Divorce Property Settlement – The Biggest Mistakes People Make

Divorce property settlement is one thing you want to avoid making mistakes in. Family law property disputes are absolutely critical to your financial well-being and future. I have been a lawyer since 2005 and over the years I have seen how some people managed to make a mess of their  family law property settlement. Often these people then come to me asking if they can appeal the judgement, or overturn the consent orders, or just generally have a second bite of the cherry. The good news is that sometimes I can help them, but often there is nothing to be done. Prevention is always the best cure. So I hope that you are the type of person who is able to learn from the mistakes of others and is willing to listen to advice, because this might just save you from making a huge mistake.

Mistake #1: Incurring Grossly Excessive Legal Fees

First of all, let it be said, for most people, divorce is the single most damaging thing they can do in their lives financially. You get to divide your asset pool in three, one third to you, one third to your ex and one third split between your lawyers. Well, its probably not that bad. The Federal Circuit and Family Court, and the Family Court before them, have on numerous occasions expressed the view that a party’s legal costs should not exceed 10% of the asset pool. Unfortunately, many family law firms charge like a wounded bull. I always find it interesting to read the other side’s Cost Notices (which are now required to be filed before every Court event), I take it as a point of pride that my client’s costs are always lower! As he then was, His Honour Justice Benjamin (now retired) railed against excessive legal costs in his judgement in Simic v Norton [2017] FamCA 1007, “Whichever is the cause, the consequences of obscenely high legal costs are destructive of the emotional, social and financial wellbeing of the parties and their children. It must stop.” What is excessive? Well we are talking about parties spending hundreds of thousands of dollars each on their matter. For example in Trevi v Trevi [2018] FamCAFC 173, the wife claimed to have spent $587,032 in paid legal fees and the husband claimed $437,628 in paid legal fees. When I see figures like this, I ask myself how is this even possible?

So the first mistake for you to avoid in your divorce property settlement, is paying excessive legal fees. You need to find a competent and reliable lawyer who operates on a low-overhead business model, who preferably charges fixed fees and who can tell you from the beginning what each Court event will cost you. It’s not about finding the cheapest lawyer on the block, please don’t do that, do not select a professional because they are the cheapest – and do not select a professional because they are the most expensive either. Once you have a great family lawyer, who is working hard for you, and who does have reasonable fees, don’t mess up the relationship by being a scrooge or not paying your bills on time. There is nothing more frustrating for a lawyer, than working for a client who simply does not appreciate what a good deal they are getting. A good deal does not mean cheap, it means you are getting value for money relative to the market rates and appropriate to the complexity of your matter, the size of the asset pool (risk) and all the other circumstances of your case. And if you are my client, it is almost guaranteed that you are paying less than the other side are paying to their lawyer, so please pay on time.

I often take over divorce property settlement cases mid-flight. People will call me up and say they have spent ten(s) of thousands of dollars on correspondence and negotiations, which have gone on for a year, and not resolved the matter. In fact, for that money, they have not even had their matter filed in Court. I can get your matter before the Court for a fixed fee of $4,950 + GST and Court filing fees. Now it is important to negotiate and try resolve things out of Court. I am often able to achieve a great result by negotiation (and I have a fixed fee package for disclosure and negotiations, see Fees). It is important to realise early in the piece whether negotiations are heading somewhere productive or not. Because if your lawyer has been dragging on negotiations for a year, then you are playing rope-a -dope and probably you are the dope. Also you may run out of time. Property settlement must be applied for within twelve months of divorce or 24 months following the end of the de facto relationship. You can seek leave to apply out of time, though there is no guarantee such leave will be granted.

When you incur grossly excessive legal fees, even if you “win”, your victory will be a pyrrhic one.

Mistake #2: Accepting Less than Your Just and Equitable Entitlement

This is the one that really hurts me in the pit of my stomach. I hate to see someone being taken advantage of. Sometimes people ring me up and ask me to act for them in their divorce property settlement, often they will want someone to sign off on their binding financial agreement. I had one guy ring me up who wanted to give away all his assets to his ex-wife, just so he could “have peace” and see his kids. I supported the second part of that, he had a strong case for spending time with his kids, but his ex-wife had named the price, and the price was “everything”. I told him no, this is not right. I explained to him that we would need to try family dispute resolution and if that failed, we needed to get this before the Court. I also told him to go and see a psych, to get his mind in a better state first before making any long-term decisions. We had a number of long conversations over a week or so, he kept insisting. I realised that he was simply not acting rationally, this man needed a litigation guardian. I told him that as much as I would love to help him, and I could if he would follow my advice, but I would not be able to sign off on his binding financial agreement as it stood, because it was irrational and one day he would come to regret that decision. He went somewhere to some other lawyer and I’m fine with that.

Another one was a lady who was in great fear of her husband, she had been a victim of family violence, her husband was no longer a threat to her, in fact, he was living in another country. She had made great sacrifices in the relationship, had most certainly made an equal contribution, but she wanted to accept a divorce property settlement far below what the Court would consider a just and equitable outcome. Why? Because she was scared of how her husband would react if she insisted on her rightful share of the asset pool. I told her to get an intervention order in place first, to get counselling and to come back when she felt stronger. At first she was very upset, even angry that I was refusing to accept her as a client in those circumstances. I told her I like to get results for my clients, some clients actually do need to win, I know its not very PC to say that, but this is real life and for some clients, winning is the only option. But I cannot fight for people who do not want to fight for themselves.

Before I get criticised, let me clarify a thing or two. In parenting matters, when do you need to win? You need to win when it is in the best interests of the children that you do so. Sometimes, the other parent represents an unacceptable risk to the child, perhaps they are a drug user, perhaps they are in a violent relationship, perhaps they belong to a religious cult. Sometimes, as a parent, it is your responsibility to fight for your child, to fight to win, because it is in that child’s best interests that you do so. You do not fight to hurt the other parent, or exert control over them, or just to be difficult, those are not reasons to fight. As a lawyer, I am an officer of the Court, and I have duties to the Court and to the administration of justice. I have a duty under section 60D of the Family Law Act 1975. Some clients find it hard to accept that the arrangements they may want for the child are not what the ICL, the family report writer or the Court will consider to be in the child’s best interests. At times I have had to part ways with clients because their instructions to me were in conflict with my duty to treat the best interests of the child as the paramount consideration.

In divorce property settlement matters, when do you need to win? You need to win when your future economic well-being is dependent on you receiving a just and equitable family law property settlement. I have seen it a number of times in high net worth situations, where the husband was the economic bread winner while the wife looked after the children and was a home maker. The husband initiates the separation and makes a reasonable sounding property settlement proposal. The wife comes to a lawyer to “just sign off on it”. It quickly becomes clear that there has not been a proper process of full and frank disclosure, the wife has no idea what the asset pool actually consists of but says she is getting a good deal because half a million is a lot of money and she will use it to buy a house and retire on and her part-time job will support her, etc. The problem is, she has no idea what the true cost of living is, she has no idea how hard it will be for her to develop a career starting in middle-age, and she has no idea how hard it will be for her to save that extra money she is foregoing in her haste to “just move on”. There is a lot of wisdom in homely old adages such as “Haste makes waste” – in family law property settlements it often does.

Other people are also just unreasonably suspicious of lawyers, when you explain to them that they may need to invest say $30,000 to $40,000 in their divorce property settlement litigation, but that by doing so they will improve their position by say $200,000 or more, you would think it’s a no-brainer that they do that. Unfortunately, some people pay an inordinate amount of attention to first-order consequences and ignore second-order consequences. They have short term thinking and lack foresight. They don’t want to invest their time and money in achieving a better outcome and they underestimate how difficult it will be for them, in their new life, to generate that net $160,000 which they are going to leave on the table because they don’t want to fight, just a little bit, for it. It is important to remember that when you engage a lawyer, that person is under a positive obligation to act in your best interests, now that you have selected a great lawyer – trust their advice! Yes, sure your lawyer will benefit from running your case, but it is a win-win situation.

Mistake 3: Doing a DIY Family Law Property Settlement

There are times when you are able to DIY and save money, I get that. You can paint your spare room, sand down the old outdoor table, change your car’s oil and filter, pickle your own gherkins, build your own website and brew your own beer. These are all great DIY projects, they are also fun and can save you a bit of cash. There are also very limited consequences to be suffered if you stuff it up. Unfortunately, when it comes to dentistry and divorce property settlement, the assistance of a trained professional is highly recommended! The proliferation of information on the internet and the availability of guides, forms and advice given by well-meaning but unqualified persons has become overwhelming. Jump on Youtube and you will find “finfluencers” barely out of their teens giving out investment advice and sharing their wisdom. That’s fine. We live in an age when everyone has their opinions and shares them widely, where information has been democratised and people are encouraged to believe that they can do and be whatever they set their mind to. Unfortunately, this is just not true. There are the unknown unknowns which the well-intentioned but unqualified divorce advisors and separation guide writers simply do not know about. In simple cases, sure, you might be able to negotiate your property settlement yourself. You may even be able to fill in some forms and write some consent orders. Do yourself a huge favour, get a competent family lawyer to look over it all for you. For the cost of an hour or two of work, you will either gain enormous peace of mind or avoid making potentially costly mistakes. There are apps to help you separate amicably, and for certain people that might work, but an app will never be able to find potential issues which human instincts, human experience and human empathy, informed by years of experience, can detect.

The best way to contact Jano Family Law to discuss your divorce property settlement is by completing the New Client Form.