Family Law in an Economic Downturn

I’m generally a “glass half full” type of person, but the plummeting stock market and who knows what effect of COVID 19, has most of us trembling a little bit about what the future might hold.

The GFC seems a long time ago now but there are some stark lessons from that time of economic instability that are well worth remembering now that economic insecurity looms once again.

In Family Law property settlements, a key step is to value the assets that are available to be divided between the parties. When economic conditions are variable this can cause difficulty or make people have some trepidation about when to consider the value of assets.

Then there is the impact of economic conditions on who gets what in the division of property.

The following are some matters to take into consideration in negotiating property settlements in the current economic climate:

• The most important thing is to not get too obsessed about having to value or decide at the precisely right time for you. If you take that approach you will go around in circles trying to figure out what is right, particularly as often the assets can be a bit swings and roundabouts with a reduction there being evened up elsewhere. For the vast majority of people, the benefit of having your settlement concluded and the use of your assets yourself far in the long term far outweighs waiting to get a value with a bit of an increase or decrease
• Family law assets are valued as at the date that a court hears a matter. In practical terms, if the value is not agreed, then evidence of the value will be obtained a few weeks (or months) before the hearing date. Some assets, like shares or superannuation balances, can be updated the day prior or at court by looking up values online.
• However, in negotiated settlements often you use values arrived at some time ago in earlier stages of the negotiation. In those situations, you need to be alert for where changes in the economic climate may have impacted value of items and factor that into offers and analysis.
• In difficult economic times, it is also worth thinking about not just the percentage outcome of an agreement but also who gets what — for example there might be a bigger risk worn by the party who takes share rather than property or even a different type of risk for different types of property
• In uncertain markets you need to think about whether it is best to divide individual assets on a dollar basis or a percentage basis or otherwise — for example if you are selling a property volatility in the market may mean you are better to talk about percentages rather than a fixed amount to one party
• Finally, with investments moving, it is highly important to make sure superannuation splitting orders are drafted appropriately and procedures correctly followed so that they have the effect you intended

Really, what all this means is that an economic downturn heightens the need to work with an experienced lawyer on your property settlement as there are some easy traps and unintended consequences that can occur as a result of changing financial times.

At OFRM our team of experienced family lawyers can guide you through this process, you can book an appointment online to commence that process.