How to approach separation in a time of uncertainty
A relationship breakdown can be one of life’s most stressful events. It can devastate and change families, and be followed by years of grief. Individuals at this time worry what their (and their family’s) future will look like and are looking for certainty about the path ahead.
The uncertainty flowing from separation is exacerbated in the uncertain times we are all experiencing in the COVID-19 pandemic and now into the recession.
We have outlined some of our top tips for those separating or thinking about how to separate during COVID, and this time of uncertainty.
Are you aware of the law on spousal support?
Be realistic about how far your combined incomes can take you if you are maintaining separate households. For many couples, household incomes have shrunk due to job loss, fewer hours worked or time off work to necessitate caring responsibilities for others.
The change in employment conditions in many employment sectors has left many individuals without sufficient income, including former high-income earners.
Spousal support in Australia compared to other jurisdictions around the world is not the norm. It can, however, be paid under the Family Law Act in Australia provided that the recipient satisfies the legislative requirements in demonstrating the need for it and the paying party can afford to pay it once they meet their own reasonable living expenses.
There may be more spousal support considerations in the current economic climate than there was prior to COVID-19. Great care is required in documenting any agreed spousal support and appropriate advice should be sought prior to agreeing to it.
Make informed decisions
A good outcome starts with exceptional and specialist legal advice. It is important to receive expert advice about what you are entitled to. Legal advice doesn’t have to mean ‘escalating’ things – in fact, good legal advice for both parties can help a separating couple to remain amicable throughout the process because you’ll know what is relevant to agree on and what you can work on letting go of.
Where parties have received ‘pre-pandemic advice’ about their settlement option range, it is prudent that they get updated advice particularly if their financial circumstances have changed.
This means getting answers to the following questions:
- What is the overall percentage outcome you are likely to receive in a financial settlement? What are the variables to this percentage outcome?
- How does this translate in dollars to your net wealth following a settlement?
- If you have a need for additional income, whether you might be eligible to seek spousal support from your former partner?
- What are the alternative options to going to Court, so that you can reach an appropriate agreement in a cost and time-effective manner?
It is also essential to be aware of changes in our markets. It may be prudent to consider your appetite for risk with the assets that you are wanting to keep – for example with investment properties or superannuation. With superannuation splitting agreements, it will be critical to look at the timing of a split and whether there have been any recent drawings on superannuation.
Locking in your agreement
Whether you have reached an agreement about the division of your assets or parenting arrangements, properly documenting your agreement is the only way to ensure that you have some certainty moving forward.
A consent order is a cost-effective way to formalise your agreement. Considering how a volatile market may commercially alter what the parties understood they will receive prior to having the consent orders made may assist them in having more workable orders once they are made. This means that your agreement can still be drafted to give you flexibility, for example – they can enable a real-time assessment of the market conditions for a sale, however still ‘lock in the deal’.
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