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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