Identifying and Valuing Assets in a Family Law Property Settlement
What is a Family Law Property Settlement? Dividing property is one of the more difficult tasks to which separating couples must attend. The Family Law Act 1975, however, sets out a well-defined process intended to accomplish a fair division based on full and frank disclosure. At Owen Hodge Lawyers, we often find that clients experience a sense of relief simply on understanding the process of identifying and valuing assets that must precede any division of property.
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Whether you work through the details of your property settlement by means of Family Dispute Resolution or proceed directly to court for an order dividing property, the 5 steps are essentially the same. 1. Select a date to be used for the valuation of assets and liabilities. This is very often the date of separation, but in FDR, parties may agree to a different date.
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2. Marshall all the marital assets.
The assets subject to valuation and division often include more than divorcing couples anticipate. This may be the first point of contention. In general, though, marital assets include: • all real estate, including the family home; • cash in bank accounts, both joint and separate; • corporate shares; • superannuation for both parties; • motor vehicles; • household items. including items of value such as antiques or art work; • jewellery; • tools of a trade; • business assets owned or controlled; and • any inheritances received or anticipated during the relationship.
3. Determine the value of the assets.
Some couples use market appraisals, sworn valuations or Red Book valuations for vehicles. Agreeing on an objective measure of financial value may be especially difficult when dealing with items that have sentimental value. In any event, supporting documentation must be made available to the other party. You should be mindful that the court frowns sternly on any attempt to conceal or undervalue property. A court has the option of favouring an innocent party where the other has demonstrated dishonesty or lack of credibility.
4. Marshall all marital debts
These are generally shared and may include: • mortgages; • credit cards; • loans, including sums owed to family and friends; • hire purchase agreements; • tax liabilities; • individual business liabilities; and • personal debts and overdrafts.
5. Subtract total liabilities from total assets to determine net assets.
NET ASSETS = TOTAL LIABILITIES - TOTAL ASSETS If an asset was owned on the date of valuation but not on the date of settlement (for example, if a home was lost to foreclosure), that asset would not be included in the net asset pool. It is only after determination of the net asset pool that the task of division begins. But the hardest work may have already been accomplished.
An experienced family lawyer can often help reduce the trauma associated with teasing apart family finances and helping the newly single establish a firm financial footing on which to continue.
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