Having a good financial adviser in your corner can be critical to getting the best outcome in a family law property settlement. Here's why.

Most property settlements are reached through negotiation, without going to court. Negotiations can be formally documented through a binding financial agreement or consent orders. As a last resort, the parties may need to initiate court proceedings whereby orders will be made regarding the division of the parties’ property.

No matter how a property settlement is reached, it is important to be aware of the financial impact of the proposed agreement before finalising it. A family lawyer may recommend working with a financial professional (a financial adviser and/or accountant) to ensure a property settlement delivers an optimum financial outcome for the client. We explain below some of the benefits of working collaboratively with a financial professional and lawyer.

Identifying and classifying assets and liabilities

A financial professional can help to properly identify, classify and evaluate the parties’ assets and liabilities, whether these are held jointly or individually. Assets can be held in various ways, whether through a trust, company or shares and it is important that a full understanding of the asset portfolio is obtained. Only by presenting a complete picture of the parties’ financial position, might a fair and reasonable property settlement be negotiated.

In some cases, it may be wise to have certain assets, such as business interests and company shares, formally valued.

Recommending tax-effective strategies

Understanding the tax implications of a proposed property settlement can have a significant impact on the net result for each party.

The retention, transfer or division of different types of assets can have tax consequences such as capital gains tax, which can be an important factor if you are considering whether to retain an investment property or not. Also, stamp duty is not payable if properties are transferred in accordance with the Family Law Act. A financial professional may recommend strategies and structures for the division of assets to optimise your financial position after the settlement is complete. Depending on the tax consequences applicable to that class of asset, it may be more advantageous to retain one type of asset over another. If you are considering purchasing a new investment property it would be prudent to consider the implications of stamp duty, which is not exempt and accordingly would be payable on the purchase of a new property.

Advising on superannuation

If a superannuation split forms part of the proposed property division, then you will either end up with more, or less in your superannuation account or your self-manged superannuation fund. This may require a reassessment and restructure of your retirement plans. A financial professional can help to identify the net effect of a proposed superannuation split and how to optimise your investments for a greater return.

Assessing future needs and planning ahead

Most financial professionals have knowledge of family tax payments and child support and can assist in determining entitlements and/or obligations.

Your financial professional can help implement strategies on how to get back on your feet, financially, after separation. This may include budgeting advice and money management strategies, recommending appropriate insurance to protect your income, managing and protecting assets, and developing plans to work towards your financial goals.

A financial professional and lawyer can work together to implement an effective plan in consideration of your new personal and financial circumstances.

Strategic Advantage

Separating couples are often anxious about their immediate and future financial needs and may seek assistance to achieve a fair and reasonable property settlement. In doing so, it is important to remember that lawyers provide legal advice and not financial advice. Including a financial professional in your team can provide you with a strategic advantage when negotiating a property settlement and can optimise your prospects of financial freedom.

This is general information only and you should obtain professional advice relevant to your circumstances. If you or someone you know wants more information or needs help or advice, please  contact Alison Brown or contact us on (02) 9923 2321.