Divorce questions

Wife and I are currently undergoing separation and most likely will end up going through with the divorce. Wondering how this will affect our assets and debts.

We currently have 4 IPs and a PPOR, none of which is jointly owned. PPOR and IP1 is mine (husband) and IP2 IP3 IP4 are in my wife's name. However, we also have 5 mortgages, and all 5 are jointly and severally owed by both of us, as would be the case when applying jointly.

When we finalise the divorce, there will be no property settlements, i.e. what is currently owned by who will remain the way it is. We would also prefer to not touch the loans, and just work out who pays which loan between us. Is that possible? Or would the banks insist on reshuffling things?

Another question is what happens to our family trust set up during the marriage? Again, prefer to leave untouched, it's a pretty amicable separation and we're fine to continue with the way things are. Does the family court require winding up of this?

 

One of the inevitable aspects of a family law split is legal advice. Start with seeking personal advice. Its mandatory anyway.

The family court requires ALL assets and liabilities be disclosed (incl trusts, super the lot) and all parties get independent legal advice etc.

The family court may rubber stamp what you have agreed to but it has to follow the process

 

Loans are different to mortgages. The owner of the property would be the one giving the mortgage but both could be on the loan. If you are splitting it would probably be best to come off each other's loan.

Property ownership could be left as is if you both agree.

The trust and its property could also be left as is, but one of you may want to back up and hand control to the other - for no consideration to avoid tax issues. It might be better to sell trust owned property and divy up the proceeds.

Seek legal advice, but before you do see if it would be possible for you to come off each other's loans. Also try to agree between yourselves how to divide things up - but take into account capital gains tax on eventual sales too.

 

Meet with a lawyer and have your accountant present.

And try not to have a new relationship while the divorce is still in progress.

And my sympathies for what is a very hard time.

 

Me ex found a partner within minutes of me leaving and my lawyer has advised that I have the right to claim half of her assets. I won't do it but I know of someone who successfully did so.

 

Sorry to hear your situation, it is never pleasant but at least yours sounds reasonably amicable.

The Family Court doesn't require anything if you can come to an agreement. Coming to an agreement is not only far cheaper (my family guys charge $2,910 inc GST and Court Fees for consent orders) it is also so much quicker and easier to get on without your life. Messy divorces are all consuming and so emotionally draining.

There are several parts from a legal perspective.
1. Divorce (literally ending the marriage)
2. Property Settlement (either by consent as above or litigated - both through the court)

Number 2 should have accounting/financial/mortgage advice and legal advice if maintaining the trust. Technically you could just agree on number 2 without the consent order but the agreement is then at the whim of either party and there can be duty costs.

 

I think finding another partner during a divorce is a problem mainly because it can make the ex angry and jealous and unwilling to negotiate!

While you could claim half her assets, if you don't have kids you may very well not be successful. The description 'half her assets' sounds like they were not acquired together?

 

Just to throw another potential problem into this mix...

Separating assets along ownership lines is nice and clean, but the loans are held jointly. If you want to remove names from the loans, then the remaining borrower will need to re-qualify for those loans. This is probably a good idea as the non-owner probably doesn't want to hold responsibility for the loans moving forward.

Don't assume that the lender will simply remove a name from existing loans, lenders usually require a full loan application. Don't assume that the remaining owner will qualify for the loans required, many investors no longer qualify for what they've already got. Get advice from your broker on this.

 

Dont sweat the small stuff.

 

Hopefully this is for the best.

You might want to inventory all assets and liabilities in before and after scenarios. Then provide to one lawyer to draft an agreement for the other lawyer to review. BFA could be cheaper/simpler/quicker and if you want to keep it amicable, there are advantages in instructing the lawyers that all negotiations/contact must be via yourselves. If you do the asset/liability work yourselves it should only cost 2-3k for the two lawyers to draft / review the BFA. Trust would be additional.

Do your financing checks on refinancing joint loans immediately as this has changed a lot and may change the settlement in ways that aren't initially apparent. Transferring IP ownership is problematic from a tax deductability of interest perspective so good to avoid as you are currently planning

 

Good advice.
EXCEPT
We charge a lot less for consent orders stamped by the Court compared with a BFA.

 

That's pretty generous towards BFAs. I can't think of many scenarios where a BFA is better than actual consent orders.

They're almost always more expensive, more hassle, and give less certainty.

 

No need for a divorce if you're dead.

 

Missed the deadline for consent orders (don't do this!) so didn't get the opportunity to see consent orders through to completion.

After going through the BFA route - it seems it must be quicker (no court involved), though as pointed out, no court involved does reduce certainty.

 

That's what I was getting at, albeit in my stunted quick post while doing 10 other things way.

Your quote is spot on. Why do a BFA when you can get stamped orders cheaper.

 

Very true.

Maybe I shouldn't try and post on one screen while looking at my others.....................

 

We are having court orders drafted based on our negotiations without lawyers. The orders are just to avoid stamp duty to transfer properties between us.

As for claiming the gf's assets I would have very strong prospects in doing so. I'm glad she's in the kids' lives as their father is on his best behavior in her presence. He should be contributing more to his kids' upbringing but me claiming his girlfriend's assets is not the answer.

 

Great to see a legal firm (Certus) offering sensible, and low cost options!

Definitely take the advice, the best way to evaporate much of your wealth is for either of your to get vindictive or create delay in "negotiation". Then, the only parties who win are the lawyers.

 

I always tell clients this: they don't win in family law. Lawyers do. So keep it short and sweet. Stop fighting over trivial stuff. Be commercial.

 

Spot on.

We were never going to go into family law. I don't like all the emotional stuff, I like helping people make money or helping them recover from a business stuff up. But we were referring out a lot of family law and more often then not the simple consent orders turned into expensive disputes.

Life is too short to waste a year of your life and vasts sums of money fighting it out to get the best percentage of the pool. Unless one party is completely off their trolley or the pool is so large that after all that time fighting:
1. your actual net amount received is significantly more than you would have got by consent; and
2. the time and energy put into the fight could not be put to more financially rewarding use.

There is no point fighting over 10% of the pool if the lawyers fees outweigh that.