The Secret to Speedy Property Settlement: Your Balance Sheet

At Anumis Legal we deal with a lot of property settlements under the Family Law Act 1975. We frequently inherit these matters from other solicitors, often because they have been languishing for months and years without resolution.  It amazes us that, in many cases, the matter is ongoing due to a failure to focus on the foremost requirement of reaching a settlement: the agreed ‘balance sheet’.

In a family law context, the ‘balance sheet’ refers to the list of assets and liabilities of the parties as they exist ‘today’. Yes, not as they were at the end of the relationship, but the assets and liabilities of the parties as of the date an agreement is reached between the parties to settle their property arrangements on a final basis. There are time limits on the jurisdiction of the courts to make property orders – two years from separation in a de facto relationship and one year from a divorce. However, a party can request that a matter be heard ‘out of time’ under certain circumstances.

The longer the time lag between separation and a final property settlement, the more challenging reaching an agreement on the balance sheet becomes. The parties may have moved on with their lives, bought property, entered new relationships, or had a windfall. All of this makes agreeing a property settlement far more challenging.

Full and Frank Disclosure

You and your partner must both provide full and frank disclosure of your assets and liabilities at the time of entering into a final settlement. You have an obligation to do that and delaying the process will only make things harder down the track.  Remember, you must disclose and account for any assets you sell or dispose of between separation and final settlement.

It is important to have some objective basis for the valuations of any property that you and your former partner own both jointly and separately.

• Evidence of bank balances and bank transactions must be available and disclosed.
• If you have motor vehicles, do not guess or minimise values. Get a proper Redbook or other valuation to minimise the opportunity for any dispute.
• Household furniture and other chattels are often not worth what you paid for them. If they were to be sold, they will only attract second hand value.
• Inflating the value of furniture and other household items your former partner is keeping will only prolong the negotiation process.
• Don’t rely on a house value based on an opinion from your local real estate agent. Get an objective valuation as soon as possible.

The Price of Moving On

The price of moving on with one’s life is individual to each person so make sure you keep things in perspective. Holding up settlement of a property pool worth millions of dollars because you can’t agree on the value of tinny, the exercise bike, the hot-rod, or granny’s antique dresser because you don’t want your partner to ‘win’ might not make sense when your anger abates.

First Step

If you are separating and trying to negotiate a property settlement, as early as you can, come up with your version of the balance sheet. Then, you must try to get agreement on it between you and your former partner. Often, without a balance sheet, it is pointless to heading off to mediation or file the matter in court. If you cannot agree a realist sheet, all you are likely to achieve is to spend lots of money. You are, of course, free to argue over a mythical balance sheet or items that, in the big picture, have little bearing on the outcome.

At the end of the day, a ‘just and equitable’ settlement is not about percentages. As the court says, property settlement is not simply an accounting exercise. However, you can be sure that the earlier you agree on the balance sheet, the sooner you are likely to resolve your property matter and move on with your life.