The importance of fully disclosing your finances in a property settlement25-September-2015 Family Law By Simone Green
The first step in negotiating a property settlement between a separating couple is for them to accurately identify all their assets and liabilities. This
is often referred to as the ‘property pool’. All assets and liabilities should be placed into a balance sheet no matter how big or small; and
at the current value so a net value can be easily identified.
In order to create a balance sheet, however, the parties need to exchange what is known as ‘full and frank financial disclosure’.
Streeterlaw Accredited Specialist in Family Law, Ms Simone Green, said clients often find it hard to understand why such detailed financial information
“People often ask why it is necessary to exchange such detailed financial information and documents, especially in circumstances where the couple has already
agreed on a settlement. The reason it is essential to provide all these financial details is to ensure that the agreement or orders cannot later be
overturned for ‘fraud’ on the basis of non-disclosure,” she said. “It could be argued that one party may not have agreed to enter into the settlement
had they known the true asset position of the other party, for instance.
“When parties ask the Court to approve a settlement, the Court must be satisfied that the effect of the settlement is just and equitable in all of the
circumstances. The asset position must be listed within the Application for Consent Orders and forms the basis of the Registrar’s decision on whether
or not the orders are just and equitable.
“Even in circumstances where the parties settle by way of a Financial Agreement, this can be set aside by the Court at a later date if it can be proved
that one party has not made full disclosure of their assets and liabilities to the other party prior to the signing of the Agreement.”
In a Family Law matter, the following documents are usually requested from both parties in order to satisfy “full and frank financial disclosure”:
- Income tax returns and assessments for the past three financial years;
- Three most recent payslips
- Statements and full particulars of all financial institution accounts in their sole name or jointly with another person or entity;
- Records of investments including stocks, shares, debentures, share options, margin lending accounts in their sole name or jointly with any other person
for the past 12 months;
- The latest superannuation statement from all funds in which the parties are members
- Real estate valuations/appraisals
- Profit and Loss statements, Balance Sheets, Annual Returns and Income Tax Returns for the last three financial years for any proprietary limited company
in which the parties own shares, or have a legal or beneficial interest in such shares, either solely or jointly or in common with any other person
- In respect of any Trust of which a party is either a trustee, or in the case of a corporate trustee, a holder of any office or owner of any shares
in such trustee, or of which they are a beneficiary of any kind, a copy of the Deed of Trust and annual returns and financial statements of the
Trust of the most recent three financial years.
- Copies of any life assurance policy.
While it may seem like an onerous and time consuming exercise, the provision of full and frank financial disclosure is essential to protect the agreement
and both parties’ interests.
Streeterlaw is happy to guide you through the process and give you the right advice on your entitlements.
For further information or advice on property settlements, please contact the Family Law experts at Streeterlaw on 8197 0105 or email firstname.lastname@example.org.