Dealing with property following the breakdown of a relationship in light of the recent COVID-19 crisis requires careful consideration. It is important to reflect upon how in these uncertain times an agreement can be made that protects you and preserves your assets. There are a number of areas where the assets may be affected significantly. A few of these areas are as follows:
- The value of real estate owned by the parties.
The property market has started to feel the effects of the economic downturn created by the COVID pandemic. How long this will impact the property market and by how much has been the subject of much debate and many articles. In the context of a Family Law property settlement it is important that any orders entered into give some flexibility when providing for the sale of a property. This is so that a party is not forced into a sale on terms that are very detrimental. Allowing for longer time frames for the property to sell, or having a minimum sale price set out in the terms may be a way to either ride out the current uncertainty or ensure that the property does not sell for a fire sale price. Below is a link to a recent article which looks at how the property market may be affected by COVID-19
- The value of your superannuation entitlements.
Another area where you must be careful is dealing with superannuation interest when the value of the superannuation is fluctuating significantly almost daily. A lot of time in Family Law matters a superannuation split forms part of the property settlement orders. This is when part one of the parties is transferred to the other party. These orders can be done as a percentage of the superannuation interest or as a lump sum amount. In the current market having these orders drawn up as a percentage split is probably the safest option. This way, in the event that there are significant changes in the superannuation accounts it retains the intended percentage split. The link below discusses how COVID-19 could affect your superannuation interests.
- The value of an interest in a business that forms part of the property pool.
The value of a party’s interest in a business, whether it is owned as a private company, as a sole trader or partnership, may be significantly impacted by the current lockdown rules. Some businesses have been seriously affected by the rules which are in place and some are unable to trade at all. We will be posting in the coming days further information regarding trying to value a business in the current economic climate.
There are other assets that may also be affected by the current crisis. If you have any questions regarding the above and how any property settlement can be drafted to protect your interests in these uncertain times please contact or Family Law Department.