Financial resources and how they impact property settlements

The definition of “property” in the context of a property settlement in Australia is outlined in section 4 of the Family Law Act 1975 (“FLA”). It defines the “property" as:

(a) in relation to the parties to a marriage or either of them--means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or

(b) in relation to the parties to a de facto relationship or either of them--means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.

The property pool that is considered available for division between separated couples usually includes assets such as cash in bank accounts, real properties, shares, investments, superannuation, motor vehicles, furniture, jewelry, business interests, etc.

While the definition of financial resources differs from assets when considering a property settlement, the FLA does not provide a specific definition for it. In the High Court case of Hall & Hall [2016] HCA 23 defined a financial resource as “a source of financial support which a party can reasonably suspect to be available to him or her to supply a financial need or deficiency”.

A financial resource may have the potential to generate future income or to give access to capital, which may not be immediately divisible but can influence the financial situation of a party in the future.

The Court may take into account financial resources of the parties and may adjust the division of the property pool having regard to those financial resources. Such adjustments will usually be based on the future needs of each party, ensuring a fair distribution that accounts for both current assets and future financial prospects.

Financial resources may include:

• Future Inheritances: Expecting to receive an inheritance even if not in the near future, can still be considered a potential financial resource. It can significantly impact a party's future financial security/position.

• Trust Beneficiaries: Interests in trusts, especially where an individual is a discretionary beneficiary, may not provide immediate financial benefits but can be regarded as a potential future income stream or cash flow, depending on what has happened in the past.

• Superannuation Interests: A superannuation interest is generally treated as property and can be available for spitting if necessary. However, the defined benefit superannuation schemes, known for their (at times, generous) pension phase, may generate significant income for one party upon retirement. Therefore, this entitlement is considered more as a valuable financial resource than mere property, especially in the long term. Consideration must be given to the nature of the interest at the time (i.e. whether it is in the growth phase or payment phase).

• Employment Leave: Significant periods of leave, such as long service leave may be seen as financial resources. This perspective was supported by Baker J in the Whitehead case (1979), where it was concluded that accrued long-service leave entitlements constitute a financial resource rather than an asset.

• Pending Legal Claims: An anticipated payout from litigation, such as a personal injury claim or other litigation where a financial settlement is expected, are likely to be included as they represent a future financial benefit.

• Loan Repayments: The expected repayment of loans owed to an individual can improve their financial position once received, and therefore be taken into account.

• Business Goodwill: The value associated with a business’s reputation and client relationships, particularly if it could generate financial gain beyond tangible assets, can also be considered as a financial resource.

• Tax Losses: Tax losses that can be used to offset future taxable income, therefore improving financial status, can also be seen as a financial resource.

• Support from Family Members: Regular or reliable financial support or expected support from family members, while not a formal asset, can be considered a financial resource due to its potential effect on an individual's financial position.

In summary, the consideration of relevant financial resources is essential for achieving a fair and equitable property settlement when negotiating a property settlement with a former spouse. The identification of these resources is important and should not be overlooked.

If you are exploring a property settlement and you need family law advice it is beneficial to see a specialist. To make an appointment with a member of our team please contact us today at (02) 6225 7040 or by email info@rmfamilylaw.com.au.

After Separation: what to do with the Matrimonial Home

The family home, which used to be a shared space, filled with joy, sorrow, and countless memories, becomes a complex asset to address when it comes to separation.

The decision of whether to sell, keep, or consider other options requires careful thought and consideration between you and your former partner. It is a decision that should ideally be made jointly if possible.

Here, we explore the various paths you may consider and the implications of each. There can be creative solutions to suit the unique dynamics and needs of different families.

Selling the property

Selling the matrimonial home is a common choice for many separating couples. It is a way to say goodbye to one chapter of life, split the proceeds, and embark on a new chapter of life. Both of you must agree on key decisions of sale if the property is jointly owned, such as choosing a conveyancer, real estate agent, setting the listing price, etc.

While in a fluctuating market, you may want to make sure the sale is profitable after paying off the mortgage and related expenses to ensure there will be a profit to be divided. If the sale potentially leads to debt, retaining the property as an investment or considering alternative options as introduced below, may be more prudent.

Co-owing the property

Some couples opt to continue jointly owning the house for a period of time post-separation. This arrangement can be temporary and allow children to live in a stable familiar environment until they finish school or another period of time as agreed, or until the market has improved for selling, for example.

It requires cooperation and detailed arrangements should be discussed as to the mortgage repayments, and outgoings including rates, utilities, and eventual sale terms. This option may be suitable for families with school-aged children where you and your partner are amicable and can communicate well about decisions.

Keeping the home

One partner may wish to retain the home, often due to the emotional attachment or if they are the primary carer of the children. This typically involves one partner buying out the other’s share and transferring the property’s title from joint to a single name. The challenge here is ensuring the serviceability of the mortgage, as it will need to be refinanced from a joint name to a single name, only relying on that individual’s income.

This process can be challenging and requires the individual to have an adequate and stable income. It could be a concern for a lot of families especially under the current high-interest rate environment. You may need to consult a financial planner and/or a broker who can assess if this option is open in your financial situation. Child support can be considered an income source in some circumstances, depending on whether there is an administrative assessment in place and how long child support has consistently been paid for.

If there is a court order in place requiring the property transfer, our team is equipped to assist with the process.

Renting out the home

Another option is to keep the family home as an investment property, which may offer an alternative income stream. This arrangement involves both of you moving out and renting the property, with the income potentially covering the expenses. This could be a beneficial temporary arrangement when the market is down or if both of you want to keep it as an investment.

It also requires the communication between both of you to be effective and amicable, as you will be handling the tenants, and liaising with the agent. You also need to agree on how the rental income will be applied and expenses paid, as well as allocating who the property management responsibility will fall to.

Making a decision about the family home during or after a separation is never easy. It can require input from third parties such as accountants, financial planners, mortgage brokers, and, for navigating property settlement matters, experienced family lawyers. The team at R+M is here to assist you.
If you have questions about how the family home should be dealt with post-separation, you should obtain specialist family law advice early on. Contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.

How is an inheritance dealt with in a property settlement?

When completing a property settlement, one of the considerations made is “what contributions were made by the parties?” Contributions come in all shapes and sizes, and can include inheritances which were received prior to the relationship, during the relationship, and following the breakdown of the relationship. When the inheritance was received, its quantum, and how the inheritance was applied will impact how much weight/credit is given to the contribution. It is common for an adjustment of the property settlement to be made in favour of the party who received the inheritance, however there is no set formula, and the weight/credit applied is at the discretion of the judicial officer hearing the case.

Another consideration in a property settlement is the future needs of the parties, including any changes to their financial circumstances by way of impending inheritance. If a party is a beneficiary of a deceased estate and awaiting distribution of the estate, the nature and quantum of the inheritance could be relevant to the outcome of the property settlement. If there is going to be a discrepancy in the parties’ financial circumstances as a result, it may be appropriate for an adjustment of the property settlement to be made in favour of the party who is not receiving the inheritance; again, there is no set formula, and the adjustment applied (if any) is at the discretion of the judicial officer hearing the case.

What is not as clear is what weight/credit, if any, should be applied to the possibility of a party receiving an inheritance. For example, this question arises where one party has an elderly parent and can expect to receive an inheritance upon their parent’s passing. Consideration needs to go beyond the possibility of a party receiving the inheritance and consider the probability of the party receiving the inheritance. If the party’s parents are elderly, but otherwise healthy, well and have testamentary capacity (meaning they have the capacity to amend the terms of their Will at any point in time) then the fact that the party is to receive an inheritance at some time in the future will likely only be deemed a mere expectancy; a mere expectancy will have little if any weight in a property settlement. However, if that party’s elderly parent is unwell and has lost capacity (meaning they are unable to amend the terms of their Will), the fact that the party to the property settlement is due to receive an inheritance at some point is likely to be seen as a relevant factor when considering the parties future needs.

If you need advice about how any inheritances, received or due, may be dealt with in your property settlement you should obtain specialist family law advice. Contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.

Author: Peta Sutton

Property Settlements: The death of a party

When one party of a breakdown relationship is terminally ill, it can have significant implications to the distribution of their property, if the party passes away. Whilst a morbid and uncomfortable topic, it is an extremely important one to consider, as it can have serious consequences on a party’s assets, and how they are dealt with after a party’s death.

Death prior to commencing proceedings

Where neither party has commenced court proceedings in the Family Law jurisdiction, the matter will be dealt with under the estate law of the applicable state or territory of Australia. This might mean that if the terminally ill party did not update their will after separation, their former spouse (if provided for in the deceased’s will) may inherit from their estate. This may or may not be the intention of the deceased party.

Seeking legal advice becomes even more pertinent in family law matters when one party is terminally ill. Generally most parties will attempt to resolve their matter outside of the Court system, through independent negotiation and sometimes formal mediation. These pre-action procedures still apply despite the ill-health of a party.

However, if the matter is unable to be resolved through these means, sometimes the only alternative course of action is to make an application to the Federal Circuit and Family Court of Australia to resolve the matter.

Death after commencing proceedings

So, what happens when a party dies prior to a matter being resolved, but after filing an application? Where proceedings have commenced in the Family Law jurisdiction, and a party dies, Section 79(8) of the Family Law Act 1975 (Cth) and Rule 3.19 of the Family Law Rules 2021 apply. The Court may allow for the substitution of the deceased party by their legal personal representative - usually the executor of their estate, or another appropriate party - to ensure the legal proceedings can continue.

The personal legal representative will usually engage in Family Law proceedings with the view of recovering the deceased’s share of the matrimonial property pool for distribution according to their will. However, it is important to remember that the Orders that the Court will ultimately make are likely to be significantly different to the Orders the Court would have made if the party had not died. One example of how such a difference in outcome occurs is that the Court cannot consider the future needs of a party if they have passed away.

Family law and the death of a party can be complex and nuanced. In the event you are faced with this circumstance, you should obtain specialist family law advice. Contact Robinson + McGuinness to arrange an appointment on 02 6225 7040 or by email at info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.

Author: Lauran Clifton

Assessing contributions

Assessing contributions is an important step in determining how to arrive at a just and equitable property settlement between separated couples.

What contributions does the Court consider? 

Section 79 and 90SM of the Family Law Act 1975 requires an assessment of the following contributions:

1. Financial contributions towards the acquisition, conservation, and improvement of property. These contributions may include financial contributions received by way of income, inheritances, redundancy payments, compensation awards, and windfalls such as lottery wins;

2. Non-financial contributions made towards the acquisition, conservation, and improvement of property. These contributions may include a party conducting renovations toward real property at no cost; and

3. Contributions made towards the welfare of the family through homemaking and parenting contributions.

When does the Court assess contributions? 

The Court assesses contributions made at the commencement of the relationship (in particular, whether one or both parties had significant assets at the commencement of the relationship), during the relationship, and post-separation (if relevant).

What weight is given to contributions made by either party? 

The weighing of contributions is not a mathematical exercise. Weighing of contributions has been described by the Court as being a holistic assessment of the myriad of contributions that are made by parties throughout the course of their relationship.

Each case is different, and all contributions made by parties are unique to their own circumstances. The Court has the discretion to make an adjustment in favour of either party after assessing those contributions.

The size of the adjustment given to a party based on their contributions will depend on a range of factors including the contribution that was made relative to the asset pool that exists (in the case of a financial contribution) or the passage of time since that contribution was made, and importantly, weighing the relevant contribution against contributions made by the other party to the relationship or marriage.

Do some contributions carry more weight than others?

Historically, the Court placed more weight upon financial contributions (by way of income) over contributions made as homemaker and parent, in cases where it was said that the primary income earner exercised “special skill” in order to make those financial contributions. In traditional relationships at that time, this would advantage the primary breadwinner (often the Husband) and disadvantage the party who had made contributions within the home that prevented them from earning an income (often the Wife). The Court has since disapproved of that approach and “special skills” are no longer recognised as being a particular category of financial contribution.  

For specialist advice regarding your property settlement, contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers. The sooner you seek advice the better – so you can make informed decisions about your options.

Author: Margot McCabe

Stages of your Property Settlement

If you are recently separated, it is advisable to become informed about your property settlement, particularly if you wish to reach an amicable agreement and avoid litigation. Unfortunately, there is no set timeframe as to how long a property settlement negotiation may take, there are however common stages in almost every property settlement:

Disclosure and information gathering stage

Before providing comprehensive advice about the range of potential outcomes in your property settlement, your family lawyer will first need to know about the values of all assets, liabilities and superannuation that you and your former spouse or partner have an interest in.

Parties have an obligation to provide full and frank financial disclosure of their financial circumstances to the other. This might extend to exchanging personal financial documents (such as taxation returns, bank statements, payslips), or a more informal exchange of disclosure whereby parties provide estimated values of their assets, or a screenshot of their bank account balances.

In order to determine the values of assets such as real properties, businesses, defined benefit superannuation or other significant assets, parties will generally obtain joint valuations from suitably qualified experts.

Your lawyer may also recommend that you seek advice from other professionals before you begin negotiating your property settlement, such as financial or accounting advice.

Obtaining advice

Once your family lawyer has received all of the necessary information about the asset pool, they will be able to provide you with advice about the potential range of outcomes in your property settlement, based on your instructions.

Your family lawyer should provide advice about your likely entitlement with reference to the “four step process”, which is (generally):

1.  Identify and value assets, liabilities and superannuation owned by each party or in which they have an interest;

2.  Assess the contributions made by the parties, including financial contributions, contributions made as homemaker and parent and non-financial contributions;

3.  Identify matters relevant to the future needs of the parties, such as whether there may be a basis for an adjustment in favour of either party, having regard to matters such as age, health, income and income earning capacity;

4.  Consider the effect of the above steps and to determine a just and equitable outcome overall.

Negotiating

Negotiating your property settlement can be the most difficult stage in your property settlement. Unfortunately, for some, they are not able to negotiate their property settlement either directly with their former spouse or partner, or with the assistance of a lawyer, and they will need to litigate in order to have a judge determine the outcome.

Negotiations may also occur through more traditional forms of negotiation, such as making written offers of settlement.  Negotiating may involve participating in forms of dispute resolution such as mediation or conferences, to attempt to reach agreement.

Formalising your agreement

Once you have negotiated your property settlement, it is usually advisable to formalise your agreement.

The options to formalise your property settlement are to enter into Consent Orders or a Binding Financial Agreement. The most common and cost-effective option to formalise your property settlement is by entering into Consent Orders. Consent Orders are lodged with the Federal Circuit and Family Court of Australia, and will become approved by the Court, if the Court is satisfied that the outcome of the property settlement is just and equitable.

You should obtain specialist advice early, to understand your options and in order to be able to make an informed decision about your particular circumstances.

For advice in relation to your property settlement, contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.

Author: Margot McCabe

Formalising your Property Matter: How to do it and is it necessary?

When you separate, you will often hear stories from family, friends or even friends of friends of their experience going through a separation or divorce. These stories are sometimes the ‘worst case’ scenario, involving lengthy litigation and long paths to resolution. However, this is not the only way. Where you have reached an agreement, you are not always required to enter the Court system.

Whilst some matters require the Court’s intervention, there are many matters which can resolve by direct negotiation, through correspondence via lawyers or at private mediation. Once you and your former partner have reached an agreement as to how to divide your assets, liabilities and superannuation, you will likely want to formalise that agreement as there are benefits in doing so. To do so, you have a number of options.

The most common approach is the ‘consent orders’ process. You and your former partner ( or your lawyers) complete an Application for Consent Orders (which provides the Court with some information about what you each own and the proposed property settlement), along with the Orders you seek that the Court makes to ‘effect’ your property settlement. The Court then sets a date to review the documents and if approved, will grant the Orders that you are seeking. If the Court does not consider that the outcome is ‘just and equitable’, the Court may decline to make the Orders you seek and request you to provide the Court with further information.

Another option is to enter into a Binding Financial Agreement. This is a private agreement which requires you and your former partner to each obtain independent legal advice from a lawyer. The Court does not review the agreement reached between you and you remain outside of the Court system. Due to the requirements of a Binding Financial Agreement, this option can be more expensive however it can be preferable in certain circumstances, and more private.

In some instances, you and your former partner may decide that you are willing to part ways without formalising your agreement. Any agreement reached should at least be communicated between you and your former partner in writing. This option may only be suitable in limited circumstances.

It is important to seek legal advice from a specialist family lawyer as to the most appropriate way to formalise the agreement reached between you. For example, there may be stamp duty exemptions applicable if you transfer property pursuant to a Court Order or a Binding Financial Agreement. If your property settlement involves a superannuation split, there are extra steps that you must take to ensure the Trustee of your super fund has been accorded ‘procedural fairness’ so they can (and will)  implement the superannuation agreement you have reached.

Robinson + McGuinness can provide advice on whether the agreement you have reached is a ‘just and equitable’ outcome, as well as the best way to formalise the agreement based on your individual circumstances. Contact us to make an appointment on (02) 6225 7040 or by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.

Author: Anika Buckley

Steps to Consider Before Taking the Next Step.

It is an exciting milestone in a relationship to move in with your partner. Your partner may be moving in to your property, or you might be thinking about renting a property together.  

Whilst seeing a family lawyer can seem less romantic than picking out a new lounge, it can be useful to understand your rights in the event of relationship breakdown, particularly if you own a property or have significant savings or assets such as a share portfolio. 

People often have a misconception that if you own your property prior to living with your partner, you will automatically “lose” 50% of your property when you break up or that you will be able to “quarantine” it in the event of a separation. No relationship is the same and there is no hard and fast rule which entitles your partner to half of your property in the event of a relationship breakdown. Nor may your property interests be protected from a claim by your partner if you separate. 

When dealing with a claim for property settlement following the breakdown of a relationship (whether you are ‘de facto’ or married), the Court will first look at whether it is ‘just and equitable’ to make any alteration of your property interests. The Court then assesses contributions and future needs. 

For example, say you own a property in Canberra with your partner. You bought it 3 years prior to moving in together. During your relationship, you and your partner share finances and your partner starts to help you in repaying the mortgage. You decide to renovate the property and each contribute $100,000 towards improving the property (i.e. your partner is making financial contributions to the property). Each weekend, your partner spends hours out in the garden and does landscaping (they may be considered as non-financial contributions). You then split from your partner 20 years later. 

In this scenario, it may be ‘just and equitable’ to divide your interests in the property and your partner is likely to be entitled to a ‘share’ in your property as a result of their contributions (both financial and non-financial). 

Take another scenario where you owned your property outright prior to the relationship, having inherited it from your parents. Your partner moves in and you live together for 3 years. Throughout your relationship, you and your partner maintain separate finances and your partner makes no contributions towards your property. You ultimately break up after 3 years. In this alternate scenario, the Court may not consider it ‘just and equitable’ to alter your interests in that property as your partner may not have been seen to have made any contributions to it. 

There are a number of factors that may impact on the outcome of these scenarios, including what other assets, liabilities or superannuation are in the ‘property pool’, whether you have children together and each of your ages, health and other future needs. 

Whether you have been dating for 3 months or for a few years, if you are considering cohabitation, it would be beneficial to see a family lawyer to understand how the law operates and the impact moving in together may have on you / your assets.  You can make an appointment with us on (02) 6225 7040 or by email on info@rmfamilylaw.com.au or get started now online  with one of our experienced lawyers to obtain advice.  

Author: Anika Buckley

How Long is Too Long? Court Dismisses Property Settlement Application After 30 Years

In the case of Estes & Holmes [2022] FedCFamC1F 267, the court summarily dismissed an application by the wife for an adjustment of property interests.  

The parties had separated 1985 after a 14 year marriage. The parties were involved in family law proceedings in 1988 and in 1989 a hearing occurred without the husband being present. Orders were made adjourning the property settlement proceedings until such time as the husband received his superannuation entitlements, which were the only property of any value at the time of those proceedings. At the time, it was anticipated that the husband may receive his superannuation entitlements in or about 2006. 

The Wife sought to commence proceedings in 2020 seeking orders for an adjustment of property interests. At that time, the parties had been divorced for 31 years. 

The Wife’s application was summarily dismissed, as a result of:

1. The delay in bringing the application. The Wife could have sought to have the 1989 proceedings relisted at an earlier time;

2. The Wife did not offer an explanation for the delay in bringing a fresh application for property settlement (or explaining her reasons for not having sought to relist the 1989 proceedings);

3. The Husband’s superannuation in 1989 was approximately $150,000 but he was now in receipt of the age pension and had minimal property in his name;

4. The Wife was not able to demonstrate that the Husband had been served with the Orders made in 1989 adjourning the proceedings, noting that he was not present at Court on that date, and was not legally represented. 

Although the Court has the ability to grant leave to parties who have applied for a property settlement “out of time”, there is no guarantee that any such application would be successful. In any event, bringing an application out of time results in increased legal costs whilst the Court determines the threshold issue of whether a party should be granted leave to bring such an application. In the case of Skelton & Lindop [2022] FedCFamC1A 47, the de facto wife applied to the Court when the parties had been separated for 2 years and 9 months (9 months “out of time”). 

At first instance, the primary judge dismissed the de facto wife’s application. On appeal however, the first instance decision was set aside, and the Court granted leave for the de facto Wife’s application to proceed out of time. Notably, it had taken over three years for the Wife’s application to be determined, by which time the parties had been separated for 5 years and incurred considerable legal costs, and the outcome of the property settlement itself had not yet been determined. 

What does this mean for you?

 The above cases demonstrate the risks associated with delay in formalising property settlements.

 It is important to know that there are time limits which impact your ability to seek an adjustment of property interests after separation or divorce.   

1. If you have been in a de facto relationship, you have two years from the date of separation to formalise your property settlement by entering into Consent Orders, or to bring an application to the Federal Circuit and Family Court of Australia, seeking orders for an adjustment of property interests.

2. If you are married (or divorced), you have 12 months from the date that a divorce order comes into effect to formalise your property settlement by entering into Consent Orders, or to bring an application to the Federal Circuit and Family Court of Australia, seeking orders for an adjustment of property interests. 

If you are a party to dormant family law proceedings which have been adjourned pending the retirement of one party, or until such time as a superannuation split can be effected, you should seek urgent advice in relation to your circumstances. 

It is prudent to obtain advice tailored to your circumstances from a family lawyer, ideally as soon as possible after separation, in order to preserve your interests. Contact Robinson + McGuinness to arrange an appointment on (02) 6225 7040, by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers.

Author: Margot McCabe

Family Lawyer Property FAQ’s

Navigating a separation is difficult. Whilst every relationship is different, there are a series of questions that clients often ask in their first appointment with a family lawyer. Today, we answer some frequently asked property questions.

What do we do with our joint accounts?

If you have joint accounts, you may have a claim for an equal share of the monies held in that account. How much you are entitled to (and whether you are entitled to any) will ultimately depend on the likely division of your property pool, based on factors including the length of the relationship, your contributions and your respective future needs.

If you are worried about your former spouse ‘emptying’ the accounts, you can contact your bank and ask them to place a dual authorisation on the account (i.e. a ‘2 to sign’ feature) so you can review and authorise any transactions.

It can be prudent to avoid distributing funds from a joint account until you have reached an agreement, however this will not work for every matter as sometimes a party needs to access joint funds to support themselves or the children.

Can I still sell the house before we have negotiated a property settlement?

Sometimes people are concerned about achieving the best possible sale price, particularly in circumstances where there is a decline in the property market. If your property is in joint names, you should usually not sell your property without the agreement (or knowledge) of your former spouse. You might also need to obtain your former spouse’s agreement to sell the property even if the property is in your sole name.

If you both agree to selling a property, you can ask the conveyancers to hold the net proceeds of sale in their trust account. Trust account rules provide that conveyancers will then only release funds on your joint written instructions (similar to a ‘2 to sign’ feature).

What if I don’t know what we own?

We often see people who are not sure about what their property pool includes. This may be where a couple has not shared finances, or where one party has managed the finances throughout the relationship. If your matter is not in Court, you can utilise tools such as the national property ownership search or ASIC searches to understand an individual’s business or property interests in Australia.

Can I just get divorced without a property settlement?

You are not required to go through a formal property settlement before you apply for a divorce. It is important to know that limitation periods will commence upon your divorce, meaning you have 12 months from the date of your divorce to apply for a property settlement with the Court.

There are limited circumstances in which you can apply to the Court after this time, however it is a more costly exercise and there is no guarantee that the Court will allow your application (particularly if you do not have a good reason for the delay).

If you are not married but in a de facto relationship, you have 24 months from the date of separation to apply to the Court for a property settlement.

If you have separated and are looking to negotiate a property settlement, or if you have particular questions about what you should and shouldn’t be doing when it comes to your joint assets, you should seek specialist advice about your particular circumstances. Call us to make an appointment on (02) 6225 7040 or by email on info@rmfamilylaw.com.au or get started now online with one of our experienced lawyers to obtain advice.

Author: Anika Buckley

Assets and Financial Resources You May Not Be Considering in a Property Settlement

Each party negotiating a property settlement has a duty to the Court and to each other to give full and frank disclosure of all information relevant to their financial circumstances in a timely manner. When identifying assets that form part of a property pool with your former spouse or partner, it is typically categorised by any interest held in:

• Real property;

• Bank accounts and cash;

• Cryptocurrency;

• Shares;

• Trusts interests;

• Mortgages and/or loans/lines of credit;

• Motor vehicles;

• Superannuation interests; and

• Inheritances.

Beyond these, there are further assets and financial resources that often fail to be considered by parties which may be relevant in determining the entire property pool available for division. These may include:

• Loyalty point programs such as:

1. Frequent Flyer Points; and

2. Hotel points.

• Long service leave entitlements;

• Windfalls such as lottery winnings and/or personal injury compensation payouts;

• House contents such as:

1. Furniture;

2. Electronics;

3. Artwork;

• Pets; and

• Debts such as gambling or personal loans through friends or family.

Some of these items can be difficult to value, given subjectivity, depreciation, or their assumed nil cash value. Whilst frequent flyer points and hotel points may have nil cash value, they still hold a value and they can usually be transferred between parties.

Long service leaves accrued during a relationship may be considered valuable and relevant to the property pool, particularly if it has been accrued over a number of years.

Household contents and furniture are typically valued by their second-hand sale worth, with artwork and other sentimental items often having a higher value to a party, depending on when or how they were acquired (or if for example, they were inherited).

Pets are a complicated ‘asset’ and may have a significant emotional value between parties. This can include the pet’s monetary value from a breeding perspective to a simply strong emotional attachment. ‘Custody’ issues can also arise about jointly owned pets.

Personal loans through family or friends or gambling debts may have been hidden by a spouse from their partner. It is important to identify if these exist so that the entire property pool can be accurate determined and dealt with as part of any settlement.

It is important to note that the above information is relevant to family law and may not be accurate under other areas of law, such as in cases of bankruptcy.

If you or someone you know is considering your assets and financial resources between an ex-spouse or partner, it is important to seek support and advice from those best qualified to help you. Robinson + McGuinness is available to assist you with your family law matters, no matter how complex.

If you would like advice in relation to your family law matter, contact our office at (02) 6225 7040 or by email at info@rmfamilylaw.com.au or get started now online to make an appointment with one of our experienced family lawyers.

Author: Emily Nicholls

Why do I need to formalise my property settlement?

The division of assets, including superannuation, is something that most couples negotiate after separation.  Sometimes this negotiation is amicable, and parties are able to reach an agreement between themselves, and sometimes parties require the assistance of a family lawyer.

Regardless of how you reach an agreement, it is important that you formalise your property settlement.  There are substantial risks associated with a failure to formalise a property settlement by way of Consent Orders or a Financial Agreement. If you do not enter into one of these documents, and simply divide up your assets and liabilities, you are completing an informal property settlement.

An informal property settlement carries many risks and is not legally binding or enforceable upon you or your former spouse.  This means that:

1. Should a party fail to do something that was agreed, for example, make a cash payment to you or sell a property, there is no way of compelling that party to act in accordance with the agreement; and

2. You may be open to a later claim from your former spouse, and the claim may be bigger than that which you are exposed to at the time of separation.  This is because the Court considers the assets, liabilities and superannuation at the date it makes a decision; therefore, any growth in your assets (including superannuation) and any new assets that you have acquired between separation and the later claim will likely be included in the asset pool available for division.

There are time limits that apply to point (2) above.  Parties to a marriage have 12 months to make a claim upon their former spouse following a divorce order taking effect, and parties to a de facto relationship have 2 years from the date of separation to make a claim.  Claims brought after this time will need to be considered by the Court on a case-by-case basis.

There are two ways to formalise your property settlement:

1. By way of Consent Orders - this is a relatively straightforward process and neither party is required to receive legal advice.  In saying this, it is beneficial to engage a family lawyer to advise you on the property settlement that you have reached, whether it is just and equitable and within the range of outcomes that could be expected from the Court, and to assist you with the preparation of the Consent Orders and accompanying application.  A failure to complete the documents correctly gives rise to a risk of a requisition being issued by the Court, or the Consent Orders being incapable of being implemented; and

2. By way of Financial Agreement – this document is often more complex and requires both parties to have received independent legal advice prior to the document being entered into.  Unlike Consent Orders, a Financial Agreement is not subject to the Court’s approval.  It is often used when parties are entering into a property settlement that may not be approved by the Court.

Regardless of which document you choose, formalising your property settlement will give you peace of mind that no further claim can be brought against you by your former spouse except in very limited circumstances.  The documents will also allow you to “split” superannuation and may provide stamp duty relief to a party who retains real property or assets such as motor vehicles.

No matter where your property settlement is up to, you should seek specialist advice from a family law solicitor.   As family law solicitors, we at Robinson + McGuinness will be able to advise you in relation to your rights and entitlements and assist you to finalise your property settlement in an efficient and cost-effective way.

If you would like to discuss your options and how we can assist you, contact us today at (02) 6225 7040 or by email at info@rmfamilylaw.com.au or get started now online.

Author: Peta Sutton

Why should I formalise my Property Settlement?

The Family Law Act 1975 (the Act) provides two enforceable ways of formalising a property agreement after the breakdown of a marriage or de-facto relationship: Consent Orders (CO) or a Binding Financial Agreement (BFA). While it may seem easier or cheaper to simply divide what you have with your former partner, and go your separate ways, there are many benefits in formalising the agreement, and equally, many risks in not doing so.

Why should I?

Deciding on how to formalise your property settlement will depend on a range of factors: the complexity of your agreement, what is within the property pool, and what your pathway forward may look like.

Consent Orders are prepared with or without lawyers involved and are filed with the Court for a nominal filing fee. They can generally take from six-eight weeks to be reviewed by the Court. Once reviewed, the Court may approve them and issue you with sealed Consent Orders, or they may write asking for matters to be explained or parts of the proposed Consent Orders to be amended. The agreement the parties come to must fall within a permissible range of what is a just and equitable division of the pool as set out in the Act. Once issued, they are enforceable and binding upon the parties. They can only be set aside in very limited circumstances.

Binding Financial Agreements must be prepared where each party has had the benefit of prior independent legal advice and is an agreement that effectively seeks to deviate from the rights and protections under the Act. It is not reviewed by the Court like Consent Orders are, and it can be an agreement that does not fall within what a just and equitable division of the pool may look like. It must be precisely prepared, otherwise, it can be set aside for failure to comply with the strict requirements of the Act. 

Both sets of documents, once completed and issued in final, have the benefit of:

1. Bringing your property dispute to a close with certainty. Unless a very limited set of circumstances apply, the agreement is final and prevents either party from seeking to make further claims against the other.

2. It is enforceable, meaning either party can seek the other to comply with the agreement, even if they decide they no longer want to, by way of Court enforcement mechanisms.

3. It can offer tax benefits, such as the transfer of some assets such as property and motor vehicles under a stamp duty exemption.

What if I don’t

While it is ultimately your decision whether you choose to formalise your agreement or not, you need to be aware of the risks of not formalising, including:

• If your ex-partner decides not to comply with any of the terms of your agreement, you have little in the way of “enforcing” the agreement be complied with.

• You cannot split superannuation entitlements.

• You expose yourself to the risk of your ex-partner coming back for “more”, particularly if you have re-established yourself, such as buying further property, pooling assets and resources with a new partner, or paying down debts / paying a higher rate of superannuation. 

• They may be entitled to make a claim upon your estate and may continue to be considered a beneficiary.

If you intend to proceed with an informal property settlement, you should seek accounting, tax and estate law advice to properly inform yourself of the risks that this may expose you to. While it may seem like a convenient and cheap option, informal property settlements are likely to cause you more trouble down the track. To understand what may apply in your particular circumstances, contact our office at (02) 6225 7040 or info@rmfamilylaw.com.au.

Can I get Orders dealing with overseas assets as part of my Property Settlement?

In this day and age, it is not unusual for people going through separation to hold overseas assets. They may have emigrated to Australia after building up assets in another jurisdiction, or travelled and lived overseas for a period of time. Sometimes people just choose to invest overseas. These assets can include overseas pensions, real estate, shares, companies and bank accounts. Regardless of how the assets came about, if they are owned by people who are going through a family law settlement they will likely need to be address in some way.

While it may sound a little odd. Australian Courts do have the power to make Orders dealing with assets held overseas if the Court decides that it is appropriate to do so. This is because section 31(2) of the Family Law Act gives our Court power to make Orders about ‘things’ and ‘people’ outside of Australia. The Orders will not be directed specifically to the asset, but rather to a party to the proceedings – requiring that person to do something with the asset, like transfer it to someone else. Sell it and disburse the proceeds in some way. Or even just to retain it in their own name.

Even though the Courts do have that power, dealing with overseas assets in a property settlement can still be a tricky area of family law if one person does not want to ‘play ball’ with the process. The first problem you may encounter if the other person is being evasive or not properly disclosing their holdings is proving that the asset exists at all, and then after you have done that, establishing precisely how it is legal owed. Once that has been done, you will need to establish what the asset is worth. This can mean obtaining valuations from afar, which can be logistically difficult and expensive. These issues can usually be worked out, but it can take some time.

Perhaps the most significant issue that people can run into in this area is deciding what to do once and Order has been made about overseas assets, but the person who is supposed to do the thing – e.g., transfer the asset, sell the asset, simply refuses. Some overseas jurisdictions will recognise and Australian Order and enforce it as if it had been made in that country, but other jurisdictions will not – it is up to each country. The Court may try to avoid this issue altogether if there are enough assets held within Australia to simply assign the overseas assets to the person who already holds them, and giving the other person a greater share of the Australian assets instead. Whether this is appropriate will of course turn on the particular facts of each case.

If you or your former partner own assets overseas and you are going through a property settlement, or think you might be in the future, contact us today on (02) 6225 7040 or by email on info@rmfamilylaw.com.au or get started now online.

Author: Anna-Kate Visser