One of the most common aspects of divorce that a divorce lawyer will be asked advice on is the property settlement. Some of the reasons it plays such a large part in a divorce are understandable, and some of the reasons, not so much.
Obviously, both parties to the divorce want to ensure that they are both treated fairly with regard to finances, especially if there are children to be provided for. The other reason is that if a financial settlement can be agreed between the couple with the help of legal advice from their lawyers, the need to go to court, and thus incur additional fees, is negated.
This kind of agreement is called an informal agreement and whilst they can be created without the need for lawyers, the strong advice is that a lawyer’s advice is sought, if no other reason to ensure that what you are agreeing to is fair.
The other reason you should still seek legal advice is that informal agreements cannot be enforced by a court, so you want the agreement to be as robust and equitable as possible.
The next step up from an informal agreement is a financial agreement, which is agreed between the couple, again with the help of their lawyers. This time though, the agreements presented to the court for approval. The court will assess it to make sure it is fair, before approving it.
With court approval, a financial agreement now becomes legally binding and therefore a far more formal and enforceable settlement. These are especially needed when aspects of the settlement include support payments for children or an ex-spouse, where they might want the reassurance that the payments are protected by legal means.
However, not all divorces have an agreement and often, finances are often seen by one or both parties to a divorce as leverage, to the point that they try to use finances as a means to punish their ex-partner. This is especially the case if the split is acrimonious, and the chances of any kind of agreement are virtually nil.
In these circumstances, if the couple, and their respective lawyers, are unable to agree on a financial settlement, it will be for the court to do so. The first thing to explain is exactly what the court will consider when coming to its decision.
The types of property the court will see as assets go beyond just the family home. It will take into account other items which include cash in the bank, shares, vehicles, investments, stocks and shares, family trusts, insurance policies, and also jewellery. A court can also regard additional payments like gifts from family, and superannuation as property.
The court will also take account of contributions to the household which may not have been financial but added to greatly the relationship. A clear example of this is a mother giving up her career to care for young children.
As for debts, these will be mortgages, credit cards, personal loans, and credit obtained for the purchase of items such as vehicles and other household goods.
In determining the financial settlement a court will evaluate the property and debts, the couple’s individual incomes, the needs of any children, and other factors like the age of the couple, their health needs, and the overall position as it relates to their financial resources.
Ultimately, the court will issue a court order based on what it believes the be the fairest and most equitable financial settlement for all concerned.
