Viewing entries tagged
property settlement

Family Law and the Bank of Mum and Dad

It’s common for modern entrants into the property market to have had some assistance getting there. You might have heard of the term ‘the Bank of Mum and Dad’ to refer to when parents or family members have assisted someone in helping with a deposit on a property. But how does this new type of Bank stack up when it comes to a separation with your partner?

Family law has long adopted a presumption about money coming from family members, called the presumption of advancement. In brief, that presumption says that where there is an intra-family transfer (a payment from your mother to you for example), then that is presumed to be a gift. If there is evidence to the contrary, then the presumption can be rebutted.

What does it take to rebut the presumption of advancement? There are competing schools of thought and arguments about this. One line of reasoning says that if you intended something to be a loan, then you would have all the regular features of a loan – a contract entered into before the money was transferred, terms of repayment, interest payable, the ability for whoever loaned the money to ‘call in’ the debt, and even registering an interest by way of a charge or sometimes a mortgage.

However another line of reasoning, advanced particularly in the Supreme Court of NSW, has said that family members are simply unlikely to adopt such formalities in their intra-family relations, but that this shouldn’t stop a Court taking a view that money transferred was a loan, not a gift. That is, that the level of formality about a loan in a family is going to be lower than if the Commonwealth Bank, for example, loans you some money.

These questions turn on evidence, and your conduct with the money, particularly before you separated. If you separate, and suddenly start treating money as being a loan and paying interest, it certainly looks suspicious if that’s not what was happening before. Patterns of conduct are important, as are formal documents being prepared at the time of the loan, particularly with documents showing that a partner or former partner knew exactly what was going on.

It’s easy to say all this in hindsight, but our lawyers are experts at asking you the right questions to help find the evidence that you might need to argue a loan – and if you cannot, giving you the right advice early to help you avoid going down the wrong path.

Call us now on 03 9614 7111 or email melbourne@nevettford.com.au to find out more.

Significance of Abiding by Property Orders

Significance of Abiding by Property Orders

It is vitally important for parties in proceedings to strictly comply with property settlement Orders.

If a Court Order required you to make a cash payment to the other party in the proceeding by a certain date, you should avoid making a late payment given the potential risks and negative impact involved to your case.

For example, in the case of Blackwell & Scott [2017] FamCAFC 77 a Consent Order provided that the Husband is to pay the Wife $130,000 within 90 days (so as to achieve an equal property division). The Husband was late in making the payment by approximately 13 months and over this period, the value of the property increased in value from $860,000 to $1 million. The Wife argued that the Order should be set aside as the increase meant that she would receive far less than an equal division of assets. The Family Court Judge granted her application. The Husband filed an Appeal which the Full Court dismissed noting that “The Husband’s delay in complying with the Orders was… substantial… By reason of the Husband’s default, the agreed equal division of the parties’ property did not take place”.

On the same note, it is equally important to ensure that you abide by Court Orders requiring you to maintain properties, or demonstrate that you are able to keep up with expenses involved – as otherwise you might face a serious risk of sale.

For example, in the case of Narkis & Narkis [2018] FamCA 1083 Consent Orders were made for the Wife to pay expenses for the said property including land tax, building insurance premium, and expenses relating to repairs. The Wife, unfortunately, left the land tax bill unpaid and outstanding for seven months. The Wife failed to provide an explanation for her non-compliance. Though the Wife ultimately paid the bill, she had deposed to the fact that she had borrowed funds from friends to pay outstanding expenses, which the Court found concerning. The Judge found that the Wife had ample opportunity to do what she was obliged to do. The Judge further noted that the Wife’s indication that she had to borrow monies points to the fact that she does not have the resources to keep this property. In all these circumstances, the Judge found that it was just and equitable to make Orders for the sale of the said properties.

In short, it is important that you engage a lawyer who sees the bigger picture and able to assist you in understanding exactly what you are signing up for to avoid a costly enforcement Application being made against you. Our lawyers at Nevett Ford Melbourne are fully across these issues and will be able to provide you with the advice you need to get the outcome that is appropriate. Call us on 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au to discuss your circumstances or for more information.

Don't assume your partner will get half of your asset's increase in value!

It is a prevailing shorthand for many family lawyers that a starting point in a property division for clients is to work out what each party had at the beginning of the relationship, apply a percentage to what they have now, and estimate that your contributions otherwise during the relationship are '50/50'. However, a new case has emphasised the risks in taking this shorthand approach in some situation.

In the matter of Anson & Meek [2017] FamCAFC 257 (http://www7.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FamCAFC/2017/257.html), the trial Judge found that the Husband had brought in a property worth about $1,000,000 at the beginning of the relationship. That property had increased in value to almost $2,000,000 at the time of the family law trial. The assessment of contributions during the relationship, although not linked explicitly to this calculation, meant that the Wife was treated as having contributed half of the increase in value.

The Full Court took issue with this outcome, and identified that in fact the increase in value of the property was not solely due to the financial and non-financial contributions of the parties during the relationship (including homemaking duties), but also to prevailing market factors. In fact, a very large proportion of the increase in value was connected to the increase in the land value of this rural property, rather than the increase in value of the home itself. It would stand to reason then that the Husband should have a greater percentage contribution attributed to him, as without his initial capital to buy the property, the parties would not have been in a position to profit so handsomely.

The case seems to indicate that the Court should not neglect the concept of 'springboarding' when looking at assets such as these. It is important that you have a lawyer who understands these concepts and is able to dig into the detail of your assets, rather than treating your assets generically. Our lawyers at Nevett Ford Lawyers Melbourne are fully across this issue and will be able to provide you with the advice you need to get the outcome that is appropriate. You can call us now for more information on 03 9614 7111.

Risks in delaying property settlements

Risks in delaying property settlements

Parents, children and or family members who have endured or witnessed a relationship breakdown can certainly attest to the challenges and intimidation separated parties face as a result. Not only are they emotionally challenging, they involve life-changing and confronting decisions, particularly adjusting to the severance of any financial ties and or resolving care arrangements for the children.

It is not uncommon to come across clients who have separated and left finalising their property settlement for many years. Empathetically and understandably so, property negotiation with a former partner is probably the last detail on the minds of separated parties, given the need to also address emotional issues resulting from separation – however it is imperative that you know the considerable risks associated when discussions surrounding a family law property settlement are left for a significant period.

It is important to be aware of the time limits under the Family Law Act 1975 in bringing proceedings for property settlement or spousal maintenance before the Court, which is designed to promote property settlements within a practical time frame.

  • For married couples, you have 12 months from the date of divorce;
  • For de facto couples, you have two years from the date of separation.

For married couples, we do not recommend applying for divorce until property settlement has been finalised or proceedings commenced seeking property orders. For de facto couples, we commonly run in to the issue of being out of time and we see parties expending legal costs to argue the exact date of separation – therefore reiterating the importance of finalising your property settlement at the first available opportunity following separation.

These time frames exist under the Act to provide certainty to both parties and is beneficial in cases where one party is deliberately skirting the negotiation process (usually the party required to pay maintenance or the party who has smaller future needs) and delaying a property settlement.

In the event you wish to pursue a property or maintenance claim outside the designated time frame, you can only do so with the Court’s permission, that is, leave must be sought from the Court to begin proceedings. The Court must be satisfied that hardship will be caused to you or a child if leave was not granted. In maintenance proceedings, you must demonstrate that at the time the ordinary time limit expired, you were unable to support yourself without an income tested pension, allowance of benefit.

Another significant risk associated in delaying a property settlement is that values of assets, liabilities and or superannuation, as well as the parties’ financial circumstances may change between the date of separation and when negotiations begin and or the matter is brought before the Court –the law looks at and considers the asset pool at the time of any trial, not at the date of separation. This means that any lottery wins or inheritances accumulated may be included as part of the asset pool for division. Similarly, delaying a property settlement whilst meanwhile disposing of any matrimonial assets prior to a settlement can be treated by the Court as that the person has already received part of their property settlement entitlement, thereby reducing their entitlement in the final settlement.

When property settlements are left for a significant period, this also increases the risk that one party may die before proceedings are initiated. Any property owned as joint tenants such as the matrimonial home will be transferred automatically to the surviving tenant (usually the ex-spouse), regardless of what the deceased’s Will states and regardless of whether the parties have separated.

It is for these complexities and risks involved in determining the parties’ entitlements after a long period of separation that we advise you to speak to one of our experienced family lawyers post-separation. Or, if you are in a position where the ordinary time limit has lapsed, we can tailor our advice to you accordingly taking into account your circumstances.

On the same note, if you have managed to reach an agreement with your former partner about a property settlement, we encourage you to document it in a legally binding and recognised manner, either through Consent Orders or a Binding Financial Agreement. The risks you face otherwise is that your partner later decides to change the agreement, which was never formalised in the first place. Putting the terms of settlement in a legally enforceable way would save considerable amount of time and costs in the future if the “informal” agreement was challenged.

Please do not hesitate to contact us on 03 9614 7111 or email us out of hours on melbourne@nevettford.com.au.