Securing a fair settlement

Innovative financial strategies in divorce 

Divorce is a complex and emotional process, especially when it comes to dividing finances and assets. A settlement perceived as fair by both parties lets them move forward with financial stability and without smouldering resentment. But asset division is rarely a smooth process, even in marriages in community of property where the marital estate is shared…and divided…equally. A sum can be divided, e.g., an amount of savings or shares, but physical property can be trickier. Unless the marital home is sold and the proceeds split between the spouses, one will likely remain in the home and the other spouse will need to be compensated for their share. This is but one example of the challenges divorcing couples face in reaching a fair and equitable settlement. Innovative financial strategies are needed to achieve a fair outcome during divorce proceedings.  

Full financial disclosure 

One of the fundamental aspects of achieving a fair settlement is full financial disclosure by both parties. Spouses need to be open and transparent about their finances, sharing information regarding all assets, income sources, debts, and financial commitments. Without a clear understanding of each other’s financial situation, it is difficult to negotiate a fair division of assets.  

Asset valuation and evaluation  

Assets such as property, investments, businesses, and pensions need to be accurately valued to determine their worth during the divorce settlement negotiations. Depending on the complexity of the assets involved, it may be necessary to enlist the help of financial experts such as forensic accountants or property valuers to ensure a fair assessment.  

Forensic accounting 

Forensic accounting plays a pivotal role in divorce cases where complex financial assets or potential hidden assets are involved. Forensic accountants specialise in uncovering financial discrepancies, tracing assets, and evaluating financial statements to ensure transparency and accuracy in financial disclosures. Their expertise is invaluable in accounting for all assets and ensuring they are fairly valued during the settlement process. 

Asset division 

Creative asset division involves finding less obvious ways to achieve a fair distribution of assets which are not easily divisible. This could include trading assets of equal value, retaining ownership jointly with specific terms, or creating trusts to manage assets for children’s future benefit. Creative solutions tailored to the unique circumstances of each case can maximise overall satisfaction and minimise conflict.  

Impact of debts 

Debts accrued during marriage must also be addressed during divorce proceedings. They have as much significance as assets and can often cause more rancour. Understanding the impact of debts involves identifying both marital and separate debts, determining responsibility for repayment, and ensuring equitable distribution. Strategies may include negotiating debt repayment plans, allocating debts based on financial ability, or considering the tax implications of debt transfers. 

Tax liabilities

Divorce can have substantial tax consequences, influencing decisions regarding asset division, spousal support, and future financial planning. For instance, the transfer of certain assets may trigger capital gains taxes or other tax liabilities. It’s essential to work closely with tax advisers or accountants to structure settlements in a tax-efficient manner and anticipate potential tax implications on income, property transfers, and retirement accounts. Incorporating these aspects into divorce negotiations requires careful consideration and often requires collaboration with legal, financial, and tax professionals.  

Future financial planning 

In the middle of divorce proceedings, it can be hard to see past the decree absolute. However, there is life post-divorce, and financial plans must be made. This includes updating wills, estate plans, and beneficiaries on insurance policies and retirement accounts. Financial advisers can help both parties develop a clear financial plan for the future.  

Negotiation and mediation  

Negotiation and mediation offer constructive alternatives to litigation. They are tools that help couples achieve fair settlements and feel respected in the process. Negotiation, particularly in the context of mediation, allows:

• Relationship preservation: Through negotiation and mediation spouses can maintain a level of control over the outcome, fostering a cooperative environment. It encourages understanding and compromise, reducing animosity and facilitating post-divorce co-parenting or business relationships. 
• Cost-effectiveness: Mediation typically incurs lower costs compared to lengthy court battles. It avoids expenses related to court fees, legal representation during trial, and expert witnesses.  
• Tailored solutions: Parties have the flexibility to propose and discuss personalised solutions that suit their unique circumstances and priorities. It can identify common interests, guiding the discussion toward fair and mutually beneficial resolutions.    

Cape Town family lawyer can help

Securing a fair settlement in divorce requires careful consideration of financial details and a strategic approach to negotiation. If you are considering divorce, the experts at SD Law can help you develop a financial strategy suited to your circumstances and work towards a fair and equitable resolution. Contact Simon on 086 099 5146 or email sdippenaar@sdlaw.co.za for a discussion in complete confidence.

Further reading:

• The benefits of mediation in high-stakes divorce matters
• The role of mediation in divorce
• Choose mediation over litigation in divorce

Divorce Attorney Cape Town

http://divorceattorneycapetown.co.za/

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