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Making a settlement offer: what to consider

By November 19, 2020February 23rd, 2024No Comments

If you’re keen on achieving an out of court, private resolution to your property division after your separation, one of the most pragmatic and sensible things you can do is to make a settlement offer to your ex. A settlement offer is simply a proposal that you send to the other party which sets out terms for how the matter could be resolved. Should a settlement offer be accepted, it means you can avoid the financial and emotional costs of litigating your matter through the courts, fast-track resolution of the matter, and ideally achieve a much more amicable parting of your ways with your ex.

What are the benefits of settling out of court?

Agreeing on terms of a settlement provides resolution of the matter so that you and your ex can move forward quickly and without costly court proceedings. Settlement offers also remove the uncertainty of the court process, because you know exactly what each party will get at the time of agreeing the offer. And because the parties are coming to an agreement, it is much more likely to be an amicable agreement than the court process which inevitably creates “winners” and “losers”. An amicable agreement is much more preferable particularly if you need to cooperatively co-parent with your ex into the future.

Another major advantage is that as long as an offer is reasonable, simply making the offer can provide a strategic advantage in any future court proceedings. If you go to court and are successful in seeking orders, then you can also ask the judge to consider your early offer and seek an order that the other party pay your costs.

Conversely, if you reject a settlement offer and go to court but are unsuccessful, the other party might ask the judge to take their early offer into account and seek an order for costs against you. Therefore, make sure you obtain legal advice if you are on the receiving end of a settlement offer as well.

Although settlement negotiations are not admissible during a trial, judges will still often be aware about settlement efforts due to pre-trial or settlement conferences—and the risk is that a judge could hold it against a party if they were unwilling to even try to negotiate a settlement.

Are there any disadvantages to making a settlement offer?

Sometimes people have concerns that sending a settlement offer is a sign of weakness. But in fact, what it signals is a willingness to be reasonable and a desire to reach an amicable resolution—and these are positives in the eyes of a court, should the matter proceed to litigation.

How to make a settlement offer

There is no time limit for making an offer and either party can make an offer at any time. Offers should be in writing, seeking an agreement to the terms set out in the offer to settle, setting out clearly the proposals you want and why.

Before making a settlement offer, however, ensure your family lawyer has advised you of real costs (already paid and what will be owing up to the date of the settlement offer) plus the estimated costs to complete the matter. If you are on the receiving end of a settlement offer, your lawyer should similarly advise you of your actual costs so that you can take these into account when considering the offer. It’s also necessary to have sufficient information about your ex’s finances and all aspects of the matter, whether through formal or informal discovery and ensure that you have a good understanding of what your assets are worth.

Formalising the agreement

A property settlement can be achieved and finalised without court intervention, by means of either entering into a Binding Financial Agreement or applying for consent orders asking for the court to make orders in accordance with the terms of your agreement. You should speak with your lawyer about which option is better for your situation.

Some tips for successful settlement negotiations

  • Positively reframe the negotiations

Put yourself into the mindset of having the intention of problem-solving rather than winning.

  • Get legal advice early in the piece

Getting lawyers involved early means you’ll know what you’re entitled to and what might be a reasonable settlement offer to make, before attempting negotiation.

  • Accept the need for compromise

You must be willing to compromise. It’s inevitable that you won’t get everything you want. For example, a settlement offer might involve accepting a lower price on a property’s value than what was hoped for if time were taken to wait for the perfect sale price. Instead, it may be more economical to speed up the process, even if that means selling an asset for less than what it ideally could have ultimately sold for.

  • But be clear about your limits

Your lawyer will help you understand what these should be, provided they are aware of your needs and goals. Your lawyer will understand when you have reached the best possible deal.

  • Know the value of your asset pool

You need to know exactly what you are negotiating over. If there are disputes over values of assets, it’s sensible to engage the right experts, e.g. a registered property valuer to value real estate, superannuation expert to value defined benefit superannuation interests.

  • Don’t start too low, but also don’t start too high

The ideal settlement offer strikes a balance between making a credible offer and leaving some wriggle room. Your offer should be based in the realm of potential outcomes that a court would order, but it’s probably stating the obvious to say it’s better not to go in too low initially.

  • Document the agreement properly

Negotiated agreements need to be formally documented by way of Consent Orders or by way of a Binding Financial Agreement.

We can help if you need assistance with negotiating a settlement offer or with formalising your agreement by way of Consent Orders or a Binding Financial Agreement. Please contact Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.

You may also like to read our blog on financial separation after you split.

You can also read more about property and finance settlement at the Family Court’s website.


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