Negotiating financial matters in times of the COVID-19 pandemic

Right now, there is a high level of uncertainty in light of the COVID-19 pandemic, and many people are asking whether they should push on and settle their property cases or hold off/hibernate their negotiations until this pandemic ends.

When providing legal advice about property settlement entitlements, we adopt the following three-step process –

  1. Identify and value your assets, liabilities and superannuation entitlements
  2. Assess contributions (which are historical in nature)
  3. Assess future needs (which are of course future focused)

There is also a fourth step which occurs only when a Court determines the matter. A Judge has the discretion to ‘tweak” the division to ensure it is just and equitable in accordance with the Family Law Act.

Right now, Step 1 and Step 3 are the most difficult to assess. Businesses are closing their doors, employees are being stood down or having their salaries reduced, child support may be minimised, the housing market is likely to be majorly impacted also making valuations difficult, people are seeking rent and mortgage “holidays”, superannuation values are already decreasing, and health issues may also arise, just to name a few. These factors therefore, make it very difficult for us to properly assess your entitlements right now.

If you’ve already reached an agreement or wish to push on with negotiations, make sure you have as much current information as possible to satisfy the assessment required in Steps 1 and 3.  Also, be aware of any potential risks in not carrying out your obligations in accordance with your property settlement. One example may be you plan to refinance your home mortgage to pay out your ex however, what happens is you lose your job and can no longer afford to pay the mortgage – even though you may qualify for a mortgage holiday, will you lose your home in the future?

If you’re already in a court forum, you may have a court orders and a timetable to exchange financial disclosure or have valuations of assets or corporate interests to be done, to enable you to progress to the next step such as mediation or final hearing.  If these type of orders have been made, it is important that they are followed in a timely fashion, or if you are experiencing delays in light of COVID-19, that you communicate this to your lawyer or ex-partner or their lawyers and seek an extension of time.  If the orders are not complied with, you may seriously compromise your case and risk the wrath of the Court.

Whilst some may decide to push on with their property settlements, or hold off in light of all the uncertainties, whatever you decide, we recommend that at a minimum, you and your ex-partner communicate with one another to ensure you have appropriate interim financial measures or a safety-net in place to get you through the next few months.  The rapid changes in our economy also means the loss in certainty around paying your mortgage/rent and household bills including feeding your family.  Therefore, communication is key - speak with your ex-partner, speak with your mortgage lender or landlord, speak with your employer and/or seek government assistance, or speak with us if you have any pressing or serious concerns.

February 21, 2019
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