Divorce – Who Gets What? Just because you think you deserve a particular outcome from your marriage, it doesn’t mean the law works that way?
The family court has a formula which lawyers use to work out what you are entitled. And the court will approve the orders under the terms ‘just and equitable’ for both parties, allowing you both to move on and build a new life from the equity built up in your relationship.
Where a 50/50 split may seem fair when dividing assets, there is a list of criteria which also needs to be considered. Not only for you to survive now but also into the future. Consider contributions at the start of your relationship, during and contributions made by other parties, such as gifts or inheritances.
Researchers say it takes five years to get back on your feet financially after a divorce. This fact happens whether you remain friends or enemies. And emotions can heighten the need to win at all costs. Knowing what you are entitled to and being prepared to receive that and nothing more can cut the cost of litigation and emotional distress.
In this podcast, I will go over some of the criteria needed to help your lawyer evaluate your position and financial entitlements.
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Episode 15 – Who get’s what?
[00:00:00] Welcome to Divorce Angel Podcast and thank you for joining us. Get ready to uncover the strategies everyone can implement for a successful separation and divorce. This will save you valuable time, money, and emotions while learning the secrets to you happily ever after. Now, your host, my wife, Tanya Somerton.
Hello, hello and welcome back to the divorce Angel podcast. Can you believe it? This is episode 15. The time has just flown and I love bringing these podcasts to you. Actually this week, we had some really exciting news, and we were voted one of the top 20 divorce podcasts in the world. Coming in, I think it was number 12, which is pretty good given that we’ve only done 15 episodes. But the most exciting thing is our episodes are a little bit different because we’re trying to provide information to our audiences. Whilst emotions are so important in our decision-making, there’s so many other factors that need to come into play especially if you’re a woman.
We, women, are very emotional based and in a lot of cases, we don’t really care about facts and figures. We run on emotions. We’re going to talk [00:01:00] about in this podcast, who gets what in a divorce. In a lot of cases, when you’re talking to a woman who is very emotional, she just does not care about the facts of who bought what into the relationship or who earns more, “This is what I want. This is what I’m entitled to.” That’s why it what I’m trying to do is provide this information to people out there so they know that– You know, when you’re talking to your lawyer, sometimes the information that they’re telling you is correct, and you should listen to their advice rather than running on emotions. It’s something I see quite often and if we got facts of the of the situation, take what we’re rightfully entitled to, don’t get into a tug-of-war over something that we really never going to win. Why spend a fortune fighting for something that you’re not [00:02:00] going to get anyway only because it makes you feel better in that moment, but then ultimately, in the long run, you look back and go, “Wow, I shouldn’t have done that. I should have done something different.” and that’s my job.
My job is to give my audience and my clients that sort of– I’m the little person sitting on their shoulder saying to them, “Do you really want to go down that path? Let’s think about this logically not emotionally, but logically. Let’s consider the facts in front of us and let’s just cut our losses. Let’s take what we’ve got and then let’s use that money, information, the hunger that you have inside of you for a better life. Let’s take all that. The biggest way to show someone that you’re succeeding and happy in life is to [00:03:00] become that person that you always wanted to be. Rather than fighting and getting angry and having a relationship moving forward full of animosity, who cares? Let them take what they’re entitled to and you change your life to become the best person you can be.”
This podcast has come about because over the last few weeks, I’ve had a number of inquiries from people who are looking to do their own financial separations and divorces. I have no issues whatsoever with anyone doing their divorce online. I actually encourage my clients to do it online because I think it’s cheaper and it’s got so much easier now with the portal at the courts. Why spend a lot of money if you can do it yourself? There’s a few occasions when we will actually ask for a lawyer to be involved, but in most cases, [00:04:00] most people can do it themselves. I have previously done a podcast on this, on how you can do it yourself so please go back and look into that and that will give you the information and the show notes on how to proceed doing your own divorce. But when it comes to financial separations, that is a completely different kettle of fish. People say to me, “But I trust my partner. I know that they’re not going to do anything wrong. I’m pretty certain that once we’ve come up with an agreement, we’ll just divide it whatever the agreement is. He’ll go his way, I’ll go my way or she’ll go her way and that’ll be the end of it. “
Let me tell you a story about a lady who is in her late 60’s and has been divorced from her ex-husband for over 20 [00:05:00] years. They legally divorced but they never put proper consent orders or a binding financial agreement in place when they separated. They had a house, and what happened was he said, “If you give me $20,000, I’ll move out of the house and I’ll be able to start again.” So she did that. Twenty years later, one day, she went to the letter box and had a letter from a lawyer who was acting on behalf of her ex-husband requesting $200,000. Now, obviously, she was completely shocked by this letter and wondered how this was even feasible. Had he lost his mind? What was going on? But the truth of the matter is, if you don’t actually have a formal written agreement in place at any [00:06:00] time, the person can come back and ask for rightfully what was their share in the property. He’s issue was that over the 20 years since they’ve separated, the house had gone up in value and because of that, he wanted his fair share add of the sale of the property.
She had reached retirement. She was a self-funded retiree and she’d sold a house and was moving into a much smaller house and, with the help of their financial adviser, had put together a strategy to help her survive and live a really good, fruitful, senior years. But then when she received this letter, obviously we had to get advice as to what was going to happen to her and it turned out that he was right. It looked like she has to pay him this money because they had nothing formal in writing. They [00:07:00] went back over some of their contributions and what who’d bought in. Can you imagine how alarming this would be for her? She thought everything was going to plan and getting excited about an upcoming cruise and here she is, having all of a sudden having to find this money.
When I have clients ring and say, “Look, my ex and I, we want to do this ourselves. We think we can trust each other. We don’t have a lot to divide. We’re just going to go 50/50 and I’ll keep my car.” They’ll keep their car, will sell the house or they’re going to keep the house whatever. Their agreement is and move on. There is a risk involved if you go down this path. If you don’t have anything formal in writing, there is a risk.
Being aware of that can sometimes change a person’s decision. When someone [00:08:00] says, “I’m going to go 50/50.” in a lot of cases, they haven’t taken into consideration what the court would consider as fair and reasonable. They haven’t considered things like the debt that is associated, and I don’t mean the mortgage on the house, I mean other debts such as, vehicle loans or credit cards or personal loans or family loans, it could be school fees that are outstanding it could be business loans. Anything. In a lot of cases when you go through a lawyer, that information will all be sorted out. So when you finally get all of that debt sorted out, your able to start afresh and you’re able to start from a position where you have no debt or everything has been addressed. The interesting thing about research has shown that when you go through a divorce, it can take up to five years after [00:09:00] that divorce to finally get back on your feet financially. Five years is such a long period of time if you don’t get rightfully what you’re entitled to and if you do it just you and your ex.
Let’s get into some of the factors of what we need to address in an asset split. For some of my listeners overseas, superannuation, which we call it here in Australia, which is the fund that we use for our retirement and, like I said, this lady that was in her 60s, she was a self-funded retiree, and she was able to do that through the contributions that she’d made to a superfund. In the U.S., you would call it a 401k. When these people are ringing me in talking about just, “We’re just going to sort it out ourselves.” They don’t take into considerations the super and what needs to be divided there. They just think that, “That’s okay. We’re going to keep at my [00:10:00] share and she’ll keep her share.” and sometimes that’s just not fair.
With the help of one of my army of angels or one of my lawyers on my panel, she’s helped me put together this list of contributions and how the court looks at it. I want to make something very clear right now. This is a warning. Please remember that what I’m about to say is general advice. I am not a lawyer, I don’t pretend to be a lawyer, and I refer all of my clients to lawyers. You must seek the appropriate advice for your specific situation from a person who is qualified to give you that information. In other words, don’t listen to girlfriends, don’t listen to other people, colleagues or whatever. Get the advice from the experts and the people that deal with this day in and day out. You can do that in a lot of cases from a free consultation. [00:11:00] If you and your partner are going to go down the track of trying to sort it out yourself, make sure that you have some idea as to the assets and the liabilities, and what you are entitled to given the situation pertaining to you.
When a lawyer works out or has some idea of what you’re entitled to, they do this by an equation, and it’s pretty much just a mathematical equation and a weighing on, you know, certain factors as to what someone’s bought into a relationship or someone’s bought some debt, someone’s bought some money, whatever. They weigh all that up and they– Pretty much as soon as they meet you, they’ll ask you a few questions and those questions, straight away, will be normally enough to understand exactly what you are entitled to. But when splitting up a [00:12:00] family’s financial asset pool, it comes back to contributions. There’s three contribution particulars that they would look at.
One is the initial contribution. That’s where the assets each party have bought into the relationship. They could be things like money already in the bank, someone may already own a property and it might have equity in that property. It could be a superannuation balance. It could be tools of the trade, a vehicle, could be shares. It could be any asset that adds value to your net worth. That is a contribution.
Another contribution could be the debt that you’re bringing into, but it’s a negative contribution. So if you’ve got a car loan, that’s a debt. So [00:13:00] if you have a car that is worth thirty thousand dollars when you come into the relationship, but you have a debt of 20,000, then you only have a net position of $10,000 because you’re really carrying a large debt on that vehicle. It could be a personal loan. It could be that you have nothing.
It can even sometimes be house and content. So you might start living together and you’ve gone and bought all of the furniture. So brand-new Furniture has been used to deck out your new home. That can sometimes also be a contribution.
Then we have during the relationship. This is further broken down into a whole lot of different categories and they can be both financial and non-financial contributions. I’ll go into them a little bit more in detail. Then we have the contributions by other parties into the relationship. [00:14:00] They can be things like, gifts from parents or grandparents or relatives or even a friend. It can be an inheritance that someone has received throughout the relationship and depending on when they received that inheritance whether it was at the start or whether it’s been closer to the end of the relationship will depend on how much of that inheritance the individual will get back. Whether they get back a hundred percent of it or whether they only get back up a portion of it. That’s really really interesting because in a lot of cases people think, “No, I received this during this term so I’m entitled to all of that when I leave.” It’s in those cases that you specifically must get the proper advice for your personal circumstances.
Let’s go a little bit deeper into contributions. Whether either [00:15:00] party, any debt coming into the relationship, the income levels of the parties during the relationship is important as well. Periods of unemployment, either through choice. So you’ve chosen not to go to work because you prefer to sit at home and play a computer game or whatever the case may be, but I have had a client that said her husband just wanted to get to a certain level so he quit his job. You might lose your job, you might have had children and you’ve both decided that either one of you is going to stay home and look after the children. That’s also a contribution but a non-financial one.
It can be whether either party has decided to take up some additional study and has changed career over the time of the relationship. How did that study– How was that supported? Did the other person’s support the [00:16:00] person who was studying to allow them to be able to do that? Then there’s whether either party travel for work or not.
Do you travel overseas for your job? And if so, how long does that keep you away from your family? And does that mean that the other party has to take on the majority of the chores and running the children around? All of those things have a weighing as well. And then who was the homemaker or the primary carer of the children? Who undertook the outside chores and made other non-financial matters such as planning holidays and social activities? Did one of you take on that as a primary role? Was there a person that gifted you some money? Did either one of you get a redundancy? (17:10) or have a windfall at some stage that helped pay down your mortgage or helped buy your property or [00:17:00] allowed you to go on a holiday? All of those things are also things that are looked at from contributions. Who paid the mortgage and helped maintain the assets around the home? Were they paid from joint accounts or did someone pay them mostly out of their own pocket? Did either party improve the assets? For instance, your ex-partner it is a builder and you bought a rundown home and it was because of his labor and hard work that the price doubled in value. Those things are also taken into consideration. Who was the spender and who was the saver? Whether either party suffers an illness or had an accident during their relationship. Because that will have a bearing on how much someone gets when the relationship splits up. Whether [00:18:00] either party had any issues such as drug or alcohol or gambling over the term of the relationship and what impact that had on the overall asset pool. What are the current assets and liabilities of the relationship? And this just does not mean a house, it can be cars, motorbikes, trailers, boarding equipment, jewelry, boats. It can be shares, paintings, anything that has a net worth that adds value to a person that, at any stage they could sell and get cashback from.
All of these things are really important and need to be taken into consideration so it’s just not as easy as “Let’s just divide our house or sell our house and divide it 50/50.” There’s a lot that needs to be taken into consideration. Under the Family Law Act, they will [00:19:00] also consider are the ages of both parties and how much longer someone has to work. Is someone much older than the other person? The length of the relationship. Was it a long-term relationship or merely just a short-term one? It is just not as simple as a lot of people think. Here in Australia, we thought we also have a no-fault divorce, which means that if either party has done something wrong to the other party such as, cheating or physical or emotional or verbal abuse, done something to cause the demise of the relationship, our courts here in Australia don’t take that into consideration. But if you have a lawyer, they may be able to use that information to get a greater split of the [00:20:00] assets if possible.
I suppose getting back to this whole thing of doing it yourself and what you are entitled to and what you’re not entitled to, at the end of the day, it comes back to a simple mathematical equation and a formula. It’s working at the assets and liabilities, and taking that away and then working at a net worth for the couple, and then dividing that, if you’ve agreed with each other, 50/50 then. It’s not as simple as just saying, “We’re going to sell the house and we’re going to take a share each. There is everything else that I’ve spoken about that needs to be taken into consideration, including superannuation.
If you are doing this because you certainly don’t want to cause any more animosity with your ex, and you want to make sure that you guys have a really good future going forward, [00:21:00] especially if children are involved, there are other ways around it. We do a process called couples separation simplified where we work with couples who are in this position and are wanting to save money. We do the complete due diligence of the relationship. We have the consent order submitted to the court and it allows you to have a level of confidence knowing that it has been done appropriately, it’s been done as per the letter of the law, and that you know that at no time can anyone come back and say they want more or that all the sudden they’re into some debt and you are now still responsible for that because you never got a financial agreement in place at any given time.
Making sure all of this is done appropriately, and you finalize your relationship [00:22:00] is very important to allow you to move on and have a new life. Making sure that there’s nothing that can ever come back to prevent you from moving forward such as the lady I spoke about earlier. At the time, she thought that it was the cheapest and easiest way to do it so they got divorced, legally divorced, but they didn’t do a financial agreement. 20 years on, here she is, having to look for a substantial amount of money because she didn’t do what was right at the time. Don’t be one of those people. Make sure that you do your due diligence, you are aware of the consequences of your decisions.
If you got any questions about this podcast today, please send me an email or put in a comment, and I’d love to try and answer it or give you some advice. [00:23:00] I thank you once again for listening to this podcast. I am so grateful for you spending your time listening, and I hope that it has been of some help and assistance. Until next week, I look forward to talking to you again then. Bye for now.
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