How do you divide property when a relationship breaks down? Consider the family law four step!6/15/2017 It is with regularity that family lawyers are buttonholed at social events to provide some impromptu advice to someone going through a property division.What is consistent through these conversations is how little many people understand of the process, how much people cobble together their own solutions based on what is ‘fair’, and how infrequently lawyers are consulted at an early stage to provide some guidance and frameworks for discussions between parties.
I can recall a matter that was brought to me where the parties had been spending an inordinate amount of time dividing and ascribing value to each and every item of furniture or household appliance and dividing these in a way that was reflective with their respective incomes; but had no idea that they might be entitled to some of each others’ superannuation, a significant oversight that would have resulted in one party missing out on almost $100,000 of superannuation. So what is the broad overview of the process that family lawyers will apply?
These steps are simple in some senses but as with everything, the devil is in the detail of the implementation and the ‘edge cases’. Consulting a family lawyer early for guidance to inform your discussions, identify any problematic issues and define your expectations is one of the most sensible investments of your money post separation you can make.
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Many people choose to invest in property in Australia for their retirement, as a source of income, or to assist their children with somewhere to live. This is true of both local buyers and overseas purchasers. When you do this however, you should turn your mind to how Australian family law will consider this type property in the event that there is a separation involving yourself or your children in the future.
If a parent buys a property for their child, their child marries and then divorces, it is not as simple for the parents as getting their money back out of the property ‘dollar for dollar’. Australian family law will usually consider this assistance from a parent a type of financial contribution, not a loan, and is not inclined to repay the money as if it were a normal debt. Often people will walk away from a relationship having lost not only a lot of money themselves, but also a lot of their family’s money, resulting in increased family tension. At Nevett Ford Lawyers, our large and experienced team advise and assist with a range of solutions to help to protect you and your family in these situations. When you purchase a property, we recommend considering a Binding Financial Agreement under the Family Law Act to protect yourself and your children, as well as ensuring loan documents are drafted to assist in recovering money if necessary. We are also able to draft Inheritance Agreements to help to protect inheritances from family law disputes in the future. We can even draft Agreements that will operate for couples who are not yet married but may do so in the future and want to make just one document to cover these different situations. It is important to look at these types of documents and have them prepared when everything is going well, to protect you in the event of future uncertainty. Determining the right kind of document for your circumstances is a skill at which our lawyers excel, and we recommend you contact us to enable you to make this important decision in an informed manner. It is important to know that there are time limits on making applications under the family law for a property division. If you are unaware or not advised of these, there can be serious repercussions leaving you significantly worse off.
For defacto relationships, an application cannot be made under the Family Law Act 1975 more than 2 years after separation. For married couples, the time limit is 12 months after your divorce is made final. For this reason, many family lawyers will not encourage people to actually obtain their divorce until their property settlement is finalised or very near to being finalised. While the deadline is clear cut for divorcing couples, the time limit on defacto relationship can cause more difficulties, particularly if there is a disagreement about precisely when your separation occurred. Parties will of course be more likely to recall a separation date in a way that is advantageous to them. In the event that the deadline passes in either case, the Court may grant leave to a party to apply even if they are out of time, but you will need to explain to the Court the reason for the delay. The Court may grant leave to you to proceed out of time if it is satisfied that:
The definition of hardship is a vigorously contested one. The Court will take a variety of factors into account when considering these issues, particularly what exactly is meant by ‘hardship’ but it is important to seek legal advice and act quickly if you are approaching or have just passed one of these deadlines. Talking with your partner about entering into a binding financial agreement, or a ‘pre-nup’ as they are sometimes known, is a difficult enough conversation.
Making it more difficult, the Family Law Act 1975 provides that if you are in a defacto relationship, and enter into an agreement under the defacto sections of the law, that agreement will come to an end and cease to be effective upon marriage. Quite why this is the case has never been clear to the legal profession at large, but most lawyers have advised then that parties considering marriage with an existing agreement should re-enter a new agreement at that time. This often doubles the cost of getting a financial agreement and both parties have to attend at lawyers again to obtain what often amounts to very similar advice. A newly-published case (Piper& Mueller [2015] http://www.austlii.edu.au/au/cases/cth/FamCAFC/2015/241.html) however states that a financial agreement is able to be both a defacto agreement – pursuant to s90UC of the Family Law Act – as well as a pre-marriage agreement – pursuant to s90B of the Family Law Act. The rationale is that the agreements do not conflict with each other because the portion of the agreement that relates to being under the defacto laws ‘falls away’ when the parties marry, as a result of that same troublesome piece of the law that caused difficulty above. This means that parties can save considerable cost, as well as time and stress, by having an agreement drafted during their defacto relationship that is put into operation with marriage. Our lawyers would be pleased to assist you with that type of agreement and answer any questions you have about these agreements. You can contact us on 1800 642 266 or hello@bentofamilylaw.com.au to discuss further. |
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