Divorce and dividing the assets: a new approach

In the US they call it ‘conscious uncoupling’. It means a financially pragmatic and less divisive approach to divorce

Ensuring you have legal advice is the first step, and importantly, if the issues are related to a percentage division, no lawyer can guess what a judge will do. Picture: iStock

It’s an understatement to say that since March 2021 the Covid pandemic has been a disruptive force in the economy, and for society more broadly.

For many Australians, it has significantly impacted individual well being and relationships – business, personal and family. Such pressures have seen increasing demand for family law advice and a rise in the number of divorces. In turn, divorce can bring with it serious personal and financial impacts.

We have seen offshore the trend of “conscious uncoupling” or divorcing in a positive or amicable way. Yes, there is such a thing as a “friendly” divorce.

“There is a strong appetite in Australia for divorcing in a positive and amicable way,” says Margaret Neal, a family law principal at Marshalls Dent Wilmoth. “Many people are able to see the benefits to themselves and most of all to their children in moving forward constructively and with dignity.”

Similarly, Peter Carew of Carew Counsel says many people recognise that, for whatever reason, they have grown apart, but it is not always with hatred for the other. “There are many that have ongoing relationships in the sense of friendship which makes it so much easier for relatives and close friends of the couple.”

On this theme, I have long been an advocate of the Binding Financial Agreement (BFA). There is no doubt having a BFA makes life easier but nor does the absence of one rule out a constructive outcome.

For every couple, regardless of their net worth, the financial outcome is important. However, for couples of significant wealth, separations can raise the stakes.

Neal says that when there are major assets the parties can reach resolution relatively easily and quickly.

“In these cases, there is enough money available to ensure that both are comfortably placed for the rest of their lives. The focus is more on achieving settlements tax effectively, and wealth management to the next generation.”

A collaborative and less costly approach to divorce can also be achieved through mediation. “Mediation works best when the parties are each supported by family lawyers,” says Neal. “This achieves both the outcome of fair and equitable negotiations, but also ensures that tax and all other technical matters are properly addressed.”

Divorce will always be an emotional challenge, Carew notes. “The grief cycle plays a part. Those whose marriage comes to an unexpected end can use litigation as a form of ongoing communication even though there is no reasonable likelihood of reconciliation.”

But he says the angry client will often move forward over time and see “blue sky” without the other party. At that point they become more amenable to settlement.

Neal stresses from the outset that “daggers drawn” litigation is not good for anyone, emphasising the importance of legal advice to ensure the range of outcomes is known.

I am of the view that a financial resolution should be sought amicably in order to avoid the high emotional cost of a divorce.

Ensuring you have legal advice is the first step, and importantly, if the issues are related to a percentage division, no lawyer can guess what a judge will do.

“Recognise, at best, they can indicate a range of likely outcomes and that has to be weighed up against the cost of litigation,” Carew says.

Families with significant wealth typically have more complex issues. These can include multiple jurisdictions with assets held offshore and the vexed issue of whether assets are “hidden” offshore, and these days this may involve cryptocurrency.

More commonly wealth can be concealed via super or pension assets accumulated while working overseas. Carew emphasises that the discovery of overseas assets is always difficult.

He says that, within a couple to ensure that there is transparency in all financial matters, it is not okay to say something like, “the other party is good at money and I will let them decide or control the dollars”.

To extend this point, greater transparency is always possible. Neal points out that the International Academy of Family Lawyers means that Australian lawyers who are members have good access to family lawyers around the world.

“However, locating and proving assets in other jurisdictions can in some circumstances be very challenging.”

Neil Sedaka’s famous song “Breaking up is hard to do” is very apt. To minimise the difficulties ensure you get good legal and financial advice and plan a strategy, be aware of the grief cycle and how it may affect you.

Aim also to minimise conflict, and try not to focus on revenge scenarios. I have seen how they can cost money.

Finally, accepting the inevitable and understanding you must get on with your life can be a very sound financial strategy.

Will Hamilton is the managing partner of Hamilton Wealth Partners

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