Doing a DIY property settlement after divorce or separation is understandably tempting. It can seem faster and cheaper. With no lawyer to pay, it feels like you’ll keep more money in your pocket … but only if you know what you’re doing.
Negotiating and documenting a financial settlement can be a complex process, depending on the circumstances.
Divorce lawyers weigh up a range of factors to help couples reach a fair settlement, and once which is binding and enforceable, taking account of the actual and latent liabilities of each partner, and the unique facts and circumstances of each case.
If you and your spouse do it yourselves, there’s a chance one of you might make a serious mistake, which could have financial implications well into the future.
Here’s what to watch out for if you’re considering a DIY divorce.
MAKING A MISTAKE WHEN CHOOSING THE PAPERWORK
There’s more than one way to record financial settlements. It can be in the form of a consent order, financial agreement or child support agreement. Depending on your circumstances, you may need a combination of these documents.
Each of these documents has different implications in different situations (i.e. death, non-compliance and enforcement). If you choose the wrong legal instrument to document your settlement, you may unwittingly be giving up a benefit or triggering a consequence which you can’t undo later on. Selecting the wrong document might be a missed opportunity to address an important aspect of your case.
Furthermore, if you draft your outcome incorrectly, tick a wrong box or omit any information or supporting documents, it could result in delays or lead to the wrong outcome. If the court is not satisfied with any part of a consent order, it may refuse to approve it and you may need to start the whole process again.
GETTING THE CONTENT WRONG
Experienced family lawyers have drafted hundreds of divorce settlements. They know where the financial pitfalls lie. With that in mind, let’s look at two scenarios that have financial implications you may be unaware of.
Scenario 1: In your property settlement, will you be refinancing a fixed-rate home loan? There may be a cost, such as a break fee, which will be triggered by your deal. Do you know how much that will be, and who will pay for it?
Scenario 2: If an investment property is being sold, or being transferred, will capital gains tax be triggered? If so, will paying it wipe out part of your settlement funds?
These are the sorts of consequences you cannot be expected to know, but which an experienced lawyer will spot and steer you around.
If these financial implications are unavoidable, the lawyer will structure the settlement in a way that ensures the financial liabilities are shared in an equitable manner.
OVERLOOKING THINGS IN PLAIN SIGHT
It’s not uncommon for family lawyers to hear clients assume that assets in the divorce settlement will be split 50/50. Most people are unaware that Australian law contains no presumption that assets are automatically divided equally after a separation. Many also don’t realise that superannuation funds are divisible between spouses.
As a result, you may think you’re putting together a fair DIY settlement but wind up drawing the short end of the stick.
Unfortunately, should you discover this after the fact, ignorance is no excuse for the law. You may be unable to convince a Court to allow a change in your settlement agreement and you might be stuck with a bad deal. The onus is on you to seek comprehensive legal advice before doing a deal, so you can make an informed decision.
SO, HOW CAN YOU AVOID THE PITFALLS OF A DIY DIVORCE?
To try to reduce your legal costs, feel free to do as much of the legwork on your divorce settlement as you can. But before you finalise the agreement, have an experienced family lawyer review it to make sure it’s watertight.
Your lawyer can examine all your documents, flag troublesome areas and help revise your agreement, so your interests are protected and both parties receive a just and fair outcome.
Yes, that advice comes at a cost, but, in most cases, the cost of that advice will pale in comparison to the financial fallout from ‘getting it wrong’.
Remember, your post-divorce financial settlement is one of the most important decisions of your life, with major implications for your financial future. It pays to get it right the first time.
CONTACT US FOR LEGAL ADVICE
BGM Family Lawyers is a specialist family law firm serving the Gold Coast. We can help you settle your divorce in a fair manner and at a reasonable cost.
Call us on 1300 246 529 or email in******@bg*.legal
