Formalising your financial settlement with a family lawyer is very important: here’s why

When separating, it is important to not only work through key matters such as your financial settlement, but to also formalise them - so that they are legally binding. Failing or delaying this process due to a fear of not wanting to involve a lawyer can have very serious consequences on your financial prospects and your family. To help you learn more about the importance and value of working with a family lawyer, SE Lawyers family lawyer Courtney Salter shares her insights on working with a client who experienced this scenario. Read more below.

A case that comes to mind frequently is that of a client who did not formalise their property settlement at the time of separation and how this compromised what their ex-spouse became entitled to.

The case

The two parties had separated over 10 years before, and at that time, they had sold the family home and divided the proceeds of the sale. That process was the end of contact between them, and in the meantime, the former spouse spent their share of the proceeds of the sale, along with using all superannuation entitlements.My client contacted me after receiving a distressing and unfortunately-timed demand from their  former spouse for a financial settlement.

This was unfortunately-timed because it occurred just after a family member of my client had passed away, meaning that they were possibly entitled to an inheritance. This timing by the former spouse was incredibly upsetting to my client, combined with some overwhelming feelings about working with a lawyer for the first time, and what this would involve financially, their emotional state was at the forefront of my mind throughout the matter.Our partnership with our client started when I met with them and took detailed instructions. Essentially, the parties had divided their sale proceeds but had not formalised the agreement reached by either an Application for Consent Orders or a Binding Financial Agreement (BFA).

As well as this, the parties had not turned their minds to their respective superannuation funds and whether either party was entitled to a split of the pooled funds - which can be possible.Family law legislation entitles any party to a relationship to seek Orders for a financial settlement from the Federal Circuit and Family Court of Australia. In doing so, the party is entitled to ask the Court to consider whether a financial settlement is appropriate, and if so, what that settlement should be. The asset pool available for consideration and division includes superannuation entitlements.

How South East Lawyers supported our client

Because the parties had not formalised their financial settlement via Consent Orders or a BFA, the  former spouse was within their rights to file an Initiating Application with the Court seeking a division  of the asset pool, including specifically pooled superannuation entitlements in this scenario.After considering the previous actions of the parties, their failure to formalise the financial settlement - as well as the potential inheritance funds my client would potentially receive in the future - I had to gently and respectfully advise my client on the reality of their circumstances.

These were that if the former spouse potentially filed Court proceedings, whilst they did not have a strong argument of entitlement to potential inheritance funds, there was a reasonably strong chance the Court would order a division of my client’s remaining superannuation entitlements.With the benefit of legal advice and guidance, my client elected to offer a final settlement figure to  their former spouse. This was fortunately accepted without the need for legal proceedings, the matter was resolved and formalised relatively quickly, and my client was able to focus on more important matters.

Final thoughts and advice

Looking back, this case serves to constantly remind me of the importance of parties formalising any settlement agreement reached despite the reluctance of clients to involve lawyers. I use it as an example to my clients as reassurance that they are taking the right steps to secure their financial future and freedom with the experienced and deeply valuable support of a family lawyer. If you are newly separated, or wish to discuss your financial settlement options, our family law team at SE Lawyers can offer you clear, considered and specific advice for your exact needs. Reach out to our team below for a chat.