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Property Matters During a Pandemic

Property Matters During a Pandemic

Wednesday 16th of September 2020
By: Victoria Kilby, Senior Associate and Accredited Family Law Specialist, Coote Family Lawyers

What a momentous day!  Thank you all in getting to this position. I can now start to move on with my life.   

How do you value assets during COVID?

In the process of negotiating (or litigating) a property settlement, one of the first and arguably most important steps is to value the assets.  This can be done by agreeing on a value using an estimate or an appraisal, or where no agreement is reached, by engaging an expert to independently value the asset.

The impact of COVID-19 on our economy has been, and will continue to be, drastic.  Over the course of 2020, we have seen significant changes to the values of various assets including property, shares, superannuation and some businesses.  As a result, careful consideration needs to be given to the way in which experts are appointed to prepare valuations including the timing and the scope of the instructions provided.

We have had to adapt the way in which certain assets are valued, during a time where restrictions have limited physical inspections and have instead necessitated virtual or online inspections, including for real properties and chattels.

We have seen the value of superannuation interests decrease, which means that careful consideration needs to be given to the drafting of superannuation splitting orders and in particular, whether the splittable amounts should be expressed as a base amount (in fixed dollar terms) or as a percentage amount to account for further fluctuations. 

The regulations and restrictions imposed by the Australian government to deal with social distancing and isolation has had a drastic impact upon certain industries, which may affect business valuations obtained for family law purposes – noting that not all businesses will be impacted negatively.   Certain industries are thriving; whilst others are facing a rapid decline in demand and profitability; and others have been forced to limit trading or close their doors.  This can make it difficult to predict future cash flow and profit, and to make projections and forecasts as to the future performance of a business, particularly given the uncertainty around when life and the economy will return to “normal”.   It may be that information from the 2019 financial year is not an accurate reflection of how the business will perform in the 2020 financial year or future years.  If you have already obtained a business valuation earlier this year, it may no longer be up to date or accurate and consideration may need to be given to obtaining an updated report to consider how COVID-19 has impacted the business.

If you have separated from your partner and/or you are already going through a property settlement, it is important to consider whether the divisible assets have changed, or may change, and how these matters need to be taken into account in reaching an agreement.

Please contact one of our team of top Melbourne divorce lawyers for advice on (03) 9804 0035.

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