Viewing entries tagged
property settlement agreement

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.

I’m going through a property division - should I quit my job to get more?

We get this question, or a variant of this question very commonly. Part of the stages of a property division in Australia is considering each party’s future earning capacity. In response, people often have some ideas about how they might maximise the funds they receive.

Someone might ask whether they should quit their job, as getting 5% more of a million dollar pool of assets seems attractive. Or they might decide not to start looking for work very hard during the course of the proceedings. Sometimes opportunities come up and clients think about whether they should postpone taking up those opportunities. It can happen that there is deliberate contact to reduce your earnings just to try to get a bigger slice of the pie. Sometimes clients are, unfortunately, not completely honest with their lawyers or with the Court, and may be earning cash from jobs that they do not declare.

In all of these situations, the Court is obliged to look at your earning capacity, not necessarily what you are earning right here and now on paper. A skilful lawyer will be able to identify a pattern of earnings you’ve had, and if those earnings suspiciously drop around separation, you will have to have an excellent answer for why that happened for your Judge. You may be compelled equally to reveal to your ex-partner and the Court what attempts you have made to get a job, and your efforts in that regard (or otherwise) could become a significant issue.

Not only that, but by not working if you are otherwise able to, and not earning what you genuinely are able to for the work you do, you are depriving yourself for potentially years of litigation while you await a decision, all while gambling on whether a Judge will find your actions to have been believable. It’s not a bet I would risk my house on!

My view is that you should take the work you can get, can reasonably perform with your health and skills, for fair pay. You will have more money in your pocket from salary and appear as an honest, sensible person to any Court looking through your affairs.

This is of course a general observation and you should always seek advice specific to your circumstances. If you suspect your former partner isn’t playing by the rules, or you need advice about your reported earnings, call our lawyers on 03 9614 7111 to speak with someone now.

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.

Forever young? Valuations and family law

The valuation of assets is a critical part of family law property settlements and divisions. Lawyers and clients are not usually property value experts, whether in the industry of real estate, businesses, cars or jewellery. You would be surprised how many people suddenly decide that they are experts in this field when they separate from their long-term partner! As a result, independent property valuations are commonly obtained when disputes arise about the precise value of items of property. But are those values, once obtained, set in stone

It is not unusual for valuations to be updated as a result of the passage of time – a property valuation that is two years old may not accurately reflect the current value. In what appears to be an uncertain real estate market at present, a valuation obtained even a few months ago may be able to be challenged based on new information and changes in market conditions. Business valuations also have a significant amount of complexity – sometimes it is best to obtain historic valuations of businesses ‘as at separation’ because of conduct by a party that has had the result of diminishing the value. It is extremely common for business owners to claim that their business has suddenly faced a downturn immediately after separation and the Court is increasingly sceptical about such claims, and so historic valuations may well be appropriate or useful to the Court. If you are on the other side of this equation though, an insistence on the current value may well be much more in your interests.

 

In short, you should engage a lawyer who is alive to these issues rather than blindly follows a set structure or path for every case. Tailored, specific advice is invaluable, and is something that we offer at Nevett Ford Melbourne. Call us on 9614 7111 to discuss your circumstances.

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.

Binding Financial Agreements (BFA)

Parties can enter into a BFA before marriage (s 90B), during the marriage (s 90c), after a divorce (s 90D), before entering into a de facto relationship (s 90UB), during a de facto relationship (S 90UC) or after the breakdown of a de facto relationship (s 90 UD). Both heterosexual and same-sex (LGBT) couples can enter into a BFA.

A Binding Financial Agreement (or BFA) is a written document signed by both parties to a relationship which contains provisions about the division of property in the event of a separation. It must comply with either Part VIIIA or Part VIIIAB of the Family Law Act 1975 and parties to the Agreement must obtain independent legal advice about the Agreement.

A Binding Financial Agreement is often referred to as Prenuptial Agreement (prenup or prenups), Cohabitation Agreement, Postnuptial Agreement (postnup or postnups), Property Settlement Agreement or Divorce Settlement Agreement.

Binding Financial Agreements entered into prior to or during a Marriage or De Facto Relationship

Advantages

  1. It allows parties to protect assets and financial resources which existed prior to the relationship from a claim for division after separation.
  2. It allows parties to protect an inheritance or gift they received prior to the relationship, during the relationship or after separation.
  3. In some circumstances, it allows parties to remove their respective responsibilities towards the other to provide spousal maintenance.
  4. It provides a degree of certainty to the parties as to how their assets, financial resources and liabilities will be treated in the event they separate and remove any anxieties they may have about entering into a relationship in the first place.
  5. It allows parties to be clear about the responsibility of debts such as credit card debts, home loan, personal loans, business loans, etc.
  6. In conjunction with a will, it allows parties to plan their estate and ensure that their children, especially any children from previous relationships, are not disadvantaged in the division of the estate.
  7. It allows parties to determine their property settlement without the intervention of the Courts and costly legal disputes.

Examples of when a Binding Financial Agreement may be useful

  1. When one party has significantly more assets and financial resources than the other, a BFA (whether entered into before or during the relationship) allows that party to keep those assets and financial resources safe from the other in the event that they separate.
  2. When both parties have significant assets and financial resources and they both wish to quarantine those assets and financial resources from the other in the event that they separate.
  3. When one or both parties have children from previous relationships and wish to protect all or part of their assets and financial resources for their children.

Binding Financial Agreements entered into after separation

Advantages

  1. It allows parties to keep the terms of their settlement agreement away from the eyes of the Courts, the Australian Taxation Office (ATO) and other persons and organizations.
  2. It allows the parties more flexibility in how they wish to determine their financial matters.
  3. In some circumstances, it allows parties to remove their respective responsibilities towards the other to provide spousal maintenance.

Examples of when a Binding Financial Agreement may be useful

  1. When parties have complex property, business or trust arrangements which they wish to keep as private as possible.
  2. When the settlement terms are more in favour of one party and as a result may not be approved by a Court.
  3. When the parties need a quick resolution to their financial affairs and wish to avoid an agreement which requires the review and approval of a Court (consent orders).

We have a competent and approachable team of family lawyers who is able to assist you in determining the right kind of Binding Financial Agreement for your circumstances. We recommend you contact us on 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au.