Property and asset division checklist and preparation for mediation

Separating couples often turn to mediation to reach agreement on how to divide their property, other assets and finances without going through the court process.

The mediator’s role is to help parties negotiate a fair and equitable division of property and other assets, finances, and liabilities (debt / mortgage). Usually, mediation involves a day of facilitated discussion and negotiation between the parties, with the mediator’s process facilitating parties to work through, discuss and consider the same criteria and steps applied by the court in property division matters. These steps include:

Step 1: Identify the value of the assets, liabilities and financial resources that form the joint property pool (being the pool of assets that will be divided).

Step 2: Assess and consider contributions made by each party before, during and post separation.

Step 3: Consider the future needs of each party.

Step 4: Divide the property / assets in a way that is “just and equitable”.

Identify assets and cash position

Preparation is everything in property settlements and being well preprepared saves time and money. Each party must be prepared to make full and frank financial disclosure and your mediator will explain in detail during the intake session, your legal obligation to disclose all assets and liabilities that make up the joint property pool.

The types of assets that may fall into the asset pool include:

Family home

Investment properties

Stocks and shares

Motor vehicles, motor bikes, boats

Animals and pets

Home contents

Antiques, artwork, collectible items

Jewellery, sporting goods & equipment

A business

Bank accounts

Superannuation funds

Trusts

Money owed to either party

Identify liabilities (debts)

In almost every property separation, there needs to be two lists – the asset list and the liabilities list – or list of debts. Having covered off the assets, the following types of liabilities should be considered as to whether or not they form part of the parties joint liabilities:

Amount outstanding on the home loan / mortgage

Personal loans (how much and in what name)

Credit card or other debt

Outstanding taxes

Loans from family members or friends. It’s extremely important that you determine whether the amount given was a loan or a gift and whether it was given to one party or both of the parties (this may require written clarification from the giver of the funds if needed).

Identify contributions made by each party

The next stage involves a discussion regarding individual contributions made by each party relating to the acquisition, maintenance, or improvement of property/assets. Parties may consider who brought what to the relationship – for example a property – as well as ongoing salary or investment contributions. Relevant contributions need not be financial, and parties may consider for example the contribution made by one party raising children, up keeping the home, making renovations, establishing and upkeeping the garden. Indirect financial contributions such as inheritance, prize monies or other gifts and other indirect financial contributions may also be included.

Identify future needs of each party

This is a particularly important consideration in property settlements as courts consider future needs of parties when looking at how a property pool should be divided. The same matters are considered during mediation to assist parties to agree to a division of assets that may be considered fair and equitable. The following factors will be taken into consideration:

The age of each party

The health of each party

Income, property, and financial resources of each party

Earning capacity of each party

Care responsibilities of any children under 18 of each party

Commitments to support others

Standard of living duration of relationship

Care of dependents other than children

Eligibility of either party to receive government benefits (this can include superannuation and other government benefits)

Orders on either party from debt recovery service providers

Child support obligations

“Just and Equitable” division

Taking into account the three steps outlined above the mediator will work with the parties to discuss, consider and come to an agreement that would be considered by the courts to be fair and equitable.

Create a spreadsheet or easy to reference document for efficiency in the mediation

Property mediations can involve multiple figures arising from many of the factors mentioned in this article. It can be complicated and confusing. It is useful to make a list of the assets and liabilities that you consider forming part of the property pool prior to mediation, and your mediator will discuss with you during intake session, some of the items you should consider. This kind of preparation will enable efficiency in the mediation process and ensure the mediator has a transparent and thorough understanding of the perspective of both parties and the state of the asset pool. Yes, it’s a time consuming, detailed exercise – but there’s a lot riding on it, so it’s one of those occasions where you just need to focus and prepare carefully.

It’s a good idea for parties to provide documentation around property and asset values to the other (via the mediator) prior to or during the mediation. Documentation such as real estate valuations, financial statements, superannuation statements, details of shares / stock value, estimate value of cars, boats and other ‘big ticket’ items may assist parties to come at an agreement on the value of each of the assets and items in the property pool.

Get the right help to evaluate your financial position prior to mediation

It’s not uncommon that one party may have more knowledge and understanding of the financial position of the parties shared property and asset pool than the other, leading to a potential imbalance of power between the parties.

If this is the reality, then the party at a potential disadvantage may need the services of an expert such as a forensic accountant who applies accounting, auditing, and investigative skills to the examination of finances of an individual or business. Ideally, most separating couples would not need the services of a forensic accountant to verify their current asset position and the finances during the relationship, however they are often used to provide an accurate value of businesses, trusts and companies as well as discover ‘hidden’ assets and assess expenditure.

While a forensic accountant may be not be needed in most asset and finance pool determinations, it is critically important to use the financial history of the relationship to help predict the future financial needs of each party. This is particularly important if only one party worked (sometimes this is the case when children are to be cared for) or if there was a significant difference in salaries between parties to determine a fair and equitable division between parties.

And lastly, run everything by a lawyer/accountant/tax advisor/financial advisor before mediation

While this is by no means obligatory, we highly, highly recommend it. Yes, there are some parties who do not feel the need for this final step – but they are in the minority – and for the rest of us, it’s a very prudent decision. There are plenty of ‘outside factors’ or ‘unknowns’ that could possibly impact a person in your circumstances and it’s just a good idea to have another set of eyes over your preparation – just in case you’ve forgotten something. The aim of property settlement is to allow parties to separate and move on independent of one another in a way that is just and equitable. The courts will not certify consent orders if the proposed division is not just an equitable in the courts opinion and so it’s important to get it right.

To help you prepare for mediation, we have created a library of helpful information including checklists, tips and added detail around the process of mediation. For useful and relevant information you can download for free, we encourage you to visit our resources page.

Author: Kris Darmody

Lawyer, Mediator, Conciliator, Conflict Coach + Family Dispute Practitioner, Fresh Start Mediation