you separate?

You don’t have to be friends to work these things out. It can be done in a business-like way by email or over the phone if you want. You must be completely honest and disclose everything.  If either of you hides assets or isn’t truthful, it can work out badly for you in the long run.

The more you can agree on factually between yourselves, the better it will be, and the less you will have to spend on lawyers’ fees. If your ex-partner will not cooperate with you, at least collect as much of this material on your own as you can, before going to see a family law specialist.

Get legal advice: When you have as much information as you can, go to see a family lawyer to get legal advice on your situation, and encourage your ex-partner to do the same. The lawyer should make sure that all the information has been exchanged and that there is a substantially complete list of assets and liabilities. The lawyer will also offer preliminary advice on what kind of settlement might be achieved. Because the law is so uncertain, and judicial decisions can be difficult to predict, you may well find that each of you gets different advice on what a fair settlement would be.

No lawyer can responsibly say what a fair settlement would be without knowing all the information – the values of the assets, the history of how much each person brought into the relationship or acquired by inheritance, and the details of what has happened since separation. Some lawyers give their clients unrealistic expectations about what percentage of the assets they will receive in the first meeting. It is often too early to do so.

It is likely that the end result will be some form of compromise, and neither of you will be completely satisfied.

Decide how best to resolve the issues: Talk to your lawyer about what are the best options to resolve the conflict. The traditional approach to negotiation is for lawyers to write letters to one another. That can be a helpful way of proceeding, but each letter may cost hundreds of dollars (depending on how long it is). Sometimes much more progress can be achieved by having a roundtable conference, which is a meeting between the lawyers and the ex-partners to discuss the issues, or by using a mediator.

Talk to your lawyer about the advantages and disadvantages of mediation. Mediation is not for everyone: see here. It is often a good way to discuss the issues calmly and in an environment where all the issues can be considered. Usually, it is best for the mediator to be an experienced family lawyer.

If you cannot agree between yourselves, arbitration might be a much better option than going to a trial in court. It needs both of you to agree to arbitration. An arbitrator can make a binding decision, just like the judge, within a few weeks. You have to pay the arbitrator, but the advantage is that you can ensure it is someone who is expert in family property matters who can give you a decision quickly. Usually, it will work out much cheaper than going to court, because so much time is spent in court on procedural steps. The long delays in getting to trial cost both parties money.

Of course, if the other person is being totally unreasonable, and you cannot agree on arbitration, you may have no other option except to engage in litigation. In the end, most people who go to court settle their cases without the need for a judge to decide the matter. However, it can sometimes take the pressure from the court process to make people compromise sensibly.