Video Transcript:

Hi! Welcome to Video 2 of Module 5: Divorce and Assets. My name is Leanne Abela. I'm Partner and Director of Pearsons and if this is the first video you've seen in the series, I strongly recommend you go back to the beginning and look at all of our other videos in the series. This will give you a good opportunity to understand how we got to this point.

You can view all of those videos on either our Pearsons' YouTube Channel or on our Pearsons' webpage. If you've already looked at the series and you're ready to begin, let's start!

In this video, we're going to talk about the size of the cake and the slice that you're entitled to, that is, what is the asset pool and what is your percentage split. We start by looking at the ingredients in the cake, that is, what makes up those assets, what is their value and whose name are they in. So, let's begin.

When you're looking at the assets that are available for division between the two of you, you are looking at a whole range of assets and some people refer to them as property and confuse that with real estate. Property is a loose term that's used for lots of assets, that is, all of the assets and resources that are available for division between the two of you.

What do these assets include? The matrimonial home, or the relationship home that the two of you lived in, regardless of whose name it's in. You look at its current value and that is what it's worth now. Now, most people don't know what the value is. We're not real estate agents, after all, so it's a good idea to contact a few agents to get some free appraisals, as to what the property might be valued at if you were to sell it.

The next asset that's looked at is other investment properties. Again, regardless of whose name those properties are in, they go into the pool, as long as they belong to one of you, or there may be a property that is not in either of your names, but in which you have an interest as a result of a trust or company structure. Again, have an agent look at the value of that property and give you a free estimate, either verbally or in writing, because this is information that you can take with you, either to a solicitor or to assist you in making your own calculation.

Other assets include vehicles, either in your own names or in the company name, regardless of who's driving them. Most people determine the value of their vehicles in two ways: you can either go to a car trader and ask for its trading value or sale value or most people just do a Glass Guide or Redbook valuation.

You also look at bank accounts, that is, joint accounts, individual accounts and also accounts in the children's' names. Now, for some reason, people think that the accounts in the childrens' names shouldn't be included because they belong to the children, but, in fact, the children have not worked to save those funds and so those funds have to be included into the asset pool.

In most cases, parents decide that those funds should be quarantined and kept for the children, themselves, when they reach a certain age or for their education, but, technically, they do fall into the asset pool unless people agree between themselves. So, you should have that information with you.

Other assets include collections: stamp collections; art collections; memorabilia, which is quite popular these days. They all have a value and though you may not know the value, you need to include them in the asset pool and they can be valued by a reliable source, later.

Furniture is also included, but, generally, unless it's valuable antiques which are certified, you simply divide the furniture between yourselves, doing an item by item separation. Very rarely is the actual value of the furniture taken into account.

Often, there are businesses or companies, which have a goodwill value and also an asset value and the assets might include company vehicles, computers, stock and equipment that also needs to be taken into account. Generally, it's very difficult for the parties, themselves, to determine the value of that company or that business, but, if needed, an appropriate forensic accountant can do the valuation of those assets.

The other resource which is taken into account, which is sometimes seen as an asset rather than a resource, but, in fact, the law says it's a resource, because neither of you can use it, spend it or borrow against it, is superannuation funds. So, it's important that you're both aware of your respective superannuation funds: old ones, new ones, current ones and the current value of those funds.

Generally, what happens with superannuation funds is that they're split, or divided, so that half of the difference in the values of your superannuation funds are transferred to the other person's superannuation. So, at the end of the day, you both have an equal amount of superannuation in your superannuation fund. Now, that of course, is a generalization for a long marriage, where there are children, etc., but it's often the most popular way of dividing that superannuation.

That is the range of the assets which are taken into account when you first look at what there is to divide. Then, of course, you must look at the other side of the ledger, which consists of liabilities. So, foremost, are usually mortgages. They're a large part of the liabilities people have.

What's important to look at is this: where are the mortgages parked? Against the matrimonial home, against the business, against the investment property? It's good to determine that and, also, to determine what are the current balances. So, if you have a list of that, that needs to be set out on a ledger.

The next set of liabilities are usually personal loans to financial institutions or banks; credit card liabilities, regardless of whose name they're in; debts to family members or friends, that is, personal loans taken out for either building purposes or day-to-day expenses. Sometimes, those personal loans are set out in a loan agreement, and often they're not, but there is a clear pattern of debts being paid on a continual basis to reduce that loan, so evidence that that loan has been repaid. If not, it's still worthwhile bringing up that loan.

Other liabilities can include school fees, medical expenses that are unpaid, unpaid household expenses and any other debt or liability, such as taxation liabilities or capital gains tax. If you're armed with all that information, you can clearly present a ledger that has all of your assets on one side and an estimated value of those assets, now at the time of separation, and a list of liabilities, again, now at the time of separation.

What you do need to know, however, is that when you are doing a property settlement, it's the value of those assets at the time of settlement that is taken into account, not at the time of separation. So, for example, we did a case recently, where the parties had separated 20-30 years earlier and, for some reason, had not done their asset division or property settlement.

They'd gone along, living their lives thinking that everything was sorted because they'd reached an agreement at the time, but, as one of the parties was approaching death, she wanted to be satisfied that everything was in order and, in coming to see us, she asked what her entitlement would be. She was quite shocked to find that you would actually look at the value of the matrimonial home she had occupied all this time on it's current value, not the value when she separated.

Now, there are other factors that come into account and she'd be given credit for her contributions made to that property in all those years, but again, it's the value at the time of settlement, which is often another reason why you should try to do your settlement as close as possible to separation. It's, in fact, easier to un-scramble that egg after you've just made it.

So, hopefully that gives you the list of assets and liabilities that you can put on the ledger, to determine the size of your asset pool, or the size of the cake that you're dividing. In the next video, I'll be giving you the factors that you need to be aware of, which will determine the size of the slice that you are getting, that is, what is your percentage split going to be.

If you're ready to move on to the next video, go on to Video 3, which is The Relevant Factors That Are Taken Into Account in Module 5.

All our videos in this Youtube series can be found through the Pearsons Youtube Channel at http://youtube.com/pearsonslawyers or by visiting the Pearsons website at http://pearsonslawyers.com.au and following the links.

Alternatively, if you know that its simply time to see a Family Lawyer, please contact us for a free initial consultation. Please be advised that we must complete a conflict check so that we can only represent one party in a Family Law matter. So if your partner is watching this same Youtube series and engages our services before you do, we advise that we may not be able to talk to you.

Whatever it is that you choose, its our wish that throughout this Youtube series, you can finally gain a sense of certainty so that you know where you stand.

 

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