The property settlement process following a relationship breakdown can be one of the most difficult and emotional experiences of a person’s life. It can seem like a relationship founded on trust and love is, in the end, reduced to dollars and cents.
For many, having a better understanding of the process and knowing what to expect can help to reduce the difficulty experienced.
In Part 1 of The Property Settlement Process article we will discuss what is involved in identifying the asset pool provided it is “just and equitable” to make a property adjustment order at all, the next step is to determine how property is to be divided between the parties.
During this time we will often work closely with your accountant or financial planner to gather information and obtain a clear understanding of your financial situation. While the process can be confronting, it is important for us to have as clear a picture as possible of the assets that we are dealing with – being upfront and honest in this process is very important.
Simply put, the net asset pool of a relationship includes all personal and shared assets and liabilities. This may include:
- real estate, including the family home, land, investment properties and any shares in properties owned jointly with other parties;
- superannuation;
- shares and interests in businesses / companies and trusts;
- personal items and assets including cars, boats, household goods, jewellery, furniture, artwork and other valuables; and
- liabilities may include outstanding personal or property loans, home mortgages, tax liabilities or other debts.
Putting all this information together clarifies what is available to then be divided between the parties. Both the value and nature of the assets held may influence how that distribution is made.
Where difficulty arises in assessing the true nature of assets of a relationship or disputes arise as to values and ownership, the services of a forensic accountant may be required. The parties may then negotiate as to whether assets fall within the net asset pool or not.
Once the net asset pool is determined the next step is to determine the contribution of each party to the asset pool. We will deal with this step in Part 2 of this article.
If you have any questions about the property settlement process for yourself or in relation to a client you are advising, please contact a member of our family law team for more information.