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28 August 2020

Understanding your own pool of assets: how can I negotiate when I don’t know anything about our finances?

We have set out some of the steps you can take to become informed of your financial circumstances so that you can confidently negotiate your property settlement.

You’ve been in a relationship where your partner has managed the finances. They have done all the internet banking, paid the bills, been the point of contact for your financial adviser and accountant, and so on.

It’s not uncommon. Perhaps they were just more interested in financial matters and you were happy to sit on autopilot.

But now you have separated and are left with limited knowledge of your finances. You have no idea where to go to from here when negotiating your property settlement.

Sound familiar?

We have set out below some of the steps you can take to become informed of your financial circumstances so that you can confidently negotiate your property settlement.

Conduct searches

Your lawyer can undertake ASIC searches of all the corporate interests you and your partner have. These will show who is the director, secretary and shareholder of any companies (provided the ASIC record is up to date) you may own or have shares in. This is a starting point for understanding what your corporate structure looks like.

Title searches can also be conducted for all real properties you and your ex spouse or a company own. These searches will show who holds the legal title and the property address.

Ask your ex partner for disclosure

Each party has a duty to make full and frank disclosure of their financial circumstances when negotiating a property settlement.

This includes providing the other party with documents like bank and loan statements, current superannuation statements, tax returns, and financial statements of any trust or company, etc.

The first step is to ask your ex to provide you with this information. If it is voluminous, they may prefer to provide you with an authority to obtain the information directly from their accountant.

If your ex partner refuses to provide disclosure, then, unfortunately, you may need to consider commencing court proceedings and issuing subpoenas. Discuss these steps with your family lawyer.

Once you have disclosure, you can put together a balance sheet, which includes a list of assets, liabilities and superannuation that are to be divided between you and your ex.

Have property valued where you are not sure what it is worth

Where you do not agree with the value your ex partner has attributed to an asset, for instance a business or real property, you can ask that it be valued.

You and your partner would jointly engage one independent valuer to prepare a report.

Generally market appraisals of real property should not be relied upon because they tend to be inflated. Similarly, valuations prepared by banks for finance purposes are usually conservative.

Once the valuation report is released by the joint expert, if you are still unsure what it means or disagree with the value, you may convene a conference with the expert or send them a list of written questions so they can clarify their report.

Engage your own accountant and financial adviser

You may wish to engage your own accountant to review any expert report. They will be able to help you understand it and identify any areas of the report that should be clarified. Your accountant and family lawyer should also be able to help you understand the financial reports of any companies.

If you are considering settlement options and what mix of assets to retain, it may also be helpful to speak with a financial adviser. For instance, depending on your age and risk profile, it may be more beneficial for you to retain the unencumbered home rather than the large portfolio of shares.

Where you have limited knowledge of financial matters and, after settlement, will potentially be managing your own finances for the first time, it is important to retain expert legal, accounting and financial advice to guide you through the settlement process.

If you are in this situation, you are most welcome to contact one of our experienced family lawyers, who can assist.

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This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please let us know.

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Justine Woods
Craig Turvey
Special Counsel

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