Dividing assets and property is essential for separating couples to end their financial relationship and move forward with the next chapter of their lives. It’s the most important stage of separation and can have ongoing implications if the proper considerations aren’t made.
Ensure your financial freedom by avoiding these five common property settlement errors:
- Assuming ‘property’ only means the family home
It’s an easy assumption to make, but property settlement following a divorce or de facto separation actually refers to the whole asset pool of yourself and your former spouse.
This includes the family home, but also other assets and debts including:- Savings and investments.
- Vehicles.
- Digital assets, such as cryptocurrency.
- Jewellery, furniture and other items of significant value.
- Superannuation.
- Any debts, including credit cards, loans and mortgages (both individual and shared). Read more about dealing with debt in our blog here.
- Relying on your former partner’s word (rather than a legally-binding document)
You and your former spouse may reach an amicable agreement, but the absence of legally-binding documentation can put you at risk in the future if they make a claim.
Without a Binding Financial Agreement (BFA) or Consent Order to formalise your agreement, your ex-partner can challenge the asset division and put your financial stability at risk. - Forgetting about superannuation
Superannuation is treated like any other asset in the pool, despite the name it’s attributed to. Yet, it’s often overlooked in situations where an agreement was reached without seeking legal advice.
Understanding the implications of dividing superannuation is crucial to ensure financial stability post-divorce (especially long-term), particularly if one partner accumulated less personal superannuation due to taking time off employment to raise a family.
Learn more about superannuation in property settlements here.
- Doing it all on your own (without the help of an experienced lawyer)
Even if you do reach an agreement on your own, we always recommend seeking independent legal advice to ensure you’ve considered every aspect of the separation.
An experienced family lawyer will ensure you’re aware of your full legal entitlements, provide guidance to correctly value your assets and assess your short- and long-term financial needs and earning capacity.
- Not updating your Will
With many couples leaving their entire estate to each other in the event of their passing, updating your Will following a separation guarantees your assets are distributed according to your current intentions. If not, it risks having part of your estate gifted back to your former spouse following your death.
