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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Husband’s Business Suddenly Gains Value Post Settlement – What’s a Wife to do?

$93 million dollars! The Age today made headlines with this splashy article about an-going legal battle that was brought before the Family Court of Australia. The parties have been given the pseudonyms of Mr and Ms Wills, and you can read their case here http://www.austlii.edu.au/au/cases/cth/FamCA/2017/183.html

In this case, the parties were married for 35 years before they split. On 27 April 2015, their property dispute was finalised where the wife received a division of assets worth $15 million. The Wife has then filed an application for this agreement to be disregarded, claiming that the Husband had failed to disclose relevant information relating to an interest in a business which later resulted in him receiving $93 million.

As it appears to have turned out, on 1 May 2015 the Husband was said to have “determined to take the initial steps to the making of an Initial Public Offering (IPO)” for the business. Their property dispute was finalised on 27 April 2015.

Having not seen the full details of the case, it is hard to say exactly who said what, knew what and when, and so we cannot comment definitely on what will happen. But there may be some value in looking at cases where the property ‘pool’ consisted mainly of lottery winnings (bought by the husband), as in the case of Elford v Elford [2016] Fam CAFC.

In Elford the Appeal Judge upheld the trial judge’s decision that the winnings were not a joint endeavour but rather recognised that the husband made the sole contribution to the winnings – therefore dismissing the wife’s appeal to a greater share in the property pool.

The question then is whether the wife receives any entitlement to the $93 million.

Only an experienced lawyer such as one from our family law team would be able to navigate you through complex scenarios such as the above – we are contactable on 03 9614 7111 or otherwise out of office hours on melbourne@nevettford.com.au

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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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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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Protect Your Family’s Investment

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. Our number is 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au

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ChildSupportman v SpousalMaintenanceman: Dawn of Justice?

Child support and spousal maintenance in Australia are two very different things and are administered in two very different ways.

Surprisingly to some lawyers, many people do not understand the reason for the distinction between the two types of payments may arise or that they are even separate things .

 

Child support is usually based on a formula and assessment made by the Commonwealth Department of Human Services (formerly the Child Support Agency).

This formula is based on incomes, nights of care and the number of children subject to the assessment; the obligation to pay child support arises from an acknowledgement, whether through a DNA test or simply agreeing, that a party is a biological parent to a child.

The amount is assessed and can be collected by DHS through regular voluntary payments, by garnishing wages from your employer, or in some cases by taking stricter enforcement action against bank accounts.

The payments then get sent to the other parent who has been assessed as requiring the child support and will last until a child turns 18 years old or finishes their last year of high school.

The family law courts usually do not apply except in circumstances where people make applications, often very costly in comparison to the cost of any assessed amount, for an order to vary the child support amount for one reason or another.

 

People can also enter child support agreements of varying types that allow the parties to either pay more child support (and direct those payments towards schooling , health, extra-curricular activities and the like), less child support or to pay lump sums to avoid having ongoing obligations.

These types of agreements are sometimes made as part of a parenting dispute between parties or as part of a property settlement in order to provide some ongoing assistance when that assistance is to be directed towards children directly rather than through their parent.

 

Spousal maintenance is a term for a few types of payments that somebody can agree to pay, or a family law court can order for parties who are engaged in a property settlement.

These are payments that are calculated looking at a person’s income and expenses, seeing if their legitimate expenses are higher than their income, and then examining their former partner’s income and expenses.

If the former partner’s income exceeds their legitimate expenses they may have ‘capacity’ to pay and may be required to do so.

The purpose of these payments is usually to assist the person with the ‘need’ to get back on their feet or to be able to live in a lifestyle to which they have reasonably become accustomed as a result of the other person’s actions.

Usually these payments are made only during proceedings / while a dispute is ongoing and are often ‘capitalised’ as a lump sum in a final settlement.

 

Internationally there are differing attitudes towards spousal maintenance or ‘alimony’ and whether these payments should be ongoing  and this may effect where you might start Court proceedings.

 

There are important differences between child support and spousal maintenance that may not be clear to people entering the family law system, and that lawyers may not realise they need to explain to their clients. 

If you would like more information, call our expert team on 03 9614 7111 or Melbourne@nevettford.com.au to discuss your situation.

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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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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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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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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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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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