How do I work out what offer to make in a property matter?
Family law has the capacity to ignite emotions in a way that very few other issues can. Negotiating a path to financial settlement following separation is a difficult thing, and often there is little advice on how to do it successfully.
Family law practitioners have tools at their fingertips which help us take a financial stocktake of the assets, liabilities, superannuation and financial resources of the parties, which is needed before an offer can be made. If you have that information at your fingertips, you are in a good position to think about how reorganising the finances between you and your partner will help you to move forward to a positive post separation financial outcome.
Your income and expenses are likely to have changed when the relationship ended, and usually costs have gone up and household income may have gone down as the household divided into two. Before you can really think about making an offer, you need to get your finances in order and make sure you have a good idea of where your money comes from and where it goes. If you’re not used to managing your money, getting all your key financial documents together is an important first step. Find and organise your:
- Savings and transaction account statements
- Utility bills (e.g. electricity, gas, mobile and internet)
- Credit and store cards bills
- Property paperwork (deeds, mortgage papers, home loan details)
- Investment paperwork (managed fund statements, share dividend statements)
- Tax records (tax returns and tax file numbers)
- Insurance policies (e.g. health, home and contents, car, income protection and life)
- Superannuation accounts (both yours and your ex-partners)
Once you have these documents, you should think about putting a budget in place so that you understand the relationship between your income and expenditure, and to work out how you are going to manage your cash flow each week. Once that is done, you are ready to think about making an offer to divide the assets between you and your spouse/partner. At this point, the following steps can be followed.
Step 1: Ask yourself a few relatively simple questions:
- What is each asset and who owns it now?
- What is it worth?
- Does it have debt attached to it? How much debt?
- Who wants to keep it? Can they afford to keep it?
- What is the best way to achieve that result?
- Are there other debts like credit cards, store loans or car leases?
- Who will keep each debt identified?
Step 2: Make a list of the assets, liabilities, superannuation and financial resources that you identified in step 1 and place that information into a Balance Sheet.
Step 3: Using the Balance Sheet you have created, identify the assets you would like to keep (and the debt attached to that asset, if any) and ask yourself:
- Can I afford to pay the debt attached to that asset? Create a new budget with the repayments that you will take on built into the numbers. Can you afford to keep the asset with the debt payments?
- If I keep the asset and attached debt, will I need to refinance the debt? Can I get approval for the loan?
- Do I have to pay something to my former spouse/partner so that the overall result is just and equitable?
- What are my financial goals for the future? Survival or long term wealth building?
- Do I need to get some financial advice about the best way to structure my finances?
Step 4: Once you have decided what offer you would like to make it is time to ask:
- What are the best legal mechanisms and timing to achieve that result?
- How do I find a cost effective lawyer who can help me polish off the details and complete the process?
It’s not always easy taking these steps, and if you aren’t really proficient with math you may need some help from a closely trusted adviser who can help you work out the overall effect of the division of the assets that you are proposing. Excel spreadsheets are a great tool for this purpose.
The next port of call is to find a lawyer who can work with the information that you have collated, check the numbers and provide advice about whether the resulting division of assets represents a just and equitable outcome, which is what the Court must be satisfied about before it will make orders, even by the consent of the parties. If a just and equitable outcome is achieved, an Application for Consent Orders can be filed with the Court quickly, cheaply and efficiently and in most situations, the parties do not have to appear before the Court.
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Sydney Law Group is an experienced team of family lawyers who are passionate about achieving the best possible results for our clients. We exist to help you through this difficult time and to guide you to a positive outcome without extra emotional or financial stress. We’re on your side, every step of the way.