04 Aug Understanding Your Financial Records for Property Settlement Financial Disclosure
Your property settlement will be one of the most important parts of your divorce or separation proceedings. But, unfortunately, many people simply don’t understand their own financial position or financial records, even before they need to split their assets.
It might not have been important to pay really close attention to your financials during the relationship. But it can be a costly and time-consuming process to establish an asset base for property settlement financial disclosure if you’re not currently on top of your financial situation now.
Of course, there are many situations outside of an individual’s control that might impact their ability to keep on top of their financials. It could be as simple as having young children. Or it could be as complicated as a domestic violence situation. But whenever possible, when you’re preparing to enter into a property settlement, you should get a good understanding of your financial records so you can begin collating information for your financial disclosure. This ensures you have a good idea of what belongs in your pool of assets and what you may be entitled to.
Understanding your financial records for property settlement financial disclosure
It’s important to remember that the goal of understanding your financials is not to determine the value of every asset in the property pool. This can be finalised during the property settlement process. But you do need to know what your asset pool is so that you can include this in your financial disclosure. And that means understanding where your assets and liabilities sit so they can be properly accounted for.
What is an asset pool?
In family law, an asset pool simply refers to all the assets and liabilities that belonged to you and your ex-partner. This will include both assets that you owned before the relationship began as well as assets acquired during the relationship. It will also include the debts owed (before, during and after the relationship) and benefits such as superannuation.
Identifying your asset pool
If you haven’t always kept on top of your financial situation – for any reason – it can be difficult to locate the assets and liabilities that belong in the asset pool. Here are some tips to get started.
- Ask your ex-partner for disclosure. Each party has a duty to make ‘full and frank disclosure of their financial circumstances’ when involved in a property settlement. As part of this duty, your ex-partner will need to provide you with information and documentation about banking accounts, loans, superannuation, investments, tax and trust or company assets.
- Have searches been completed? Your lawyer can conduct searches to determine if you or your ex-partner have any corporate interests, such as shares in a corporation. They can also run title searches to find all the properties that you and your ex might own. Any items found will form part of your asset pool.
- Engage an accountant. Your accountant can be a great resource for ensuring that you understand where your cash is being held. They may also be able to review your financials to determine if cash has been moved or even hidden.
- Find hidden assets. There are sometimes hidden assets that need to be searched out – whether they’ve been hidden on purpose, or simply because they’ve been forgotten over time. To find these, consider if your ex-partner ever used another name (such as a maiden name or an alias) and run searches for assets under that name as well. You may also want to investigate whether your ex could have moved money or property into the name of a relative in order to keep it from being part of the financial disclosure.
- Don’t forget cryptocurrencies. Cryptocurrencies, such as bitcoin, are becoming far more popular as trading instruments. Because of that, they are often part of high-net-worth divorces. However, in many cases, only one partner is actively participating in the cryptocurrency market, while the other has minimal knowledge or understanding. This can make finding and dividing crypto holdings in a divorce far more complicated. To locate cryptocurrencies, it’s best to engage an expert who can navigate the complicated and rapidly moving crypto industry. Forensic experts can track transactions and determine what should be included in the asset pool.
- Put together a balance sheet. Once you have your list of assets, liabilities and benefits (such as superannuation), you need to put together a balance sheet. This will form part of your financial disclosure, but it will also give you a good sense of where you stand.
Getting on top of your financials
To properly negotiate a property settlement, you need to understand the value of your asset pool. And the best way to do that is for each party to provide full and complete financial disclosures to each other. But it’s impossible to do this if you don’t understand your own financial situation.
Getting an understanding of where you stand will help you speed up the property settlement process and save you time, money, stress and heartache.