Sunday, 17 July 2016

The 8 steps to write up a balance sheet

One of the things that I learnt from 30+ years of helping clients with property settlements (20 of which as an accredited family law specialist) is that working out the property pool is one of the most vital. Knowing what your cake is and its size is essential before it is cut up.

I have lost count the number of times when other lawyers haven't focussed on what is the pool - and as a result a dispute at times has occurred which was entirely avoidable, while that lawyer comes up to speed.

Because of the need to know what the pool is, I always ask my clients before the first appointment to prepare a balance sheet and bring it in. Here are my tips about how to write it up.

Step 1: list all the property

List out all the property owned by each of you. Put beside each item who owns what- and then how much that property is worth.

I like to put under each item the debt for that item. For example, the husband and wife might own a house together. I will list out the address, who owns it, and the estimated value. I will then put as the next item who the mortgage is to, for example, Commonwealth Bank, and how much is owned- and them come to a net figure for that asset.

Step 2: total all the property

This then gives you the total gross property.

Step 3: list all the liabilities

Now list out the liabilities in the same way . Don't double count! If you have put the mortgage and the car loan, for example, in the list of assets, don't put them in here as well.

Step 4: total the liabilities

Step 5: subtract the liabilities from the gross assets

This will give you the net assets. Put this figure down.

Step 6: list the superannuation

In the same way, list the superannuation you believe each of you own.

Step 7: total the superannuation

Step 8: VOILA! Total the net property and superannuation

This will now give you the total net property pool of you and your ex.

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