What do I need to know before family law property settlement negotiations commence?

​When couples separate, invariably some form of property settlement agreement needs to be reached about who takes what property. In Part 1 of this family law property settlement series, we discuss four important factors that need to be carefully considered before negotiating a property settlement agreement.

FOUR IMPORTANT CONSIDERATIONS BEFORE NEGOTIATIONS SHOULD COMMENCE:
 
There are four main steps which should be taken before property settlement negotiations commence. Cargill Family Law have summarised below where you should begin:

1. Should there be an adjustment of the parties’ property interests?  

In most cases the answer to this question will be yes, especially if the following circumstances apply:

• there are children of the relationship;
• the parties have pooled their assets and resources to grow the joint asset pool;
• the parties have acquired property together during the relationship;
• the relationship has been of a number of years; and
• there are no Binding Financial Agreements in place.

 
2. Valuing the net asset pool

Before negotiating a family law property settlement, it is vital that the parties obtain an accurate understanding of the true value of all property held - both individually, with a third party or together. This will usually involve retaining certified valuers to value all substantial assets to include: real estate, business interests, property interests held by associated trusts or companies, superannuation interests (if the fund is not a simple accumulation fund) and any other high value items.
 
During this process, both parties are required by law to exchange all documentation which is reasonably necessary to value the assets.
 
The rest comes down to maths: total assets minus total liabilities = Net pool.

3. Assess the contributions that each party has made to the asset pool

 Under this step, the contributions (of all kinds) that have been made by the parties are carefully assessed. Under this step, both financial and non-financial contributions (such as caring for the children and/or home) are taken into account.
 
Important considerations under this third step include:

• The length of the relationship;
• Where one party had considerably more assets at the beginning of the relationship;
• Whether there are children of the relationship;
• Whether there are children from a previous relationship which have been cared for and supported during the relationship;
• The source of income and financial resources during the relationship;
• Who has attended to caring for the children and / or the home during the relationship;
• Where one party has received an inheritance or substantial gift from a third party; or
• Where one party has received a payout of some sort (such as compensation monies resulting from a legal claim).

4. What are the future needs of the parties?  
​
This step involves assessing the individual circumstances of the parties and the impact of those circumstances on their future financial position.
 
Important considerations which are likely to affect the outcome include:

• Where one party is going to be the primary caregiver of the children;
• Where one party is significantly older than the other or suffers from a significant medical condition;
• Where one party is unemployed or is unable to be gainfully employed;
• Disparity of income between the parties;
• Where one of the parties receives regular payments from a trust managed by an external party.

 
At the conclusion of these four steps, a careful assessment is then made as to how the assets should be divided so as to achieve an outcome which is just and equitable in all of the circumstances. 
 
In part 2 of this family law property settlement series, we discuss how you can negotiate and finalise a family law property settlement out of court. Stay tuned for this blog post, releasing June 2021.

Find out more about how Cargill Family Law can help with your Property Settlement.

Author: Rachel Jones

Rachel is a skilled negotiator and litigator with 14 years experience as a multi-disciplined lawyer with a passion for family law. Rachel has two children, Harry and Jack and two fur-children (Olive & Simba) with husband Luke. With a keen interest in health and fitness, Rachel is a regular on the Lake Wendouree track which assists her to keep an even keel. She otherwise loves spending time with family, friends and finding pleasure and humour in life's simple things.