WHAT DOES A FAMILY LAWYER & MORTGAGE BROKER GOT IN COMMON?

Hey, it's Aaron here. I'm a mortgage broker. I'm known as the bagpiping mortgage broker. And I'm sitting with Amanda Elias from Greenleaf Legal. What do you do, Amanda?

I mostly specialize in family law. So property settlements, children disputes, that sort of thing. We also do wills, conveyancing and personal injury.

Cool. So just to expand on three little points today, looking at how money's managed within a couple unit, what might happen to one or the other parties when they have to potentially take over that money management, and if someone wants to buy the property out from an unfortunately dissolving couple, how that sort of happens. So we know money makes the world go round. We can use money to buy fantastic stuff for us to have our purse in or wear a nice jacket or all that nice stuff. But sometimes it can become a point of contention.

Sometimes or all the time. I'd have to get the latter nine times out of 10. Yes. I mean, if you look at divorce rates, statistically in Australia, one in three marriages or relationships will fail. That's quite high a statistic. And of those breakups, 40% or so is attributable to financial problems. So not communicating about money, debt, financial stress. So that's quite a high statistic.

I suppose there's a positive and a negative. You've highlighted some of the negatives. I suppose the positives. Sometimes when we do go through financial stress and we go through some problems with maybe spending too much or anything, if we had the communication open with our significant other or whoever's joint with us with a bank account, that could be a sign of strength.

That is the sign of strength. Communication is key. It is the only way to navigate a relationship. I mean, marriages and relationships are hard enough yet alone just the financial element. You've got children, you've got family disputes, different personalities, and you need to communicate anyway, but more so on finances.

So I would imagine you would agree with me that when you got a couple unit, could even be business partner, could be a couple unit. As a married couple or partner, everyone needs to understand where the money goes. And in the event that someone gets just a simple sickness, that they can jump in and pay the mortgage or jump in and pay the urgent bill for the locksmith because they've run out the door or know how to divvy up the money into any number of bank accounts that that they desire to manage their finances with.

There's always a system. Depending on the couple. There is a system, generally there's a breadwinner and there's a homemaker or the, you know, husband is the breadwinner and the mum is the homemaker, but also works part time. The couple may have separate bank accounts in which they get paid into and put funds into a joint account or there is just a joint account from the start. There's a system.

Yeah.

And we need to communicate and ascertain how we're going to grow this relationship before the kids come along. Because that's a different stress in itself.

Yeah.

And yeah, it's just all about communication. And generally there will be one party that actually has control of the funds. So as I said before, husband bread. We not very, you know, I'm generalizing here. But then the wife may be the one that's actually in control of the fund. So she's attending to payment of the bills, the utilities, the childcare fees, so on and so forth. But then when she decides that she wants that Chanel handbag that costs $10,000 and maybe doesn't consult with her significant other and just makes the purchase, then, you know, that's just one example how some tension might arise.

Yeah, absolutely. And I see it from a mortgage broking point of view. We get a young couple in love and I'm stereotyping with young. Whatever age comes to us and we start going through the liabilities. And one of the things I got asked all the time, do you have a credit card? Do you have personal loans? Do you have this? And you notice where they delay the answer because it's a credit card that the husband or the wife doesn't know about.

They don't know about. Exactly.

And you get an impression that that could be a pain point. Or it's actually really interesting if they've got a good level of communication that they might say, oh, we'll talk about it later. And the wife goes. Or the husband goes, okay, that's fair enough. It could be old or whatever. And then there's a bit more communication. Or it's got nothing owing on it and it was just legacy. So we see it from our point of view all the time. And that's where maybe they need your assistance. But it's a high hope that we don't need to go down that part. But communication comes into that all the time.

I just thought of a great business idea. Yeah. So when you go to get married, say in a church, there's usually like a pre marriage counseling service. We should totally do that.

Where Pre marriage. Financial counseling.

Financial counseling. And then we would log through the books and if there is something Something hidden or curly or that hasn't been disclosed. Maybe it's something where we have to offer a prenup situation where, you know, those assets have to be disclosed, those liabilities have to be disclosed in the event of a breakup. So it's kind of like a healthy check.

I'm talking about the liabilities hidden. And you could, you're saying there could be assets hidden 100%.

And then what happens is once you've been together for a period of time, say it's de facto it's two years or if you've been married, then the other party can actually still make a claim on that estate. Sorry, not estate, asset. Even if they didn't disclose it at the start of the relationship, even if they didn't know about it. So you can still claw that back.

Even though you didn't know about it. So communication and truth is a great thing. Even though someone's truth might not be someone else's truth.

Interesting. And then you've got the prenup, which is the end of it.

Yeah.

So you haven't been communicating, you've been off to Chanel and Louis Vuitton and Gucci and dkny. The list goes on and on.

Are these your favourites?

Yeah, probably, yeah. Top three. And. Yeah. And then you've got a prenup situation where. Sorry, a post nap situation where you need to financially let go and sever the financial ties and again disclose assets and liabilities. So not just an equitable settlement.

So not that we want anyone to go through this. And if you are all sympathies and compassion is to you and if you need professional help, two of the best are sitting here. See what I did there? It's more that you're the best. But anyway, if you need help in that legal area or some of the financial mind field of home loans and things, when something bad is happening, like a separation, what, what sort of. What comes onto the table when someone is wanting to get out of a relationship where there's assets, debts, income, children.

Yeah, look, generally we get the call privately without, you know, without actually having a discussion with the significant other. No longer significant. And the conversation goes along these lines, oh, I'm thinking of leaving my partner. What should I do next? I'm thinking of walking out. What do I do? What are my rights? If I leave the matrimonial home, can he change the locks on me? What does that mean for the children? If I relocate, there's a lot of issues. Assets need to be disclosed, liabilities need to be disclosed. So there's something called a disclosure process where legally, before you could actually do a property settlement, these are the assets and liabilities of the parties that not just, it's not just a singular right, it's a net pool of assets, meaning a joint pool that need to be disclosed. So we can understand from a legal perspective how we will divvy up this property in a just and equitable way. And sometimes, well, more often than not, if one party wants to buy the other party out, that's where we would refer them onto someone like Aaron to sort of delve into whether they could afford to go.

So I think one of the things when you're managing finances together and hopefully not into this area, that you understand where the money's going and you can potentially take over it. But when you're going through some sort of separation, this is where a little bit of fear of something, the security, the protectionism comes into the person that may feel the un security, the one that may not be the breadwinner but may operate the day to day things or there might be even worse case of any physical or emotional abuse there. And that fear comes in and want to protect that person. And naturally us in our situation sometimes want to protect that person too. So how do they. So when we're going through some sort of separation, they put everything on the table and then it's got to divide up somehow.

Yeah, there's a four step process that the court goes through and it goes along the lines of this. Looking at the assets, what are they? Looking at the liabilities, what are they? It is a simple. Well generally speaking it's assets minus liabilities equals net pool. But then we look at other things like the financial contributions of the parties, the non financial contributions of the parties, things like homemaker gardening, renovations to the house, any gifts or inheritances received, lottery wins, that all goes in the pool of assets, superannuation, you know, all the good stuff. And then we look at the parties, needs section 75, two factors of the Family Law Act. Does a mum need a little bit more of a payout because she has a disabled child or she's been out of the workforce for 10 years and may have issues getting back into the workforce or she needs to retrain these sorts of things. And then the last one is my favorite one, which is a bit of a tough one. There's no real measure. It's quite subjective. Is, is it just and equitable? Does it feel right? And that's just a subjective sort of test really. So yeah, that's how the court goes through it. But just touching back on something you said, which really resonated with a lot of my matters, is knowing about the funds, where they're going. That's very important. So if it is a joint bank account and both parties have access to that account and the wife is spending personal expenses, not joint relationship expenses like the children, the house, the bills, like, say, shopping spree or hair or beauty or there's a lot of that sort of stuff, wining and dining designer stuff. And the husband is actually watching that unfolding for two years and not really saying anything or every now and then, oh, why'd you buy that? But actually isn't stopping it, then he could kind of be penalised for that. Be a little bit. Can be in some trouble. Because if it did go to court, the court will say, well, yes, I understand you're trying to allege a wastage claim here. That's what we call it, a wastage claim, where he may want to claw some of those personal expenses back into the asset pool. But a judge will probably say, you watched it happen, you didn't stop it, you didn't put a freeze on the account. There's more that you could have done. So you kind of knew about it, you had control of it. So you don't get to now say, oh, hang on, what about me? So that's the other thing. And again, it stems back to the communication and it's got to communicate.

I suppose that's the feel right thing. Like, I love spoiling my life. Oh, so you.

That's so sweet.

So you got it. You. You've got to have that level of interaction in a marriage to be able to spoil each other and let each other spoil themselves occasionally.

I like the word occasionally, but yes.

But when it's tough situation where something's happening. Yeah. Don't, don't, don't abdicate your responsibility. You can monitor things till the cows come home, but don't abdicate the responsibility that you have when you are happy in a marriage and still don't do that. Don't abdicate your responsibility when you're going through tough times or even divorce.

Couldn't agree more.

And with regards to home loans and liabilities, where someone wants to take over, I suppose that's where my job starts to jump in. There a couple of things that need to happen. There is the party wanting to buy the other person out needs to be able to, number one, cover the mortgage that's on the property already.

Yep.

Is there equity in the home and then the net asset, net equity in the home post the loan being paid out needs to be fairly divided too.

Yeah, 100%.

And those calculations can become quite interesting because not only are we trying to keep the bank happy, that's going away and all the struggles that that may have, whether you've opted to have a fixed rate and you've got break costs involved, or whether you've got any of the mechanisms that the banks don't want to let go the client. I would imagine you've found the same thing where the bank hasn't let go of the client and we've got a settlement coming up and everything's all bad and the bank's just being stupid. And that's just the bank side we haven't even talked about how do we get the right percentages? Is there enough money in there? And there's a funky thing that helps us with stamp duty. So if one party's buying the family home, are they going to be subject to stamp duty?

No, no. Generally speaking, no. Because if they're buying the other party out, then you can claim an exemption on stamp duty. So to do that you would need to do one of two things. File consent orders in the court or enter into a postmap, which is a binding financial agreement. With those two documents, then you can claim for a stamp duty exemption.

Yeah. So I've had clients in the past come to me going, I just want to sell and just divide it 50, 50 and I don't care. And one of the things when we start looking at that and they're buying one of the properties out of, or they're buying the property that they've lived in out from the other person, is if they don't do this property settlement agreement in whatever style the banks, the courts want for the Office of State Revenue stem duty is applicable.

It's applicable and it's a lot of money. It is to waste, you know, 40 grand. 50 grand, depending on the sale price. Correct, sale price. But what we're financing on, it's just a waste of money.

And if they do waste that money, those. There's nothing binding with it, is there?

No.

So there's still problems that could occur.

Exactly. And they could always come back and claim later. Even though there's an in principle settlement or even if the parties write it down on a piece of paper and sign it not worth the paper it's written on. The only two ways in which you could really embody that settlement and for it to be legally accepted is the consent orders or the postnup, the binding financial agreement.

So I suppose the tips are when someone's. If you're going to come to me as a mortgage broker to buy an asset out of a dissolving marriage or relationship, and de factos can be in that category, you need to have the right orders in place for us to do the loan properly. And there's usually only, there's one main winner and that's the bank. And then the other winner is how you divide up that asset in the most equitable way that you can from the relationship going.

I thought you were going to say the other winners are lawyers, but to be honest, not really.

No.

People would think, oh, it's very expensive, but it's actually not. Depending obviously it's a case by case basis. But you could file consent orders for two grand. Yeah, two to two and a half grand. Obviously depending on the situation. Situation. How long the disclosure process is, if the parties are negotiating for a long time. But if it's all, you know, prim and proper and amicable, then two grand, two to three grand, the post snap is a little bit more, maybe four grand. But yeah, I mean if that's saving you 50 grand of stamp duty, it's worth it.

One of the stamp duty calculations done recently for property in Wurrunga in Sydney was $145,000 in stamp duty. So if you can get that waived on your principal place of residence just to get on with your life because something bad's happened. And by no means advocating anyone to go through a divorce, but $145,000 savings is much better to kick start your life again than to pay to the government.

And Aaron, I've known you for a little while now. If you were to receive a phone call from a new client, you would speak to them and give them the advice, wouldn't you?

Correct.

And so would I. And it's no obligation. I don't charge for my initial consultations. We try and help as much as we can. So there's really no loss to just understand what your rights are.

Yep, ask the questions. Because you never know, you might ask the questions and everything works out perfectly fine or you might ask the question questions and you've got more and you need to get into a bit more detail. And that's where the rubber hits the road, so to speak.

Yeah. And that's where we come in and hopefully we can help.

Yeah, cool. Not advocating anyone to split up, but if in the event you're in that situation, let's get the professionals involved. You're going to need a good family lawyer. You're going to need a good mortgage broker if there's home loans and things. And you want to do more than just dispose of the assets. And you need the ability to kick start your life again after an unfortunate or problematic issue that's happened.

Yeah. And a lot of the times, you know, people don't see the light at the end of the tunnel, but that's because you're in the thick of it. I've personally been through it. Once you come out of that and your finances are in order and you can, you know, start that new chapter of your life, then that's where all the positivity comes in.

And just to sum it up, the, the main thing is keep the communication open. Well before you need any of our services, apart from maybe I cheekily say mine, where you need to save a bit of money on your mortgage right now. Keep the communication open, know where the money's going between you and make great decisions so you can have a great life. And if you need our help, we're always here.

Couldn't have said it better myself.

There you go.

Thanks, Aaron.

Cool.

Thanks, guys.