Separation and divorce: Be sure before you sign

A leading family law firm is recommending couples think carefully before they sign any legal document that could have significant financial consequences later down the track.

According to Jones Mitchell Lawyers partner Dan Bottrell a common scenario for many newly separated spouses is that they may, after separation, be bound by documents signed ‘blindly’ before separation.

“As family lawyers, we see all manner of relationship dynamics,” said Bottrell.

“But the dynamic which can cause significant anxiety after separation is that in which one spouse has, during the relationship, signed any document given to them by the other spouse.

“When assessing financial outcomes for clients after separation, we find many have little recollection of what has been signed, no copy of the documents signed, and no understanding of their effect.

“Those documents have been plonked in front of them at the breakfast table, where they have been invited to take an outstretched pen and “just sign here”.

Those documents can be any number of things:

  • An extension on a housing loan facility.
  • The establishment of, or guarantee of, a finance facility.
  • The offering of security for the debts of other people or other entities.
  • The purchase or sale of items of property.
  • Resignation as Director of a company.
  • Agreement to lend funds to another person or entity.
  • Tax returns etc.

Mr Bottrell warned the consequences of signing such documents could see one spouse’s financial or legal position compromised.

“All of them can have significant financial consequences,” he said.

“They may see a spouse’s property disposed or indebted to a bank or other entity, or their financial or legal position compromised.

“While the binding nature and effect of some documents may be challenged, that is usually not without complicated legal argument, and the time and money spent in Court advancing that argument could be extensive.

“There is also the challenge that third parties to those documents have no knowledge of the circumstances around which they were signed, and are relying on the simple fact of them being signed, and will seek to hold that spouse to the obligations in them by hook or by crook.”

Here are some tips when being asked to sign a document:

1. Read it

Do not ever sign anything without reading it first.

2. Get advice

If you do not understand it, get some advice about it from your accountant or lawyer – there is no shame in not knowing the purpose and effect of a document – that’s what lawyers, accountants and other advisers are for, so use them.

3. Keep a copy

If you resolve to sign it, keep a copy of it in a safe place (and have your accountant or lawyer do likewise) – you may need to refer to it at a later point.

4. Understand the consequences

If you have signed the document, know that other parties will be relying on your having signed it.

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