Would you sign a prenup if your fiance threatened to cancel the wedding?

Binding Financial Agreements (BFA’s) or prenups as they are commonly known are meant to be voluntary, and each party must enter into the agreement of their own free will, and not because they have been pressured into it by the other party.  The High Court will consider the issue of “duress” in the matter of Kennedy & Thorne [2016] FamCAFC 189 where Ms Thorne claims she was forced to sign the binding financial agreement — because her husband-to-be, “Mr Kennedy”, said he would cancel the wedding if she refused.  Her legal team argues that this meant she was “under duress”, and that the agreement should therefore be declared void by the court.

Mr Kennedy was a divorced, 67-year-old property developer worth between $18 million and $24 million, while Ms Thorne was half his age with no assets.   They met on a dating site and he organised to fly to her home country in the Middle East to meet in person, promising to marry her if they hit it off.  After a four-year marriage, she is contesting a BFA she signed on the eve of the wedding, which left her with just $50,000 of his fortune and she is now seeking a bigger slice of his wealth.

The High Court will examine the question of whether threatening to “cancel the caterers” amounted to “unlawful duress”.  Mr Kennedy has passed away while the trial was part heard and the case will be carried on by the husband’s estate.  The estate, it seems will counter that Ms Thorne willingly signed the agreement after obtaining independent legal advice, and was not concerned at the time about the amount of money she would be left with if the marriage ended. 

The High Court is due to hear the appeal on 8 August and will need to clarify issues around duress, undue influence and unconscionable conduct.

If your married, intending to marry, in a de-facto relationship, have assets or have been gifted an inheritance then it could be time to think about a BFA.  However please ensure that if you are considering if you want to have a BFA, don’t leave it until the day or two before the wedding, and don’t threaten to call the whole thing off if your beloved doesn’t sign. 

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Be careful what you pay for – creating a pattern of dependence

People will often consult a family lawyer after a separation and be struggling as a result of now having to pay for two separate households, having become used to having to support one household for many years. Parties’ expenditure may have expanded during a relationship given the savings they were making in only running one household, meaning that post-separation the weekly budget becomes very strained.

It is important then to carefully consider what you do and don’t pay for post-separation, as this will likely become the position you have to keep up until there is a final settlement. If you start paying for the mortgage as well as for your rent in new premises, then you will have to convince a Court carefully and with proper detail of a very significant change in your financial circumstances. You will need to explain why you no longer have capacity to pay this amount in order to avoid having to continue with this arrangement for what is effectively “spousal maintenance” whilst proceedings continue. The recent case of Hogan & Orwell (http://www.austlii.edu.au/au/cases/cth/FamCA/2016/505.html) reviewed the party’s finances from the perspective of a spousal maintenance application and the Husband in that situation was required to continue with mortgage payments. The Husband had increased his credit card liability by about $35,000 but had produced no explanation for why this had increased by such a large amount.

This cost can become overwhelming for people, and if decisions are not made very carefully, you can be locked in to paying for two properties for a considerable period of time, particularly if litigation takes a long time to sort out. This is one of the many factors your sensible family lawyer should advise you about in considering how to run your case. Call us for more information or send us an email if you would like to discuss your situation in a confidential free initial assessment.

http://nffamilylawyers.blogspot.com/2017/05/be-careful-what-you-pay-for-creating.html

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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 brining 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.

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Two asset pools might not be better than one

Most family law property matters approach the division of parties’ assets by adding everything together into one ‘pool’ of assets and then dividing up the total value of that pool. However in certain circumstances, a Court may take a different approach where the facts support departing from the usual system.

One such case was the matter of Arthur and Arthur (http://www.austlii.edu.au/au/cases/cth/FamCA/2016/324.htm) , decided by Judge Rees in Sydney in May 2016. In that case, Ms Arthur was due to receive a sizeable - $535,000 – inheritance from her mother’s estate, her mother having passed away after the Arthurs’ marriage had broken down. The rest of the assets totalled approximately $800,000, meaning that this inheritance would have been a very significant factor in working out each party’s contributions, if it was included.

 

However Judge Rees determined that the inheritance should be kept separately and that Ms Arthur would be considered to have contributed 100% to that pool of assets, and that she should simply keep the inheritance. This was a practical way to deal with the matter, but had the effect of producing a note-worthy result in the rest of the assets.

 

Mr Arthur’s family had provided significant support to the parties during their relationship, transferring as much as 75% of a house to them without really expecting any payment back. In addition, the parties were allowed to live rent-free in the property for many years even though it was owned by family members of Mr Arthur.

 

Mr Arthur earnt significantly more than Ms Arthur, who had significant obligations as a carer and whose employment prospects were uncertain. Nevertheless, Mr Arthur received 80% of the non-inheritance asset pool. This is a high percentage of assets on a pool of this size, and Ms Arthur did not receive a larger percentage because she was going to have the benefit of the very large inheritance she had received and was going to retain, meaning the inheritance was a double-edged sword for her.

 

What does this mean for parties contemplating a separation? Look after your parents!

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Superannuation – Cap and Trade

The federal government in its May 2016 Budget indicated that it intended to make changes to the superannuation system that would limit the amount of contributions people would be able to make above and beyond their compulsory employer contribution, which may affect those engaging in a family law property settlement.

 

The proposed change highlights the difficulty that separated parties may have in re-earning superannuation post-separation.

This is particularly the case where one party decides not to take any superannuation so that they can retain another item, for example the family home. 

 

It is important to note however that the family law system has taken some pre-emptive action in this regard a number of years ago.

Cases that go to Court and are decided by a Judge will now often have superannuation earnt during a relationship split between parties.

This has the effect of ensuring that both parties are put in a position where they can save for retirement, even if it means some short term difficulty with property.

 

With that said, it is still entirely possible for parties to organise and come to an agreement between themselves to arrange their assets how they like.

The government’s proposed changes to how superannuation work should be fully considered by your family lawyer and incorporated into your family law settlement.

You can call our experienced lawyers to discuss your situation and whether you might be affected by the changes on 03 9614 7111.

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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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How do you divide property when a relationship breaks down? Consider the family law four step!

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?

1. Identify your assets, liabilities and superannuation as at present. This is commonly called the ‘asset pool’
2. Identify what contributions were made into the relationship, including both financial and non-financial contributions. This will mean knowing what you had at the beginning, what you had at the end, and how you got between those points.
3. Identify what your and your partner’s future needs are – whether they relate to income disparity, care of children, ill-health and medical costs, or your age.
4. Determine whether it is just and equitable to proceed with any alteration of your existing legal rights at all, as well as whether the final result as determined by the above 3 steps results in an outcome that is just and equitable and also practical.

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.

Call our family law team on 03 9614 7111 or email Melbourne@nevettford.com.au.

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Interstate Relocation

What do I need to do if I want to move interstate with my children? Communicate your intention, communicate your reasons, focus on the benefit to your children and get permission to relocate to avoid being dragged back interstate. Most importantly, speak to a good lawyer before you do anything. Call Richard Hamilton at Nevett Ford Lawyers on 03 9614 711 or email Melbourne@nevettford.com.au for more information or 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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The Small Business Family Law Dilemma

Clients with small businesses often find themselves gobsmacked at the approach that the family law courts may take in relation to their business. A valuer will regularly be appointed at significant expense and that valuer will place an astronomical value on a business that the client has no ability to sell, leaving them with a fixed asset of paper-worth but little by way of realisable value.

 

The situation that may result is a difficult one for many small business owners to face – that they will be left with just their personal-services business whilst their former spouse will keep the whole of a house and a significant proportion of their superannuation to boot.

 

Clients on the other side of this equation will often not appreciate the precariousness of a valuation that may come falling apart, or indeed how a business owner might readily lower their business incomes dramatically to avoid a genuine valuation of the business occurring. Recent developments in the law regarding how ‘add-backs’ are considered mean that this becomes a particular risk for parties to family law disputes.

 

Not even considered in this situation yet is the impact such a valuation, or the forensic accounting exercise undertaken to get to a valuation, may have on the business partner(s) of a person undergoing a family law property division.

 

Judicious and early advice is the best answer to help you deal with the complex web of outcomes in such a situation, whether you operate the business or are the former spouse of such a person.

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Why Hire a Family Lawyer?

Why Hire a Family Lawyer?

Many people balk at the idea of hiring a family lawyer for a variety of reasons, including the cost of the exercise, and the feeling that they do not want to invite a stranger into the most intimate details of their lives. The Court has made services accessible to the public at large that helps to foster peoples’ easy and cost effective access to justice including:

• All Court forms being readily accessible online, with how-to guides for popular documents
• Providing ‘duty lawyer’ services at Court so that individuals can access basic advice even on their Court date
• Providing significant accommodation, time and patience to parties who are ‘self-representing’ when they are in front of a Judge

All a lawyer seems to do to most people is to manipulate words, and if you can speak, so the logic goes, you can be your own lawyer. There are fewer people who feel the same way however about accessing other professionals, and few are game enough to do their own plumbing or service their own car, despite the arguably ‘higher stakes’ involved in a bitter family law dispute. In short, investment in a lawyer for your family law matter has a significant number of advantages:

• Getting forms and documents ‘right’ the first time
• Knowing what is going to help, and what is going to hinder you
• Knowing from an early stage what the likely range of outcomes for your matter is going to be
• Accessing expert and experienced strategic advice in relation to your matter, and with the best law firms, expert advice on how various Judges, Courts, Registrars and Registries will react to certain issues
• Having an expert who is suitably objective to provide you with ‘reality testing’ at every step of the process

Hiring a lawyer does not have to be an all-or-nothing approach either; many law firms are now offering packaged work or strategic intervention, to assist you for example with finalising documents in preparation for trial, simply appearing for you and avoiding the cost of back-and-forth in letters, or reviewing your situation early so that you can negotiate an outcome directly with your former partner. We offer these types of services and encourage you to contact us to discuss your situation today.

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Parenting post-separation – don’t become a victim to statistics

The Australian Institute of Family Studies (AIFS) recently released research which showed that only 6% of children under 17 spent equal time with both mother and father. Yet regularly family lawyers will be regularly instructed to seek an equal shared care arrangement, or what many clients refer to as ‘shared custody’. Why doesn’t this frequent desire of separated parents often materialise in reality?

There are a variety of factors that the Family Law Act (Cth) 1975 requires be considered in making Orders concerning parenting arrangements, and a good family lawyer will advise their client of these factors early on in their consultation, including the paramount consideration of the best interests of the children. It is frequently not seen to be any easy experience for children, already dealing with the difficulty of mum and dad living in separate houses, to have to live out of a suitcase on a week-on week-off arrangement. Our lawyers are experts at identifying what issues preclude an equal shared arrangement early on, so that you can ensure that your situation is appropriately managed and directed so that you improve you can get the result you are seeking. 

One more issue to come out of AIFS’ research however should be kept in mind – half of children of relationships that have broken down do not spend any overnight time at their non-resident parents’ home. By even taking the step of seeking and maintaining regular time with your children, you will be significantly shifting the odds in your favour. Call our office today to seek advice on how best to progress your situation.

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How do you proceed with a divorce if you do not know where your spouse is?

You can still proceed with your Divorce application but you need to obtain an Order from the Court for “substituted service or dispensation of service”.

An Order for substituted service permits you to serve the Divorce documents on a third person who the Court is satisfied will bring the divorce documents to the attention of your spouse. 

An Order for dispensation of service gives your permission not to serve the Court documents on your spouse if the Court is satisfied that you have taken all reasonable steps to locate your spouse. 

An affidavit is required by you setting out the steps you have taken to locate your spouse.

For further assistance in preparing the affidavit, please contact the Family Law Team at Nevett Ford Lawyers on 03 9614 7111.

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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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I want a divorce but I don’t know where my husband/wife is.

In Australia, you do not need the consent of your husband or wife to obtain a divorce. To obtain a divorce order you need to prove:

1.    You and your spouse are married.

2.    You and your spouse have been separated for at least 12 months.

3.    There are adequate care arrangements in place for any children of the marriage.

4.    If you and your spouse were married for less than 2 years at the time of applying for a divorce, that you have a counselling certificate from an approved counsellor or permission of the court to apply for a divorce.

5.    If you and your spouse were married overseas, that at least one of you is an Australia citizen or ordinarily lives in Australia and has done so for 12 months immediately before applying for a divorce or regards Australia as your home and intend to live indefinitely in Australia as a citizen or resident.

If you do not have the consent of your husband or wife to apply for a divorce, you can file your own application, also known as Sole Application. Once the Sole Application has been filed at Court, ordinarily you would need to serve it on your spouse at least 28 days prior to the date of the divorce hearing (or 42 days if your spouse was overseas at the time of service).

If you do not know the whereabouts of your spouse and you have made reasonable attempts to contact your spouse at his or her last known address, telephone number or email, then you may apply to the Court to do away with the service requirement. As the application process can be quite technical, we suggest you contact a lawyer who specialises in Family and Relationships Law for specific advice. At Nevett Ford, we have two Accredited Specialists in Family Law, Annmarie Farrell and Elizabeth Hall.

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