Financial Disclosure in Property Settlement Agreements
Posted in: Property Settlement Monday, 02 March 2020
People involved in Family Law property settlements must disclose a range of financial information to each other including tax returns, bank statements and superannuation details, even if the other might already know it.
Although it is tedious, failing to disclose a piece of relevant and material financial information could be fatal to the settlement, especially when there is a small property pool.
In one case decided in July, 2016 the parties had agreed to a settlement involving a small pool of assets and the payment of joint debt. However, the wife did not disclose her superannuation of $37,000. The husband failed to pay out a joint debt as agreed, so the wife sued to enforce the agreement and the Court ruled that because she did not fully disclose her financial position, the agreement was invalid. This meant she had wasted the legal fees spent in preparing the settlement agreement and also in trying to enforce it.
Sometimes, when people have a small asset pool they don’t see the value of getting legal advice or collating all the required financial information. This is actually dangerous because in a small asset pool an individual asset (e.g. an overlooked superannuation account) can be ‘material’ and leaving it out will risk a ‘material non-disclosure.’ This will leave the settlement at risk of being challenged later and ruled invalid. By contrast, in a $3m net asset pool, failing to disclose $30,000 (1%) may pose less of a risk.
The case shows that cutting corners to save time or money in a modest property pool can be expensive. The extra time and money spent doing it right is an investment in both money and peace of mind. Like so many things, it’s worth getting the right advice.
The family law practitioners at CLO Lawyers understand the emotional distress, confusion and financial hardship that often follows relationship breakdown. The added complexity of negotiating a financial settlement can make that difficult situation feel overwhelming.
Our referral network of financial planners, accountants and valuers can be engaged to assist with this process if required.
Murray Crawford, Family Law Solicitor and Director of CLO Lawyers, can assist you to achieve the best possible financial outcome from the property settlement process and if a negotiated settlement can be reached, will draft the necessary documents to formalise the agreement.
For further information, contact Murray Crawford at CLO Lawyers on 07 4631 9000. Contact CLO Lawyers now.
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About the Author
Director | BEc, LLB, LLM (Applied Family Law)
With a passion for the law and a strong social conscience, Murray is a strong advocate who’s focused on achieving positive outcomes for his clients and supports the community through leadership positions with several not-for- profit organisations.