Financial Crisis and Natural Disasters Hit Property Settlements

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Leading Brisbane Family Law Firm, Michael Lynch Family Lawyers, have observed an increasing impact of floods, cyclones, the financial crisis and other natural disasters on divorce property settlements as many business owners, home owners and investors have found that their assets have lost value at the time of their divorce.

Financial Crisis Hits Property Settlements

The Financial Crisis and natural distasters have hit property settlements

Placing a value on your property is one of the most important and complex steps involved in a property settlement.

Placing a value on the matrimonial property pool is one of the most important and often complex steps involved in negotiating a property settlement.

Recent events such as the GFC and natural disasters both locally and internationally may have an ongoing impact on the valuation of certain assets, particularly business interests, shares and real estate.

Business owners, (whether it be a small family run retail business or a larger company with numerous employees), and real estate owners (whether it be your family home or an investment property), need to be aware of the factors that experts take into account when valuing these assets.

The most obvious impact will be in relation to properties that were affected by the recent floods in Queensland and Victoria or cyclone Yasi. Many spouses are now finding that although their properties may not have been directly affected, they are now located in a ‘flood zone’ with the likely result that the value of their property will decline, significantly affecting the terms of their property settlement.

It is important that spouses and their legal representatives provide property valuers with accurate information about how a property was, or was not, affected by these natural disasters.

Businesses and shares in public or private companies may fluctuate as a result of local, national or global events. In particular, in the case of a business that has traded through either the Global Financial Crisis, floods or a cyclone, it is important that careful consideration is given to the valuation methodology used.

A common methodology used by accountants for ‘small to medium’ sized businesses is the Future Maintainable Earnings method. As the name suggests, the method looks at the earnings which can be maintained in the future and takes into account historical operating results and any upward and downward trends.

If an industry was genuinely affected by the GFC, giving consideration to earnings between 2008 – 2010 may not provide a true reflection of the value of the business. It may be more appropriate for an accountant, in valuing the business, to consider results pre GFC along with industry projections and other factors.

Michael Lynch says that to ensure spouses receive their fair entitlement it is important to speak to a Family Law Specialist with experience in this field.

About Michael Lynch

Michael Lynch is an experienced Family Law Specialist and has practiced in Brisbane for over 24 years. He is well recognised and respected as one of Queensland’s leading Family Law Specialists and has extensive experience in complex family law matters, including creating a Property Settlement Agreement and handling children’s matters.


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