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E23: Two Views on Property Settlement

On the Show Today You’ll Learn

In this episode Benjamin and Heather switched up the format, with each asking the other increasingly challenging questions about property settlement.  It opened up so really honest conversation about the difficulties involved with property settlement specifically and separation more generally.

These two family law experts dealt with the following questions:

  • The biggest mistake people make when negotiating a property settlement.
  • The number one tip to avoid going to court to finalise a property settlement.
  • The toughest property settlement case Heather has dealt with in her long career.
  • How lawyers help people figure out what to expect in a property settlement.
  • Whether it’s possible to reach a settlement out of court if the separation is hostile.
  • Dealing with financial imbalance in property settlement
  • The pros and cons of divorce….is the whole thing worth it?

Links & Resources Mentioned in This Episode

Past podcasts:

Episode 2: Getting a Fair Property Settlement – this episode went through Heather’s top 10 tips for getting a fair settlement.

Episode 9: How to Keep Divorce Costs Down – in this episode Heather and Gemma discussed the best ways to reduce legal fees and includes a number of tips on property settlement.

Resources:

FAQs Property Settlement – this PDF on the Bryant McKinnon website answers the most frequently asked questions about property settlement

 

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Full Episode Transcript

Welcome: Two Views on Property Settlement

Benjamin Bryant: Hello and welcome to Episode Twenty Three of The Family Matters Show, the podcast that answers the difficult questions about divorce and separation. I’m your host, Benjamin Bryant from Bryant McKinnon Lawyers, and I’m here again today with my business partner, Heather McKinnon. Hi, Heather. How are you?

Heather McKinnon: Oh, really well, Ben, I’m ready for today’s show.

Benjamin Bryant: Well, Heather, I’m glad you’re ready, because this show is going to be a little bit different to our usual format. So you’re going to need to be paying attention. Today, we are going to talk about property settlement, which is almost always one of the biggest concerns for separating couples. But unlike most episodes where I get to ask all of the questions, this time we both get to ask the questions. We might get a chance to learn from each other. And, of course, we might find we disagree with each other, in which case the listener will get the benefit of our two different opinions.

Benjamin Bryant: I’ve been doing a lot of thinking prior to the show and I think I’ve come up with some really tricky questions that even you might find challenging. What about you, Heather? Have you done any planning or will you be finding the questions spontaneously?

Heather McKinnon: Now, this is OK Corral time. I’ve got some tricky questions up my sleeve. I’ll find out how good you really are Benjamin.

Benjamin Bryant: Well then it sounds like the gauntlet has been thrown. Before we get started, I do want to remind everyone that you can send us questions in confidence to familymatters@bryantmckinnon.com.au or message us on Facebook. And please do share this show with friends and family who might be starting out on the rather scary journey of separation. The earlier we can be there to provide the answers, the better. Let’s get to it. Heather, are you OK if I asked the first question.

Heather McKinnon: OK best shot.

The biggest mistake people make in property settlement?

Benjamin Bryant: In your opinion, what is the biggest mistake that you see people make when it comes to finalising a property settlement?

Heather McKinnon: Absolutely, the biggest mistake is now described as anchoring. So when separation happens, everyone goes to the pub or to their mates and says, you know, what percentage am I going to get? And they start gathering information from all sorts of sources. And then they form a view that, for example, I’m worth 50 percent or I’m worth 70 percent. And so they anchor in on that percentage before they’ve really got enough information to understand how it works. In our job, as you know Ben, when people come with that anchored principle, it’s then very time consuming and costly to get them to shift off it. It gets worse when they go to a lawyer who’s prone to anchoring as well. So the lawyer puts their arse on the line, if you like, and says, “Oh, you’re with this much.” The client anchors on that principle and then they’ve got to fall on their sword in mediation two years down the track and retract from that original, strict, very strong advice. So I think what I would say is if you want to avoid that mistake, you have to remain flexible. It is a commercial transaction and negotiation. You’ve got to give a bit to get a bit and be very, very careful of that anchoring in on a percentage, because that’s where things really spin out of control.

Benjamin Bryant: And like you said, Heather, it takes so long, so much time, so much energy to try and undo the anchoring. it’s not just at the pub. sometimes people come in not knowing and they rely on the advice of a lawyer. But then I hear what they want to hear and they anchor to that.

Heather McKinnon: And look, in the last 12 months, what we’ve seen all around Australia is this rapid increase in real estate values. So if you anchor on a dollar in a moving market, you’re setting yourself up for really serious mistakes, because we’ve had valuations just in our practice that have gone up by hundreds of thousands of dollars in a 10 week period. So it’s that keep flexible, keep gathering the information, listen carefully to your legal advisors about what discretion means and don’t anchor too early.

Benjamin Bryant: And it’s mightn’t even be on a figure or percentage, it might be on a concept. For example, I brought in the farm, therefore I leave with the farm.

Heather McKinnon: Yeah, and you know, I’ve got three children so I get sixty five per cent even though the kids are in week-on week-off arrangements. We need to tell people about. Rigidity equals huge costs, both legal and emotional. Don’t be rigid.

Number one tip to avoid having to go to court for property settlement

Heather McKinnon: Ok, Ben, you’ve asked me about mistakes. I’m going to go with a more positive question. What would be your number one tip to avoid having to go to court to finalise a property settlement?

Benjamin Bryant: Great question, Heather. The number one tip is probably very similar to what you were just speaking about with anchoring. And there’s a saying out there that says, don’t lose sight of the forest through the trees. When people come to see a lawyer, probably the first 20 minutes of an initial consult is stuff that’s irrelevant to actually what we need to look at and what we need to divide or what is actually relevant in the property or on the parenting proceedings. A lot of people get stuck on all the bushfires burning around them. All these all these things that they think matter actually don’t matter. And so you really need to be able to have the whole picture in mind. And it’s difficult to do that when you’re in it. And that’s why you really need to make sure that there’s a good support network around you, because there’s no point having your best friend of your sister or whoever telling you exactly what you want to hear. You need people to give you perspective, people that aren’t in it. And that’s why it’s really important, I think, to get a good lawyer as well, get a good lawyer that will tell you the advantages and disadvantages of your case. If you find a lawyer that’s just going to go and attack for you, it’s just not going to work out You’re going to get lost in the forest You really need someone that’s been down the path before that knows the options and knows what’s ahead of me to help you guide yourself down the path. So my biggest tip is really don’t lose sight of the forest, take the bigger picture, being able to identify the things that you can control and that you can’t control and just having a really good support network and a lawyer.

Heather McKinnon: And I think what I’d emphasise about that response is that we now know that people learn through different mediums. So what we offer is sound: listen to podcasts, written advice: read if you find that easier, go to the website and read the letters of initial advice you get from it. And the third thing is to bring a trusted advisor with you to appointments so that they’re able to listen to the advice and they’re more objective so they’re likely to listen to the whole advice, not just what they want to hear.

Benjamin Bryant: And that is a great segue Heather to our listeners, which are probably auditory learners: if I could refer them to Episode Two, which is Getting a Fair Property Settlement, and Episode Nine, which is How to Keep the Cost of Divorce Down. So I think if they’re finding this podcast or this episode of the podcast meaningful to them, they probably should check out episode two and nine also.

What is the toughest property settlement case you’ve ever worked on?

Benjamin Bryant: Heather my next question for you gets a little bit personal. You’ve been helping people through separation, divorce for over 40 years. What is the toughest property settlement case you’ve ever worked on and what has made it so difficult? And could it have been done better? Now Heather I know you’ve done coach companies, MacDonald’s, hotel chains before. So I know you’ve got some terrible ones in there.

Heather McKinnon: Yeah, look, I think the toughest ones that you retain in your memory aren’t necessarily cases involving big amounts of money or complex businesses, but something about the human journey that remained with you So there are two cases that really I’ve never forgotten. One involved a woman who had been a farmer’s wife but never married him. And this was back in the mid 80s before de facto relationships were recognised. And I had this sense of justice as a young woman. I could feel the tide turning. But in those years, if you were not married, your case had to be determined in the Supreme Court in Sydney. And I just had no idea how reactionary those old white male judges were in that jurisdiction. And I remember that she received twenty five per cent of the asset pool after 40 years of relationship and raising a child. And she died some nine months after the litigation concluded. I felt that that case was, for me, the watershed. The law changed shortly after, but I still think of that woman and what she did and how our legal system has moved, thankfully, in my career a lot further than I would have thought. But that case gutted me because I knew what she’d done for those decades. And these old guys judged money only. I had no sense of what it meant to fence, to worm cattle, to be up in the morning at four o’clock cooking meals for the staff that work the farm to raise a child with no real input from the father. It was absolutely outrageous and I’ve never forgotten her.

Benjamin Bryant: Wow, that’s amazing. And just for some context for our listeners I’ve been a lawyer since 2009 and I have never done a property settlement in a state jurisdiction. So just to give you the listeners an idea of the timeline

Managing expectations in property settlements

Heather McKinnon: Now it’s your turn. Let’s get into the specifics. How do you help people to figure out what to reasonably expect in a property settlement?

Benjamin Bryant: Reasonably expect, what a great term. I think it’s fair to say, and you’d agree with me, that our biggest role as lawyers is probably to manage people’s expectations. That’s probably the largest role and probably the most important, because as we’ve discussed before, the family law arena is all discretionary. It is not like the criminal code, whereby if someone blows a particular blood alcohol level and it’s their first offense, we can say, this is the minimum and maximum penalties and here’s the guideline judgements. Here’s what you can expect. But it’s not one size fits all in family law. All relationships are different, all contributions are different, all parenting needs are different. So, our role as lawyers is to really identify the advantages and disadvantages of different paths for people to take. But ultimately they choose the path. And I guess in terms of managing people’s expectations, it’s getting a trusted lawyer or even a trusted advisor that’s been down the process before. They know what’s ahead. Even though it might seem that the sky is falling down, it’s not that bad. You will get through it. There are some difficulties. It is stressful. It is expensive. The court is under resourced. But if you’re in the process, you will get there. There is light at the end of the tunnel and we need to keep that light in mind.

Benjamin Bryant: and I think it’s also important to remember, and this is what I say to people when they first come and see me, is that whether you could reach an agreement with your spouse or whether you cannot, whether you enter into consent orders or whether an order is imposed upon you by a judge, the outcome should be pretty similar. That is, in respect to parenting, the outcome should be in the children’s best interests. And in terms of the property matter, the outcome should be just and equitable in the circumstances. So our job as lawyers is to step people through the legislative framework, go through the contributions, go through the future needs, in respect to the parenting discuss what is in the child’s best interests and what the court has to consider under Section 60CC. And then essentially they have an understanding of the process the court would take and what the outcome may be. And I think that’s the best way to guide people in their expectations.

Heather McKinnon: Yeah, I was just reflecting last week we had Circuit here and we had a judge and we did a number of hearings. One of the things that’s really hitting me, in my 60s, is that adjustment for what we call future needs, where a court, a judge has to sit in, assess how has this person going to fare compared to the other partner and should I give either of them a bit more than the other? That’s really hard to pick because it’s only when a person gets in a witness box that you get any sense as to what their resilience is like. And the judicial officer really is watching them because that witness box gives some hints as to how they’re going to deal with the ups and downs of life going forward. It’s fascinating that that five percent adjustment could come down to that subjective assessment by the judicial officer as to whether they reckon you’re tough or whether life’s going to mean that you’re not necessarily going to bounce back. And they are the things that we’ve got to judge because some of the cases we’re in at the moment, five percent of the asset pool can be upwards of a million dollars. So calling it’s really difficult

When a divorce is hostile, is it possible to settle out of court?

Benjamin Bryant: Alright Heather, here’s a tough one. When a divorce is hostile, how do you work with people to try and reach a settlement without having to go to court? Is it even possible?

Heather McKinnon: So when you first meet a person who’s just separated or thinking about separating, one of the things you’re doing in that initial interview is working out whether they’re still in that really hyper fight or flight mode. If they’re not through the initial grief stage and they’re still operating in that fight and flight mode, it’s useless trying to start negotiating a settlement. So the first thing that you have to do is get your client to understand that time is the best asset they have. And I will just look at them in that first interview and say, “I want you to go away and come back in six to eight weeks”. If in the discussion you pick up that they may have an adjustment that’s outside the normal range, then I will strongly recommend that I get to their GP and get a referral to a psychologist who can help them deal with those feelings that are really affecting the way that they’re making decisions. I find that if that combined team approach works, the next time you see the client eight weeks down the track, they’re in a much more settled space and they’re much more ready to tackle this commercial negotiation.

Heather McKinnon: If the marriage is ending after twenty five or 40 years, then the space might be a lot longer. I might suggest that once the immediate financial plans worked out, who’s in the house, who’s renting, who’s going to pay which bills, then just park it and wait 6-12 months Particularly in long term marriage breakdowns, the grief that hits both people is quite profound. And if you don’t have insight, you don’t know that that’s what’s happening to you, you can create absolute disaster in negotiations.

Benjamin Bryant: And, of course, something that I know that you and I do have there is that we don’t just take things at face value. We want to try and understand the hostility. You want to try and understand where the behaviour or where the attitude or the, frankly, verbal abuse is coming from sometimes because, of course, there’s a lot of factors. There’s mental health issues, there’s alcohol problems, there’s, you know, again, just the dynamics of the relationship. People could just be in this rut that it desensitises as normal for them. This is how they treat human beings. So I think it’s really important for people in our position to get an understanding of the hostility. But can I ask you, what if the other side is hostile? What if we got the good guy?

Heather McKinnon: Well, you know, I would say that’s really what fuels litigation, and if you talk to the mediators, they can identify those factors really early in the mediation. They can pick a rogue lawyer and a rogue client. The dead giveaway is in a mediation if you and the client are hardly spoken to, you know the assessment is they are functioning, it’s the other side we’ve got to work with.

Heather McKinnon: So there’s a different approach in the profession. Many people are uncomfortable with this notion that we’ve got to understand the psychology of the dispute. But nearly every accredited specialist, everyone who’s done their postgraduate training is acutely aware of the psychology of conflict. So you really want to you ask around. I mean, there are rogue lawyers who don’t have insight and don’t know that they are fuelling that conflict. The worst combination, though, is when you get someone who’s in the flight and fight mode and they go into a conflict driven lawyer who has no insight and isn’t interested in the dynamic of conflict and just fuels it. So then it’s just explaining to the client why this is happening to them and making a quick assessment that it’s probably better to get this matter before a court, so there’s some rational framework for dispute management. And I’m pleased to say that our federal circuit court judges deal with the same lawyers all the time. And if they identify a rogue lawyer, they help the management of the process. So that’s why we have the judges.

Benjamin Bryant: Of course, one of the biggest jobs I find, not just us all lawyers and find is convincing our client that the high road is the better road. When you have someone that’s hostile and on the attack on the other side, the instinct when you’re in it is to be hostile back and attack back. And how dare he or she say that? How can the lawyer say that and we do nothing? But it’s not doing nothing. It’s taking the high ground. It’s focusing on the things that actually are important. It’s about choosing the battles essentially And as my Nan always used to say you catch more flies with honey than you do vinegar.

Heather McKinnon: Absolutely. Nan’s a genius. It’s a pity that China and Australia aren’t listening to Nan at the moment.

How to deal with financial imbalance in property settlement

Heather McKinnon: And what if someone comes to you in a difficult situation financially, but the other party looks to be doing okay, what can you do to help that person get through the initial stages of separation before the property settlement is finalised?

Benjamin Bryant: That’s a very interesting question. And, what sits with me Heather is that in most circumstances, we’re actually encouraging people not to go to court. But sometimes you actually do need to go to court. I know when I’m giving that advice, it’s difficult. I’m always very honest with people. It’s difficult giving this advice in circumstances when everyone thinks you’re just going to go see a lawyer and it’s going to drag into court and they’re going to charge you. That’s their whole intention. That’s their game. And that’s why it doesn’t sit with me very well. But I’m very honest with clients when I give them the advice and why I’m giving advice. And normally it is when there’s elements of financial disadvantage or financial imbalance that one would need to go to court.

Benjamin Bryant: For example, if you have, still today, even though it’s 2021, we still have traditional roles. And what I mean by that is, traditionally speaking, men will be the breadwinner and the women will be at home with the children when they’re young It is what it is. That’s our society. When people separate, the husband’s still going to be the breadwinner and the wife is still going to be the primary carer for the children, And so there is a common occurrence when if things are hostile and the parents aren’t getting on, that there may be a division of care or division of income. And there’s gaps that need to be filled. And people, when things are nasty, they use children as pawns and they use money as pawn or bait or whatever you’d like to use or bargaining chips. And there’s common circumstances that we need to make an application for spousal maintenance when one party does need to be maintained because they simply don’t have the income to meet the expenses.

Benjamin Bryant: Another situation Heather when one person moves out of the home, the other person’s staying in the home. And what they’re trying to do is they spend the weeks or months negotiating. But then at one point the person in the home figures out that they can never afford the house by themselves. They can never come up with the money to pay the other person out. They can never take on the mortgage big enough to do a buyout. So they drag their feet, they have their head in the sand. And so if you’re seeing the person that is out there paying rent or couch surfing or living with a sister or whatever the case may be, if they’re the one with the financial disadvantage and they’re the one that’s going to have to do something. So even though most of the time we say try to avoid court as much as you can, there are some real circumstances when you probably do need to go to court. Because we see a lot, people say, you know, we’re going to have a chat next week and I’ll get back to you after we have a chat. And then you don’t hear from them for three months. And then they come back to you in three months time and like: my advice hasn’t changed. It just is what it is. They’re not going to do anything about it. You’re in the disadvantage. You’re the one that’s going to need to be proactive. This is what we need to do.

Heather McKinnon: It’s so true. And I mean, it’s happening really all the time in these regional areas now where the rental market’s really tight. So the one who leaves is shacked up with their best friend or their parents or something and living in these really difficult circumstances. So, yes, sometimes we do have to say you need the big stick. Yeah.

What are the pros and cons of divorce?

Benjamin Bryant: Alright Heather, our final question, and this is a tough and interesting one. This one has been sent in by one of our listeners. It doesn’t relate specifically to property settlement, but we’d like to answer the listener questions as soon as we can and I thought this one might challenge you. The listener asked, what are the pros and cons of divorce? But in my mind, what I think he’s asking is, are there actually any advantages to a divorce?

Heather McKinnon: This question’s to the heart of everything that we do. So if you’re asking me, I think the human condition is best enhanced by long-term monogamous relationships that last until death. I have firmed that view over years of watching human beings struggle. So the objective evidence is that the best outcome for any human being is to be loved and to love and to raise children from birth until adulthood in a sound relationship. So the objective indicators, educational outcomes of children and financial outcomes, the mental health of people. And at the present time, there’s a wealth of evidence that says women over 50 on their own are stuffed. If they’re out there on their own with no super, no housing. So clearly, the best advice that any human being can be given is: find your match, work at it and stay with them. Then would come to the other side of the matching and the finding of that intimate partner that will love you for life is very much a lottery. And it doesn’t matter how much you want it to work. There are some pairings that on balance, are disastrous. So we have to be careful that people don’t stay in relationships that destroy them. But we also have to balance that with: if you are in a relationship that’s needs some tweaking, is it better to take it with the help of professionals and try and move forward stronger or pull the pin? I think that as a culture, we need to focus resourcing, particularly on young families, who I think pull the pin often too soon because of things like financial pressure, mental health issues, disability of a child, and if any of those things hit your family when you’re in your 20s or 30s, they’re are fault line and there’s often not much help. Whereas if as a culture we prioritised backing up those families with proper childcare, proper access to mental health treatment, proper access to income support, then we would save a lot of relationships but that’s obviously a Pollyanna dream.

Heather McKinnon: And I’m really interested to see the research coming out of COVID, where we did have living wages, where we did have people less stress because they were able to look after their own preschoolers. We might get some change. So message is: don’t pull the pin unless you’ve really assessed objectively, with some people that you trust, whether that’s the option. Unless it’s at the stage where contempt has entered the relationship and you can’t save it. So for what it’s worth. Good luck out there everybody.

Benjamin Bryant: I agree with that message. And I jump in at the word contempt. I think it’s a great word to use, Heather. It is, as we know, very finely balanced. Relationships are so nuanced. And even though I agree with you that perhaps people are pulling the pin too soon, once you get to the point of contempt it’s probably fair to say that there’s no turning back. Or resentment, there’s no turning back. And what we say to clients all the time, as you know, we say that kids are pretty resilient. Kids can deal with, new schools, new homes, step-parents. They can deal with those things. But what they can’t deal with is conflict. That is what is going to impact children the most. Not Mum or Dad’s new partner, not the new school, not those things that people are so worried about. So even though it is important not to pull the pin too early, it’s also important not to just lay in the kitty litter tray. Sometimes you just do need to get out for the greater good. I think that’s very important to say.

Benjamin Bryant: And another thing that you’ve said before, Heather, on a previous podcast, you’ve said learn from your mistakes. If you don’t have insight into the breakdown of the relationship and take responsibility for your part in the breakdown of the relationship. Chances are you’re just going to make the same mistake.

Heather McKinnon: Yeah, the revolving door.

Goodbye for now…

Benjamin Bryant: Well Heather, I thought that was fun. What did you think?

Heather McKinnon: Well yeah, I reckon it was pretty even. You know, we did all right at the O.K. Corral.

Benjamin Bryant: Well, we certainly kept each other on our toes. And I usually get to ask all the questions on these podcasts. So it was fun to sit in the hot seat for a little bit of time. And I think the show has given some great information for anyone going through property settlement. We’ve mentioned it through the show, but I want to reiterate episode two: Getting a Fair Property Settlement is also a fantastic resource. In this episode we went through Heather’s top 10 tips for getting a fair settlement. And in my view, every couple stop staring down the path of divorce or separation should have a listen to Episode Two. Can we just do that show again? Thank you.

Benjamin Bryant: I think the show has given us some great information for anyone going through property settlement. We’ve mentioned it through the show, but I want to reiterate that Episode Two: Getting a Fair Property Settlement is also a fantastic resource. In this episode we went through Heather’s top 10 tips for getting a fair property settlement. In my view, every couple staring down the path of divorce or separation should have a listen to Episode Two.

Benjamin Bryant: Next month, we’re going to let you, our listeners, take control of the show. In our next session of Community Questions we invite you to submit any and all questions related to family law. And we will endeavour to provide the answers on the podcast. Not only will you get a bit of free family law advice, but the rest of the community will benefit from the question as well.

Benjamin Bryant: To submit a question in confidence, either messages on Facebook or e-mail us at familymatters@bryantmckinnon.com.au. Our producer will come back to you to confirm that your questions are included in the next podcast. We hope you enjoyed today’s show and look forward to fielding your questions in June. In the meantime, of course, we have a whole library of great podcasts available to help you find answers and make wise decisions. Goodbye for now.

 

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