Fifteen tips on how to stay sane during property settlement
Tip 1: remember your children
It may sound dumb- because after all you are thinking about a property settlement, and things are fixed with your kids, right? But it is essential at all times to focus on your kids first while also thinking about or actioning a property settlement. To do otherwise, means you could be failing in your primary duty- as your children’s parent. Fighting between parents can and does impact on children even when not about them.
Some years ago I gave advice to a client that he would not have to repay a loan to his former parents in law because the loan was drafted in such a way that it was outside the limitations period: they could not sue him for repayment of the loan. I warned him that by taking this technical legal point, that it might poison the well, particularly with his children. Sensing that he would save tens of thousands of dollars, my client instructed me to take the limitation point.
Some months later my client came back to me and said that his children were not speaking to him. They were adults. I asked why. The answer- because he had taken the limitation point, they were disgusted that he would not be repaying his former parents-in-law, the children’s grandparents. When he asked what he could do, I reminded him of my earlier advice. I said that he could drop the point, or could nominate a lower figure, so that at least the pain of his former parents-in-law would be eased. He refused to do so- and then wondered why his children weren’t speaking to him.
Tip 2: drop the anger
I can’t emphasise this enough. Once it’s over, it’s over. Let the anger go. When it comes to property settlement, all anger does is fuel the fires- and lead to at times a HUGE increase in cost and delay. Anger leads to hate. Hate leads to bitterness. Bitterness leads to destruction.
I remember many years ago when I had two complex property settlements side by side. Each involved a husband who came into the marriage with multiple properties and businesses. Each were tough cases. In each case the husband represented himself, and I represented the wife. In one case, after particularly hardnosed negotiations, we settled it. After getting barrister’s advice, real estate valuations plus an accountant’s valuations, my client was out of pocket $10,000. In the other case, with very similar facts, my client spent $300,000! The difference- the husband in the first case was realistic, but the husband in the second case decided to put every possible roadblock in place (including a series of lawyers from time to time) to try and pressure my client to come back. He threatened her. He threatened to kill me. I ended up on the protection order. The domestic violence case ran for 7 days, still a Queensland record (the usual domestic violence trial runs half a day to a day). We had 30 + appearances in the Family Court BEFORE a 9 day trial- then a stay application and an appeal. I had to move home. We ultimately had appearances in four courts (Family Court , two separate Magistrates Courts, and the Federal Court). And the difference- the attitude of the husbands- one of whom was a hardnosed businessman who engaged in realistic negotiations- and the other a hardnosed businessman who used his anger that his wife had dared leave him to result in a scorched earth policy. If he had been sensible, and not angry, he could saved each of the parties an enormous sum of money and years before the courts.
For the same reason, your lawyer’s role should be to represent your interests and not your anger. Doing the former will speed up your matter, and decrease your costs. The latter will increase your costs, slow the matter down, and put you at risk of having a costs order made against you.
Tip 3: get the best legal advice you can afford
Getting the best advice that you can afford means that a lawyer hopefully with lots of experience will be able to head you in the right direction, not tilting at windmills, and will be able to give you pointers as to what to look out for.
Funnily enough, it’s usually helpful when your ex does the same, and gets legal advice from a lawyer who knows what they’re doing. Your ex should then realise his or her dreams of world domination, or at least trying to punish you for leaving, are probably not worth the effort. Usually the more expensive lawyer your ex gets, the higher the chances of settlement.
Ask around as to who is good. An accredited family law specialist is a good starting point. Contact the Law Society in your State for a referral.
Tip 4: listen to your lawyer!
It may make for uncomfortable listening, but it is important to heed the advice of your lawyer. It could save you big bucks and lots of heartache. More importantly, if you do decide to tilt at windmills, it’ll almost certainly impact on your kids. Your lawyer’s role is primarily to give you objective legal advice- not be your best friend, nor your counsellor.
Tip 5: have a support network
Separating is one of the hardest things to do – EVER- and it is essential that you have a support network. If you don’t have one- get one. Join a club or a church- meet new people. Friends and family can help you get through the crisis quicker, and help you remain focussed.
Tip 6: get a counsellor
I can’t emphasise this enough. If you are about to enter into the most far reaching financial decision of your life, do so with a clear head.
Tip 7: get financial advice
Your lawyer is not allowed to give you financial advice. That is what financial planners do. I have found it is very helpful for clients to be part of a team working collaboratively for the client- so the client also gets financial advice, and can therefore make informed decisions about she or he might do depending on how the split occurs.
Tip 8: think positively
It is easy to catastrophise – and think that your whole world is going to come crashing down on you. Most of the time that doesn’t happen. You wake up the following day! Take each day at a time. Be kind to yourself. While it may seem hard to think positively in such a period of gloom, being positive (and let’s be clear, I mean being realistic) can make all the difference.
Tip 9: get fit
Having a fitness regime will help you through the difficulties. Endorphins and oxygen kick in when you exercise. The brain is emptied of its rubbish and allowed to function clearly again. You feel stronger and more positive about the world. Chances are, there will be less risk of wallowing in depression if you are fit.
Tip 10: come prepared!
One of the essential steps in sorting out a property settlement is working out the balance sheet. What do the two of you own? Who owns what? How much is it worth? Is there a defined benefit superannuation fund? Are there companies or trusts?
And to make things even more complex, lawyers will want to know – what was everything worth when the two of you got together- and if you have been separated for a while- what is everything worth now, compared to when you split up.
If there is going to be a dispute about who contributed what and when, get as much documentation as you can to show in an objective sense who paid what and when, or how much something was worth back then.
For tips about how to write up a balance sheet- see my post: the 8 steps on to write up a balance sheet.
If you are going to a mediation, or having negotiations with the other side, prepare for each step. A client who is switched on can help guide their lawyer in their instructions- and can save huge amounts of time on the lawyer’s part.
Tip 11: negotiate, negotiate, negotiate!
Whether talking to your ex direct, or through lawyers, or outside the court room, or in mediation- chances are you will be negotiating on the way through- and again, and again, and again. Sometimes clients put all their eggs in one basket- for example, they focus on the mediation to the exclusion of everything else- for the trial or for mediation. Better to think that what you are engaged in with your ex is a continuum of negotiations and process until it is over. Be realistic, but assertive!
The range of property settlement is that – a range- and what one judge might do is different to what another might do- even in similar circumstances. Many years ago, I took part in an exercise when lawyers were asked to assess the range on property settlements. Of the 60 lawyers in the room, spanning in experience from old practitioners to green newbies, there was heated disagreement about many of the exercises- and a range of 15%. For example in one case a lawyer was adamant that one party would get no more than 55%, and another lawyer was adamant that the same party would get 70%!
If your lawyer tells you that the percentage will be precisely x%, for example 45%, and not a range- beware, beware, beware. It is rarely thus.
Tip 12: focus on costs
If you are lucky, and you are smart, you could have a property settlement done and dusted for under $4,000. If you are unlucky, it could cost you a lot more.
A colleague of mine said many years ago that many of his clients when told of the range of likely property settlements and the range of costs would invariably hear the high end of the range for property settlements and the low end of the range for costs!
Work out in percentage terms in your matter what the likely costs outcome might be. If your lawyer says that you and your ex are 10% apart- and you have a net pool of $400,000- well, that’s $40,000. And if your lawyer says that it is going to cost you $20,000, there’s 5%, or half the difference.
Tip 13: prepare for death
It is important to have peace of mind to make sure that if something goes wrong, your children have been properly provided for.
Death and taxes, as Ben Franklin said, are inevitable. You may be unlucky and die before your property settlement is over. Instead of leaving a mess for others (and potentially cutting your kids out of the will), make sure you have an up to date will, and consider other basics: severing any joint tenancy and nominating beneficiaries for your superannuation and life insurance. Talk to your financial planner about these as well as getting legal advice. Accidents and illnesses happen.
When I was young and green, I had a client who was seeking 60% of the property. Aside from a few odds and sods, it was ALL owned by her husband. He was a general good for nothing who had made a lot of money. One Friday afternoon, the day before court (as court was on the Monday morning) the four of us- my client, her ex, his lawyer and me- found ourselves around a table trying to cut a deal. It didn’t work- and didn’t go down well with me or my client when I asked the husband: “Who owns the 50 foot boat?” He responded: “A man in Sydney.” I might have been green, but I could smell a liar way back then. We didn’t settle. I made arrangements to meet my client at court on Monday morning.
Instead, on Monday morning my client called me and said she was not coming to court. Being young and green, I yelled at her: “You have to come to court now!” She then told me that her ex had died on Saturday on THAT boat, which incidentally he owned, and that he hadn’t changed his will, so she was executor and sole beneficiary. At that point my client was effectively suing herself in the Family Court. While she was sad that he had died, she was also very happy that instead of getting, at most, 60% of the property, she was now getting 100%, because he hadn’t changed his will!
Tip 14: avoid court
Only mad people and lawyers like court. It is best to avoid at all costs. The outcome is uncertain, and how long it takes is unknown- but as reports have come in over the last year- getting worse. You might be told that you have two years to trial, and possibly another year after that for judgment.
Having said all that- court is the only place where someone can order your ex to do something. Negotiations and mediation cannot. It is the option of last resort, but sometimes painful though it is, you may have little choice but to go there.
Tip 15: formalise the deal
If you don’t formalise the deal, you may end up with a liability to pay stamp duty, withholding tax, capital gain tax or a potential future claim from your ex. Formalise! Formalise! Formalise! This will normally be by way of consent orders (orders made by a court in which the parties have consented to being made) or a binding financial agreement, and sometimes by both. Each will depend on your case’s unique characteristics.
