Why Should we do a Financial Settlement now?

Why-should-we-do-a-financial-settlement-now

Many people separate and in the interests of remaining amicable work out some temporary arrangements and then wait and see what happens. Neither party get legal advice and they do what they think is sensible and practical and usually what works best for their family.

I don’t need legal advice, we can work through this together”

Occasionally as family lawyers, Perth clients often come to us after things have taken a turn for the worst. The point being, amicable separation without legal advice can work well. Until it doesn’t.

What many people don’t realise is that when Family Lawyers and the Family Court consider the assets of the parties, they look at the values at the date that they are being considered – not the date of separation, or some other date that the parties picked as the “moment in time”.

For many people this can cause enormous problems. For instance, what if one party decides that they will significantly boost their super. They downsize their housing, live frugally and put everything they can into their super. The other party carries on as normal, sometimes even going into debt to try and maintain a lifestyle they had on two incomes, although now they only have one.

If they have been unable to agree on their property settlement, the Court will consider the assets at the date of trial, including the substantially increased value of the frugal party’s super.

When you are searching for divorce lawyers, Perth based or otherwise – head the warning story below:

Recently a couple in New Zealand, who split some five years ago, decided to finalise their settlement.  A wealthy couple, the wife had her very valuable engagement ring valued – a lovely platinum ring with a three carat diamond. The expected value of $189,000 was not achieved – instead the value came in at $1,000 – due to the fact that the diamond was now a cubic zirconia and the platinum was no longer.

The ring had been in a safe in the former matrimonial home and the parties moved in and out for many years while the children lived there.  No one could trace when it has been replaced as the wife had taken the ring some years later and put it in the safe of a friend.  The police could not do anything and insurance is unlikely to pay.

Remember – it is rare that after separation you are both working together for your collective common good.   The reason you are separated is because one or both of you want to be independent, and financial decisions are made to reflect this.

There are always instances of people who, after they receive legal advice, decide to carry on working together.   The key point is though that they are informed about what the potential downfalls could be, they consider the pros and cons and then they decide.

If you are simply living in the status quo because you are scared to know the truth, or if you think that getting legal advice will make things worse, you run the risk of being taken by surprise later down the track.

And there are plenty of examples where people agree on a financial settlement early on, which includes steps to gradually unwind their finances – but that agreement is documented and orders are made so there is certainty.

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