The Importance of Making a Will after Separation

Your Will should reflect any significant changes in your relationship status, whether you are getting married, having children, or breaking up.

If you made a Will whilst you were single but have now married, this automatically cancels your Will rendering it invalid.

Divorce affects your Will differently in each state. In Victoria, pursuant to the Wills Act 1997, upon divorce, any provision in your Will that relates to your former spouse becomes invalid. On the other hand, unlike divorce, separation does not automatically cancels the provisions in your Will relating to your former spouse/partner. This means that, if you separate, your former partner may still get a share of your estate (or your whole estate if you leave no children at the date of death) unless you make a new Will.

However, if you divorce but continue to maintain an amicable relationship with your former spouse for the sake of your children, and you intend to leave your former spouse as the executor of your estate after your death, your former spouse may encounter complications proving your intentions when you are no longer around.

Rather than leaving these issues to the Supreme Court to unravel, it would save one the hassle and legal fees to simply make a new Will to ensure your intentions are clear. If you think about this carefully, taking the time to draw up a Will or revisit your old Will each time a significant event occurs is worth taking the time for, particularly if you have children or family members or friends you wish to provide for when you are no longer around.

At Nevett Ford Lawyers, we always advise clients who are starting or have finalised property proceedings, and or applied for divorce to make a Will (or a new Will) and properly arrange their estate affairs. We cannot emphasise the importance of this enough!

So, the next time you update your relationship status on Facebook and/or on other social media, think about this article and remind yourself to also update your Will! If you have done the former but not the latter, call us now on 03 9614 7111 or email Melbourne@nevettford.com.au.

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The Nuts and Bolts of a Property Claim in a De Facto Relationship under the Family Law Act

De Facto Relationship:

A De Facto relationship arises when two people, who are in a relationship, are not married or related by family, and having regard to all the circumstances of the relationship, are a couple who live together on genuine domestic basis. Circumstances of the relationship that the Court will consider in determining whether a De Facto relationship exists or not include the duration of the relationship, living arrangements, whether there was a sexual relationship, financial arrangements, property owned jointly or individually, any registration of the relationship under State or Territory law, any children and public representation of the relationship.

Grounds for Property Claims in a De Facto Relationship:

If a De Facto relationship breaks down, the Family Law Act provides that a Court can make orders in relation to property of the relationship only if: -

• The relationship has lasted for a minimum of 2 years; or
• If there is a child of the relationship; or
• A party has made a substantial contribution; or
• The relationship was registered under a State/Territory law.

As a result, the De Facto relationship that last for less than 2 years, a property claim can only be made if there is a child of the relationship, the relationship is registered or if the concerned party has made a substantial contribution.

Substantial Contribution:

Substantial contributions are contributions which are not ‘illusory’ and are ‘considerable or large’ having real worth or value. Contributions that would be considered by the Court as being substantial contributions include, but are not limited to, the following: -

• Financial contributions made for acquisition, conservation or improvement of any property of parties
•  Non-financial contributions made for the acquisition, conservation or improvement of any property of parties
• Contributions made to the welfare of the relationship and/or children of the relationship including homemaker contributions.

When determining whether a contribution is a substantial contribution, the Court may also take into account other considerations, such as: -

• Effect of any proposed order on earning capacity of any party
• Matters such as age, health, income, care or control of child, any commitments, standard of living, extent of contributions to financial resources of the relationship
• Any financial agreement/arrangement between the parties
• Child support

There is a further requirement for claims based on substantial contributions. If a party makes a substantial contribution and in the absence of an order that party would suffer a serious injustice, only then can a claim for property be made by that party. The Court requires this injustice to be more than slight and a mere injustice will not suffice.

If you have been in a de facto relationship that has unfortunately broken down and you would like to discuss further what your entitlements are, please do not hesitate to contact one of our approachable family lawyers. The number to dial is 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au. 

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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.

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A whole lotto luck for Mr Elford as Judges decide not to divide winnings to wife

Cases about lottery winnings often draw attention perhaps in part due to the large sums of money that can be involved but also because they require some very particular and detailed attention to be paid to how parties in a dispute have organised their lives during their relationship, before and after the win.


In a recent case, known as Elford and Elford (http://www.austlii.edu.au/au/cases/cth/FamCAFC/2016/45.html), a Wife appealed orders that provided for her to, by and large, not receive the benefit of a lotto win that happened very early in the relationship.


Ordinarily, you might think that if a lotto ticket is bought by one person in a relationship and the winnings are received during the relationship then those funds should be put into the parties’ joint assets and simply divided.


This is not necessarily the case though.

In a case known as Zyk  and Zyk (1995) FLC 92-644, the Court said that it was preferable to approach the issue as one of “contribution” rather than as a “windfall”.

That is, the Court should look at how the ticket was purchased, how were the funds used to buy the ticket were sourced and were generally or otherwise used, and what happened with the winnings afterwards.

It should also look at how the parties’ relationship was structured at the time to determine their intentions.

Applying these principles, the Court in this case noted that the parties had kept their finances very  separate throughout their ten year marriage; they had separate accounts and kept no joint accounts; the Husband purchased the ticket from his money that was not mingled together with the Wife’s; that the parties did not ‘hand each other’ their pay at the end of each fortnight; and when the Husband received an inheritance during the relationship, he deposited that inheritance into his own account with the lotto winnings and kept the monies separate.

In total, the parties’ conduct seemed to demonstrate that they very much kept their finances their own and separate both at the time of the win, and afterwards.

The way the parties organised their affairs was so clearly separated that it does appear to be notably different to the majority of cases that family lawyers would see.

This justified the Husband receiving a very large recognition for his contribution of both his lotto winnings and the inheritance.

The Wife was provided with an Order that meant she received 10% of the total assets.

Missed in much of the online commentary about this case is that the Husband had also suffered a stroke some 12 months before the separation that left him blind, unable to drive or read and required kidney dialysis three times a week.

The case means that lawyers and parties should very carefully and realistically assess what actually happened in a relationship and not look to simply say that all of each other’s property is shared.

Our experienced family lawyers know the questions to ask you to keep you informed and up to date with these issues.

You can contact us on 03 9614 7111 or Melbourne@nevettford.com.au to discuss your situation.

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Know Your Deadlines – Property Division pursuant to the Family Law Act 1975

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:

• Hardship would be caused to a party to the relevant relationship or a child if leave were not granted; or
• If applying for an order for spousal maintenance, that at the end of the limitation period, the circumstances of the person applying were that the person applying would not have been able to support themselves without an income tested pension, allowance or benefit.

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.

Call us on 03 9614 711 or email Melbourne@nevettford.com.au.

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Combined Defacto and ‘Pre-nup’ Pre-Marriage Financial Agreements Determined to be Valid

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 call us on 03 9614 7111 or email Melbourne@nevettford.com.au

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Can Domestic Violence Increase My Family Law Property Settlement?

The short answer is yes.

In circumstances where the contributions of a party are made more “onerous” by the violence of the other party, the Courts may give more weight to that circumstance.

For example, if one party is subjected to verbal or physical abuse which causes difficulties for that party in carrying out their “role in the relationship”, this may be taken into account.  As well as being relevant to the party’s present health and their likely future employability, that party may get an extra portion of the property.

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Can you make a claim for property settlement if your de facto relationship is less than 2 years?

It is possible to make a claim for a property settlement for de facto couples (including same sex couples) even if the cohabitation is for less than 2 years.  You would need to have a child of the relationship or have made “substantial contributions” to any property of the parties.  You would also need to demonstrate that if the Court won’t allow your case to be heard, you would suffer serious injustice.

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How do I know if my relationship constitutes a 'De Facto Relationship'?

A 'de facto relationship' includes same sex partners and can exist if a partner is married to someone else or is in another de facto relationship. The relevant legislation defines partners as being in a de facto relationship if they are not married or related to each other, and having regard to all the circumstances of their relationship, living together on a genuine domestic basis.

Those circumstances may include:

·        the length of the relationship

·        the nature and extent of their common residence

·        whether a sexual relationship exists

·        degree of financial dependence and support

·        ownership, use and acquisition of property

·        degree of mutual commitment to a shared life

·        the care and support of children

·        reputation and public aspects of the relationship

·        whether the relationship was registered in a State or Territory.

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