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

Financial matters in the FCFCoA: where am I going and what am I filing?

On 1 September 2021, the two Courts which previously conducted family law matters in Australia merged, becoming the Federal Circuit and Family Court of Australia (“the FCFCoA”). While the overarching Family Law Act 1975that legislates how to resolve divorce, parenting and property issues arising from the conclusion of a marriage or de facto relationship has remained the same, there are new Rules that support how any resolution is to be achieved. There are also comprehensive Practice Directions that have issued to assist in understanding how to approach the new FCFCoA system.

With the FCFCoA bringing a stronger focus on parties complying with their pre-action duties and resolving, where possible and appropriate, their matter through dispute resolution alternatives to litigation, it is important that you are aware of your duties and obligations before making an application to the FCFCoA to resolve your property matter.

The Family Law Rules 2021 sets out a clear procedural pathway for the resolution of property matters:

1. Complete Pre-Action Procedures set out in Schedule 1 of the Family Law Rules 2021.

a. You may fall into one of the limited circumstances where exceptions to completing the pre-action process are permitted.  

2. Failing resolution of your matter at the Pre-Action stage, you may then need to progress to alternative means of dispute resolution such as:

a. Mediation.

b. Private Arbitration.

c. Collaborative process.

3. Failing resolution at the dispute resolution stage, and subject to pre-action procedures being complied with, or an exception relevant to your circumstances being available, you may then need to progress to litigation:

a. If the total property pool is less than net $ 500,000 – filing in the “Priority Property Pools” list after reading the relevant Practice Directions.

b. If the property pool is greater than net $ 20,000,000 or otherwise involves a complex issue in dispute – filing in the “Major Complex Financial Proceedings” list after reading the relevant Practice Directions.

c. For all other property matters – filing in the usual manner after having read the relevant Practice Directions.

d. Although you may be in litigation, there are still a range of Court facilitated dispute resolution processes available to you, including:

i. Financial mediation through a Conciliation Conference facilitated by a Registrar of the Court.

ii. Court Ordered Arbitration managed through the National Arbitration List.

4. Following the conclusion of litigation, a Judge will make a determination and issue Orders. At any stage during litigation, it remains open to the parties to resolve their matter by agreement.

The agreement can be formalised by way of Consent Orders that are filed with the Court, or in certain circumstances, by entering into a Binding Financial Agreement.

It is important to remember that whether your property matter is resolved by way of decision of the Court, arbitrator, or jointly by the parties, the resolution must be just and equitable to both parties if the Court is required to make the Orders.

A failure to comply with your obligations at any stage of your matter, and particularly the pre-action stage, may see a resolution of your property matter delayed, or disadvantaged. It may help you better understand how to cost effectively progress your property matter by getting specialist family law advice tailored to your circumstances. If you would like to discuss your matter and how we can assist you, contact us today on (02) 6225 7040 or by email on info@rmfamilylaw.com.au or get started now online.

Welland & Hawthorn – A cautionary tale; the risks of delay when making a property application with the Court

There are strict time limits that apply when making an application to the Court in relation to family law property matters. Section 44 of the Family Law Act 1975 (Cth) (“the Act”) specifies that a married person must make an application in relation to property matters within 12 months of a Divorce Order taking effect. For de facto couples, a person must make an application within 24 months of the breakdown of the de facto relationship. If an application is not made within these time periods, then the Court must provide leave (or special permission) for an application to be made out of time; and leave is not always granted.

Section 44(6) of the Act stipulates that the Court may grant an extension of time if the applicant demonstrates that they will experience hardship if they are not given the chance to bring proceedings for substantive relief. If hardship is demonstrated, numerous factors can influence whether the Court allows an application to be made out of time, including the length of the delay, the adequacy of reasons for the delay, and the prejudice the respondent would suffer if the application for extension of time was granted. This means the application to extend time is not guaranteed and might not be granted. The onus rests with the applicant to demonstrate why an extension of time should be granted.  It is not up to the respondent to demonstrate why the application should be refused.

The recent case of Welland & Hawthorn [2021] FCCA 1232 highlights the importance of making an Application in relation to property matters within the required time period. In this case, the parties were in a de facto relationship for around 16 years, commencing a relationship in 2000 and separating in February 2016. They had 2 children together.

After the parties separated in 2016, the Wife engaged several lawyers throughout 2017, 2018 and 2019 and obtained advice in relation to property matters. On her own evidence, she was advised by her lawyers on several occasions that she needed to make an application within the required time period, and she was also advised that she was running out of time to make an application. Notwithstanding this advice, the wife failed to make an application regarding property matters until November 2019, almost 2 years late.

On appeal, the Federal Circuit and Family Court of Australia (Division 1) Appellate Jurisdiction dismissed the Wife’s application for property orders out of time, on the basis that, while the Court was satisfied that the applicant would suffer hardship, she did not provide an adequate explanation as to the reason for her delay. The Court considered that she had willingly engaged lawyers, attempted mediation and engaged in negotiations with the Respondent, and as such there was no satisfactory reason for why she didn’t commence proceedings in the required time frame.

If you have recently experienced a relationship breakdown, we recommend that you contact our office as soon as possible to obtain advice about resolving property matters, within the required time period. Delay or procrastination in these circumstances could result in you not being entitled to a property settlement, that you would otherwise be entitled to, if made in the appropriate time period.

Author: Ellen Russell

Is Family Violence relevant in Property Proceedings?

Family violence can absolutely be a relevant factor in property proceedings. Depending on the specific circumstances of each case, a person who has experienced family violence may find that they are entitled to a greater share of the asset pool than they might otherwise have received had they not been subjected to violence.

The effects of family violence can be relevant at several stages of the property settlement process, and must be considered in the context of the case as a whole. In some cases, one party may be able to demonstrate that their contributions to the relationship, either financially or otherwise, were impacted or made ‘more onerous’ by their experience of violence, and so should be given greater weight than the contributions of the other party. In other situations, one party may be able to demonstrate that their experience of violence has had an ongoing impact on their healthcare needs, or will negatively affect their ability to work or care for children into the future. This may lead to them receiving an adjustment in their favour to account for their greater future needs over and above those of the violent perpetrator.

The matter of Coad & Coad [2011] FamCA 622 is a clear example of a case where both of the above situations applied. In this matter, the parties were together for 10 years and had one child. At the time of separation, the Wife was severely assaulted by the Husband and he was convicted of attempted murder, intentionally causing serious injury, and endangering life in respect to a person who came to her assistance. He was sentenced to a lengthy term of imprisonment. During the incident, the Wife suffered a fractured eye socket and cheekbone, a broken nose, and was so severely bruised her child did not recognise her in the hospital. Her cheek had to be reconstructed with a titanium plate, she was not able to see properly for several months, and she had difficulty balancing, breathing and bathing herself. The Judge accepted that not only had the Wife’s injuries made her care of the child after separation more onerous than it ordinarily would have been, she had sustained life-long injuries that would continue to impact her capacity to work and care for her child. The Judge assessed the parties’ contributions at 60% to the Wife and 40% to the Husband, and awarded the Wife a 30% adjustment in recognition of her greater future needs meaning the Wife received 90% of available asset pool.

If you are experiencing family violence, 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. In the case of an emergency, you should call 000.

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

Superannuation Splitting - Now and Then

Throughout the course of your life, and your marriage or de facto relationship, most people accumulate superannuation through their employment. You cannot usually access your superannuation until you reach preservation age, or other limited circumstances, such as if you sustain an injury and are unable to return to work.  However, notwithstanding this, superannuation entitlements are treated as assets of a matrimonial property pool and can be split between two parties following the breakdown of a relationship.

Under the Family Law Act 1975 (Cth), superannuation can be split in two ways:

1) By identifying a specific dollar amount; this is known as a “base amount” split; or

2) By identify a specific percentage; this is known as a “percentage” split.

Regardless of the type of superannuation split, following service of a sealed copy of the Court Orders that detail the superannuation split, the amount identified (plus/minus earnings/losses incurred since the operative date, and any applicable administration fees) is usually deducted from the member’s balance and deposited into a new account for the non-member. The non-member’s new superannuation interest will operate completely separately from the member’s interest.

However, this has not always been the case. Amendments were made to the Family Law Act 1975 (Cth) in 2001 for married couples, and in 2008 for de facto couples introducing and permitting the division of superannuation between two parties. Prior to these amendments, while superannuation was an asset of a matrimonial property pool, it was not capable of being “split” or “divided” between two parties.  

This meant that there was often one party who retained most of the superannuation in a property settlement.  In recognition of this, notwithstanding a property settlement could be, and often was completed, it may be that the superannuation aspect of the property settlement was adjourned until at time upon which one or both parties were entitled to receive their superannuation entitlements. If this occurred in your property settlement, then keep reading!

If the original orders (which would have been entered into prior to the changes to the Family Law Act 1975 (Cth)) adjourn the superannuation aspect of the property settlement, the Court will need to determine a just and equitable resolution of the issue now, notwithstanding all other assets will have been dealt with, and many years will have passed.

The Court has been required to navigate these matters.  In the Full Court case of Gabel and Yardley [2008] FamCAFC 162 the Court found that:

- It has power to make more than one set of Orders with respect to property settlement matters provided its power to do so is not exhausted by the original orders;

- The original orders can be varied or reversed without a party making an application to set aside the Orders, as “the power to make such Orders not having been “spent” or “exhausted”’; and

- Each case is unique, and the Court’s decision to vary or alter the original orders will depend upon the circumstances of each case and whether it is just and equitable for the Court to do so.   

If you completed your property settlement prior to the superannuation splitting legislation coming into effect, and your Orders adjourn a superannuation split until a later date, 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.

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

Author: Peta Sutton, Associate