When relationships break down, it becomes crucial to determine the fair and equitable distribution of assets and liabilities between the parties involved.
In Australia, the legal framework governing family law matters provides guidelines for conducting valuations and resolving financial disputes within the family court system.
This comprehensive guide aims to shed light on the intricacies of family law valuation in Australia, providing valuable insights and practical information for individuals navigating the often daunting process.
Whether you are going through a divorce, separation, or de facto relationship dissolution, understanding the principles, methodologies, and considerations involved in valuing assets is essential for achieving a just outcome.
What is Family Law Valuation?
Family Law Valuation occurs in the context of separation or divorce proceedings in Australia, where marital assets are valued for property settlement.
These assets can include a broad range of properties such as houses, businesses, investment properties, vehicles, superannuation, and other investments.
In Family Law Valuation:
- Real Estate Property: It is generally evaluated by a licensed property valuer. The value is usually the fair market value, which is the price that would be paid by a willing buyer to a willing seller, with both parties having full knowledge of all the uses and potential uses of the property.
- Businesses and Shares: They are usually valued by a qualified accountant or a business valuer. Various factors are considered, such as the net value of the business assets, its earning capacity, and market value.
- Superannuation: It is often the most significant asset after the family home. Superannuation‘s value is usually calculated according to methods and factors prescribed under the Family Law (Superannuation) Regulations 2001.
- Other Investments and Assets: They are valued at their fair market value.
It is important to note that the purpose of a family law valuation is to ensure a fair distribution of property between the parties.
A formal valuation may only sometimes be necessary, especially if the parties agree on the property’s value, but in cases where there is disagreement, a proper valuation may be essential.
The family law courts in Australia have broad discretion to make orders they consider equitable to adjust the parties’ property interests. The valuation of assets is a vital part of making these decisions.
Why Would the Court Require Family Law Valuation?
Family Law Valuations are required by the court in cases of divorce or separation to ensure a fair and equitable division of property and assets between the parties. The specific reasons why a court might require a Family Law Valuation include the following:
- Determine Market Value: To accurately determine the current market value of all assets held jointly or individually by both parties. This can include tangible assets such as property, cars, and valuable items, as well as intangible ones like businesses, investments, or superannuation funds. Accurate valuations are essential for ensuring that assets are divided in a fair and equitable way.
- Disputes: When there is a dispute between the parties about the value of certain assets, a Family Law Valuation can be used to assess the asset’s worth objectively.
- Transparency: To provide clarity and eliminate any perceived or actual bias. An independent, third-party valuation ensures that neither party can claim an undervalued or overvalued asset.
- Identify Hidden Assets: A comprehensive valuation can help reveal assets one party may try to hide to prevent them from being divided.
- Calculating Settlements: To help calculate any settlements, spousal support or child support payments can be based on each party’s total value of assets.
- Inform Decisions: It assists the court in making informed decisions about how to divide assets. With an accurate understanding of what assets are worth, it would be easier for a court to make a fair and just decision.
The ultimate goal of a Family Law Valuation is to provide the court with a clear, comprehensive picture of the assets that need to be divided, thus enabling the court to make an equitable and fair judgment in property settlement proceedings.
In complex cases involving substantial assets or disputes over values, the court may order a single expert to prepare a report on the value of certain assets.
What is the Process for Getting a Family Law Valuation?
The process for obtaining a Family Law Valuation in Australia generally follows the following steps:
Identify the Assets: The first step is to identify all the assets owned by both parties, including jointly and individually held assets. This includes real estate, businesses, vehicles, investments, retirement funds, and more.
Engage Professionals: Once all assets have been identified, qualified professionals need to be engaged to conduct the valuations.
This might include real estate appraisers, business valuators, accountants, and financial advisors, among others, depending on the types of assets involved.
It is beneficial if both parties agree to use the same expert to avoid disputes about the valuation later.
Conduct the Valuation: The professionals will then conduct the valuations, using accepted methodologies to determine the fair market value of each asset. This might involve physical inspections, reviewing financial records, market research, and other approaches, depending on the type of asset.
Prepare a Report: After all the valuations have been completed, the experts will typically prepare a comprehensive report detailing the methods used, the data considered, and the conclusions reached. This report can then be used in the negotiations or court proceedings.
Legal Proceedings: The valuation reports are used in settlement negotiations or court proceedings. Lawyers or the court can use the valuation figures to help ensure a fair and equitable division of assets.
Re-evaluate if Necessary: In some cases, assets might need to be re-valued if circumstances change significantly or if a considerable amount of time has passed since the initial valuation.
Remember, in a legal proceeding, any valuation must be a ‘single expert valuation.’ This means both parties jointly appoint the valuer, and their role is independent.
Their job is to provide the court with a neutral and fair market valuation of the assets.
The ‘single expert’ is obliged to act in the court’s interest rather than the interests of the parties involved.
Do You Have to Pay for Family Law Valuation Report?
Yes, you generally have to pay for a Family Law Valuation report.
The cost of a Family Law Valuation can vary widely depending on the complexity of the assets being valued and the professionals conducting the valuation.
For instance, valuing real estate or tangible personal property might involve hiring a licensed property valuer or a chartered surveyor, while valuing a business or shares might require the services of an accountant or a business valuer.
Each of these professionals will charge for their services.
If you and your partner can agree on the value of your assets, you may not need to get a formal valuation and thus can save on these costs.
However, a proper valuation may be necessary if you disagree or complex assets are involved.
It’s also important to note that in some cases, the court may order one party to pay for the valuation, or the cost may be shared between the parties.
The court has discretion to make orders about who should bear the cost based on the circumstances of the case.
Given the potential costs, it’s generally a good idea to get legal advice before deciding to go ahead with a valuation.
Who Makes the Valuation Report?
A valuation report for Family Law purposes in Australia is usually prepared by a qualified, accredited professional with expertise in the asset type being valued. The choice of professional can depend on the specific asset that needs to be valued:
- Real Estate: Valuation reports for real estate, such as homes or investment properties, are typically prepared by licensed real estate valuers or appraisers. These professionals have expertise in evaluating properties based on location, condition, market trends, and other factors.
- Businesses and Shares: These assets are usually valued by chartered accountants or certified business valuators. They can evaluate the value of a business or shares based on financial records, market position, profitability, and other factors.
- Personal Property: Personal property, like cars, jewellery, or artwork, might be valued by a professional who specialises in that particular type of property.
- Superannuation: Superannuation valuations can be complex and might be conducted by a superannuation fund manager or another financial professional with expertise in this area.
Is Family Law Valuation the Same With Real Estate Appraisals?
Family Law Valuation and Real Estate Appraisals are similar in that they both involve determining the value of assets.
However, they differ in terms of their scope and purpose.
Real Estate Appraisal focuses specifically on determining the market value of real estate property. This can include homes, land, or commercial properties.
The appraisal process typically consists of inspecting the property, comparing similar properties recently sold in the area, and assessing current market conditions.
It is done by a real estate agent – not a professional valuer.
Do You Need an Accurate Family Law Valuation?
Don’t let uncertainty about the value of your assets complicate your family law proceedings.
We work with experienced professionals at Justice Family Lawyers to ensure an accurate Family Law Valuation.
Our mission is to provide the information you need to make the best decisions during this critical time.
You’re taking a crucial step towards achieving a fair and equitable resolution by choosing Justice Family Lawyers.
Contact us today to discuss how our Family Law Valuation services can support your case.
Principal of Justice Family Lawyers, Hayder specialises in complex parenting and property family law matters. He is based in Sydney and holds a Bachelor of Law and Bachelor of Communications from UTS.