Many separating families embark on financial settlement first to split the net property asset pool. This may seem like the logical approach to enable them to rebuild a new life as they may be physically separating. They may need funds to secure a new home, want to be financially independent from each other or secure their share. Â
There are a few reasons why parenting arrangements should be the first priority;
Post-separation shared parenting is one of the factors considered for future needs when negotiating financial settlement. Your earning potential may be impacted by caring for the children. Opportunities to work full time, shift work or weekend work may not be viable when caring for young children.
Having parenting arrangements in place as a priority can help the children adjust and transition to the new care arrangements providing routine, stability, and security. If the focus is on financial settlement, the children can be impacted by their parents’ anxiety, stress, and conflict during financial negotiation.
Children being pre-school age may make it more difficult for the primary carer to secure work which can affect opportunities to become financially independent.
If a stay-at-home parent has been the primary carer and hasn’t been in the workforce for years or at all, they may need to identify course qualifications costs they may want to negotiate in their financial settlement to help them join the workforce. Some may even qualify for spousal maintenance until they become financially independent. Seek legal advice to understand if you qualify.
Having an understanding of how the new family law bill starting 6th May 2024 will affect your family here
You may be wondering how you are going to survive financially if the focus is on finalising parenting arrangements. There are short term financial actions that can help maintain financial security post separation.
Some separated families opt to stay in the family home separated under the one roof whilst they finalise parenting and financial settlements. This reduces the need to incur the cost of supporting two homes whilst negotiating parenting and financial agreements. This should only be considered if safe to do so.
You can separate your financial accounts. Set up sole bank accounts and arrange for your salaries to go into your own accounts and continue to share costs by putting in a certain amount each into the joint account towards the mortgage and expenses.
You might agree to take a one-off $5000 lump sum each from your savings to put in your own accounts so that personal expenses can be made independently. This can be captured as an addback during financial mediation to enable the overall % split to be reflected accurately.
Mechanisms can be put in place at the bank to secure funds from being withdrawn by either party whereby the joint bank accounts require both parties to approve transfers or withdrawals.
If the property title is only in one name it is possible to prevent the home from being sold by engaging a lawyer to apply for an injunction under section 114 of the Family Law Act 1975 to protect the property by restraining a person from selling or otherwise disposing of assets of the relationship or from doing any act that may reduce the size of the asset pool available for distribution between the parties. Â
Negotiations for both parenting and property can take a long time and be financially and emotionally costly if parties are not seeking the best interests of the children and a fair and equitable outcome for the whole family.
Remember the decisions that you initially made as a family for what role each party played such as one may have been the primary financial provider whilst the other the primary carer are considered by the family law act 1975 as equal contributions. So, your starting point may be 50/50 but then future needs are a key determining factor on adjusting the % split of the financials. Future needs include earning capacity, health issues, primary carer of young children or dependant elderly family members, imminent inheritance, or retirement etc.
Understanding the family law act for parenting and property negotiations will help negotiations be based on the family law to avoid wasting time, money, and stress on fighting for an agreement that you may not achieve in court.
For financial agreements the Family Law Act 1975 section 75 enables you to make a just and equitable agreement for your family.
For parenting agreements, the new Family law amendments starting on 6th May 2024 enables you to create a parenting plan or consent orders that are in the best interests of the child.
Author – Cheryl Duffy, Divorce Coach, Family Dispute Resolution Practitioner, NAS Mediator & Parenting Coordinator
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