Archive for the ‘Family Law’ Category

Ex-de factos & your Will – Isn’t a property settlement enough?

The incidence of de facto relationships has been increasing for some time, and that trend is likely to continue. Since 2009, the legal regime for property settlement has been the same whether the separating couple had been married or living in a de facto relationship. However, the law doesn’t always treat married and de facto couples the same. The law relating to what happens to your assets after you die is one area where there are some differences.

This article explores what might happen if a de facto couple made Wills during their relationship leaving their assets to each other, then, as often happens, were forgotten and unchanged after the relationship ended.

Isn’t your property settlement enough?

Many people think that once they have divided up their assets, neither partner could have a financial claim on the other in the future (except, of course, for child support if that is relevant). Some people also think that, because they weren’t married, their ex-de facto has no future financial claim. Those assumptions aren’t always correct.

The laws dealing with Wills and inheritances are completely distinct from those relating to division of assets after a relationship breakdown. A family law property settlement does not change someone’s Will, nor can it necessarily prevent someone receiving a gift left to them in their ex-partner’s Will.

So, can your ex-de facto inherit?

The answer to this question will depend on factors such as whether you had a Will, what were its terms, how long you lived together, whether you and your partner had joint children, and any financial support being provided by the deceased to the former partner. The answer may also depend on where you live.

According to a recent Western Australian case, Blyth v Wilken, another relevant factor could be the precise words you used to refer to your ex-de facto in your Will.

That case dealt with a Will in which the deceased left his assets to his now ex-de facto, with the parties having separated three years before the deceased’s death. The Will, made when the couple was living together, left the deceased’s estate to “my de facto wife Kathrine”.

The Court placed considerable importance on the words “my de facto wife Kathrine”, and decided that the deceased didn’t merely intend to benefit Kathrine; he intended to benefit Kathrine because she was his de facto wife. Accordingly, the Court concluded that the deceased would not have wanted Kathrine to benefit from his estate as she was no longer his de facto wife at the time of his death.

Would different words have made a difference?

As the decision in this case depended on the use of the words “my de facto wife Kathrine”, the outcome may have been different if the Will had merely referred to Kathrine by name, without also describing her as “my de facto wife”. That is, despite separating from the deceased years before he died and regardless of whether she had also received a property settlement, Kathrine could have received her former partner’s estate.

Some words of caution

The case of Blyth v Wilken is only one decision of a single Master (not a Judge). The decision is not binding and a Court could come to a different decision on similar facts. Hence, a reference in your Will to “my de facto partner such and such” will not necessarily guarantee that that person will not benefit from your estate in the event that your relationship ends before your death.

In NSW, Victoria, South Australia, Western Australia and the Northern Territory separating from your de facto partner will not change your Will and any gift in your Will to your ex-de facto could still be valid, despite the fact that you have separated and divided up your assets. In the ACT, Tasmania and Queensland, termination of a registered de facto relationship will revoke any gift in your Will to your ex-de facto partner. However, this only applies to registered relationships and registered terminations of them; and in the ACT it only applies to registered same sex relationships.

Depending on the State or Territory in which you live, you may also need to be wary of ex-partners making a claim for financial provision from your estate, even if you have changed your Will and had a property settlement. In general terms, in NSW, Tasmania, Western Australia and the Northern Territory your former de facto could make a claim on your estate if he or she was being maintained by you at the time of your death. Similar provisions apply in Queensland if your ex-partner is also the parent of your minor child. In Victoria, the entitlement to make such a claim is dependent on you and your ex-de facto not having finalised a property settlement by the time of your death.

The ACT and South Australia represent the two extremes. In the ACT, any ex-de facto from a relationship exceeding two years could be entitled to extra provision from your estate, regardless of whether or not he or she was dependant on you at the time of your death. However, the Court will take into account the terms of any post-separation property settlement. In South Australia, on the other hand, ex-de facto partners are not entitled to make such a claim at all.

Conclusion

Regardless of where in Australia you live, if you are going through a relationship breakdown, always speak with your family lawyer about what might happen if you or your former partner dies, even after you have completed your property settlement. It is important to review, and if necessary change, the terms of your Will as soon as possible after the ending of any relationship. In addition, in NSW your family lawyer could assist you to apply to the Supreme Court for approval of an agreement between you and your former partner that neither of you will make a claim on the other’s estate after the other’s death.

If you or someone you know wants more information or needs help or advice, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.

Was it a loan or a gift? – Big difference!

Housing affordability is a big issue for young Australians. When discussing that issue recently, the Prime Minister infamously remarked that the solution is for parents to “shell out” to help their children buy a home. For those lucky enough to have parents able to assist them financially in adulthood, whether by helping them into the property market or otherwise, could that “solution” be creating more problems than it solves?

How might that money be treated if the recipient separates from his or her spouse or de facto? Almost certainly, the parents who had “shelled out” to help their adult child won’t want the child’s now ex-partner to benefit from or keep some of that money.

Family law property settlement – the basics

The Family Law Act sets out the steps that must be followed to divide up a separating couple’s property. If it is considered necessary to alter the legal ownership of the parties’ property in order to reach a just and equitable property division, then all of the parties’ assets and liabilities, whether owned jointly or separately, must be identified and valued.

One then assesses each party’s financial and non-financial contributions to the acquisition of those net assets and to the welfare of the couple or family unit, before, during and after the relationship. Having determined respective contributions, the parties’ future needs are compared and taken into account, in order to reach a just and equitable property settlement.

Was it a loan?

If money had been received by one or both parties from parents, for example, the first question that must be answered is whether that financial assistance was a loan or a gift. When the recipient’s relationship breaks down, he/ she will almost always want to argue that the money he/ she received from his/ her parents was a loan. The ex-partner will, in turn, want to argue it was a gift. How do you tell which it was?

The say so of the recipient child and his/ her parents will not necessarily be enough to convince the Court that the money was a loan. The Court will have regard to all of the evidence surrounding the “giving” and receipt of the money, such as:

  • Conversations between the child, the ex-partner and the parents
  • Any relevant documents. For example, did the parents record the transaction in their bank account as something like “Loan to John/ Jane”? Perhaps one of the parties kept a spreadsheet of monies received entitled “Loan from mum & dad”
  • Were any repayments made?
  • A formal loan agreement would be the best evidence in trying to resolve this question.

Unfortunately, when money and families become intertwined, things have a remarkable propensity for becoming messy. Notwithstanding that, it is equally unfortunate that few people take the trouble to properly document loans between family members. The lack of clear documentation can turn a messy situation into an ugly one.

If it was a gift, to whom was it given?

Having successfully argued that money received from the ex-partner’s parents was a gift not a loan, that person may now want to argue that the money was gifted to both parties, not just the parents’ child. He or she might bring evidence of conversations where the parents said things such as “We want you both to have this money because we’re all family now”. Or she or he might claim that the money was given in recognition of, for example, the care provided by a child-in-law to her/ his parents-in-law.

While the Court will take into account all of the relevant evidence and each case will turn on its own facts, it is usually the case that the Court would find that money gifted by parents was a gift to their child, not to the parties jointly.

How is this relevant to a property settlement?

The characterisation of whether money received from a parent or someone else was a loan or a gift could be very important to a property settlement, especially if large sums are involved.

Firstly, the money would be taken into account when ascertaining the parties’ assets and liabilities. If the money was a loan, that will be a liability of the parties, reducing the net assets to be divided between them. Legally, there would be an expectation that the loan would be repaid; however, in practice, the lending parents often allow, even want, their child to keep the loan money after the property settlement is finalised, providing a windfall to that person.

If the money was a gift, then it, or whatever had been purchased with it, would form part of the parties’ net assets available for distribution between them.

However, it doesn’t end there. The money would be taken into account in determining each party’s contributions. If the money was a loan, it may have little or no impact on the Court’s determination of who contributed what. Although, the recipient of the loan could be given credit for having contributed the benefit of, for example, a low- or no-interest loan.

If the money was a gift, then, except in the unusual circumstances of the Court finding that it was a gift to both parties, it will be treated as a financial contribution by the party whose parents gifted the money. Factors such as how long ago the money was received and the size of the gift compared to the parties’ overall net asset pool will decide the extent of the gift’s impact on the final determination of the parties’ respective contributions. The larger and more recent the gift, the greater impact it will have on the recipient’s percentage contributions.

Conclusion

Whether money received by a couple from parents or others is properly characterised as a loan or a gift could have a considerable effect on the separating couple’s final property settlement. People’s memories can fade, even change, over time, and it can later be difficult to determine if the money was intended as a gift to one or both parties or a loan requiring repayment.

If parents want to take the Prime Minister’s advice and “shell out” to help their children into the property market, those parents should think carefully about whether they intend to gift or lend the money, and should seek advice about the pros and cons of those options and the proper documenting of any loan.

If you or someone you know wants more information or needs help or advice, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.

Does a Pre-Nup have to be fair?

It is now more than 10 years since the Family Law Act was changed to allow Australians to enter into pre-nuptial agreements (known as Financial Agreements or Binding Financial Agreements).

Under the Act, the Court does not have to approve a Financial Agreement for it to be binding. That is, the Family Law Act allows parties to enter into a bad or grossly unfair pre-nuptial or other sort of Financial Agreement. However, that does not necessarily mean that all Financial Agreements will necessarily be binding.

The Court’s attitude to BFAs

There is a widely held belief among family lawyers that the Family Court judges were not happy that the Family Law Act was changed to allow people to enter into pre-nuptial style agreements without the Court’s oversight. Throughout the last decade or so, the Court has used various technical legal difficulties to find that certain Financial Agreements were not binding, even though the Agreements had been signed by the husband and the wife, both of whom had received independent legal advice.

The government then changed the law again, to make it more difficult for judges to rely on legal technicalities to overturn a Financial Agreement. But some judges were still not happy that they couldn’t impose their version of fairness on an Agreement the parties had made.

Pre-Agreement conduct

Having been thwarted in their efforts to overturn Financial Agreements on the basis of legal technicalities, some judges started to turn their attention to the conduct of the parties prior to entering into the Agreement, in an attempt to find a way to undo a Financial Agreement that the judge didn’t think was fair.

That is what occurred in the first instance hearing in a case called Saintclaire & Saintclaire. In her Judgment, the trial judge expressed her view that there was “no doubt that [the] transaction should not have proceeded”, because of her view of its perceived unfairness to the wife.

However, as the Act does not allow the Court to overturn a Financial Agreement just because the judge considers it to be unfavourable to one party, her Honour had to find another way to undo the Agreement the parties had signed. To do that, she turned to the law of undue influence and unconscionable conduct.

The facts of the case

The parties, then aged in their mid – to late-thirties, moved in together in 2005 or 2006. They were both educated professionals, earning good incomes. They had two children, born in late 2006 and early 2008. The wife suffered some post-natal depression after the children’s births; which had resolved by about October 2008. The parties were otherwise in good health.

In 2007, they entered into a de facto relationship agreement, by which they each agreed to make no claim on the other party for property settlement or “spouse” maintenance in the event their relationship ended.

Sometime later, the parties decided to marry. They agreed to enter into a pre-nuptial agreement on essentially the same terms as their de facto relationship agreement. Through their lawyers, they commenced negotiations for that agreement in March 2009. They married the following month, without having finalised or signed their pre-nuptial agreement.

Negotiations for the now post-nuptial agreement re-commenced in June 2009 and continued for the succeeding four months, during which time the husband agreed to various amendments to the agreement proposed by and beneficial to the wife.

One of those amendments required the husband to pay $100,000 to the wife so that she could discharge her credit card debts, of which the husband had previously been unaware. The Financial Agreement was ultimately signed in late September 2009.

Sadly, the parties separated less than 12 months later. By then, the wife’s financial circumstances had worsened and she wanted to get out of the Financial Agreement.

The trial judge’s decision

At first instance, the wife argued that as a result of her post-natal depression, the husband’s violence and the wife’s difficult financial circumstances, the Agreement should be set aside on the basis of either undue influence or unconscionable conduct. The trial judge agreed, notwithstanding that the post-natal depression had resolved itself 11 months before the Agreement was signed, the husband’s alleged violence consisted of two disputed incidents some eleven and five months prior to the signing of the Agreement, and the wife, herself a financial planner, was the author of her own financial difficulties.

In agreeing with the wife, it seems that the trial judge was swayed more by her view of the unfairness of the Agreement than by the law of unconscionability and undue influence.

The Appeal Court’s decision

The Appeal Court disagreed with the trial judge. It found that she had been confused and mistaken as to the law relating to undue influence and unconscionable conduct. Specifically, the Appeal Court reiterated that the Family Law Act allows parties to enter into Financial Agreements which will be binding, notwithstanding that the Agreement might seem to be unfair or unjust to one of the parties.

Conclusion

It is clear from both the Family Law Act and the Appeal Court’s decision in Saintclaire & Saintclaire that a Financial Agreement can be binding on both parties, even if one of them or the Court thinks it is unfair. While there may be other avenues available to a party to try to get out of a Financial Agreement that he or she has signed, the perceived unfairness of that Agreement is not, of itself, a good enough reason. This applies to all Financial Agreements, whether entered into before, during or after a marriage or de facto relationship.

If you or someone you know wants more information or needs help or advice, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.

Social media and family law – Just don’t do it !!!

Social media – Facebook, Instagram, Twitter, Snapchat and the like – can be a lot of fun and have become an accepted part of modern life.  Many of us use such forms of electronic communication to share the exciting, as well as the banal events in our lives, to express our views and to stay in touch with loved ones.  But what happens when people going through a relationship breakdown take to social media?  Usually little good comes of it, and sometimes quite a lot of bad can result.

 

Social media as evidence

If you are going through a separation, you should expect your former partner, their lawyer or the children’s lawyer to search social media to see if they can find out anything damaging about you that could be used as evidence. For example, if you are involved in a financial dispute and might be claiming that you cannot afford to pay spouse maintenance or increased child support, it would probably not be a good idea to share on Instagram photos of your latest holiday or new car.

Similarly, when involved in a parenting dispute, you would be wise not to post to Facebook about your latest “big night out”, especially if the children were in your care at that time.

When making a decision about where children are to live and with whom they are to spend time, the Court can take into account the ability of the parents to communicate and cooperate with one another.  So, it is not likely to be helpful if the Court is shown evidence of abusive or derogatory posts you have made on social media about your former partner.

Of course, many people have social media privacy settings which limit the information that can be seen by non-“friends”. If you haven’t set your social media privacy in that way, you would be wise to do that while you’re sorting out the issues arising from your relationship breakdown. However, even with tight privacy settings, it’s still better to be very careful about what you post, or just don’t do it at all.

 

Social media and prosecution

The law prohibits the publication, including by electronic means, of information relating to family law proceedings which identifies the parties involved, people associated with those parties or any witnesses. Anyone who breaches that rule is guilty of an offence, the maximum penalty for which is 12 months imprisonment.

That prohibition has not prevented some people involved in family law proceedings from using social media as a weapon against their former partner, by carrying out a campaign of cyber-bullying against their former partner, his or her lawyers, the children’s lawyers and the judicial officers involved in the case.

In two recent cases involving such unlawful social media publication, the Court focused primarily on two things.

Firstly, the Court invoked its child protection jurisdiction and concerned itself with the harm that might befall the children if, as a result of social media publication of information relating to family law proceedings, members of the public could identify the children involved, such that the children might then be exposed to ridicule, curiosity or notoriety.

Secondly, the Court considers it in the public interest to preserve public perception of the integrity and impartiality of the Courts and judicial system, which some litigants have used social media to attack.

In both cases, the Judges commented on the difference between unlawful publication of information about family law proceedings in a one off newspaper article, for example, and publication on the internet, which is and remains available for quick and easy access by anyone, anywhere, at any time.

In one of those cases the offending parent was ordered to remove all references to the parties and the proceedings from the website he or his family had set up to cyber-bully the mother and to expose the lawyers and judges involved in the case as “corrupt”. In addition, the Court ordered the Federal Police to investigate whether the father had committed an indictable offence.

Similar orders were made in the other case in which the offending party, again the father, had used Facebook to denigrate the mother and her lawyers, the Court, the Department of Community Services and the children’s lawyer.

 

Can social media be good?

The cases referred to above involved ongoing bitterness and acrimony between the separated couple. Happily, that isn’t always the case, and some separating parents can respectfully communicate and cooperate with each other for the benefit of their children. In such a situation, tech savvy parents may find a way to use electronic communication or social media to their mutual advantage, for example privately sharing necessary information about the children and their activities.

 

Conclusion

Unless you and your former partner can find a way to privately use electronic communication to help you co-parent your children after separation, the general guideline when it comes to social media and family law disputes is just don’t do it.

Not only would you not want to find your Facebook posts being used as evidence against you in court proceedings, you could even expose yourself to prosecution by the Federal Police for breaching the law against publication of information relating to family law proceedings.

If you or someone you know wants more information or needs help or advice, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.

Ex-de factos & your Will – Isn’t a property settlement enough?

ex-defacto-and-willEx-de factos & your Will – Isn’t a property settlement enough?

 

The incidence of de facto relationships has been increasing for some time, and that trend is likely to continue. Since 2009, the legal regime for property settlement has been the same whether the separating couple had been married or living in a de facto relationship. However, the law doesn’t always treat married and de facto couples the same. The law relating to what happens to your assets after you die is one area where there are some differences.

This article explores what might happen if a de facto couple made Wills during their relationship leaving their assets to each other, then, as often happens, were forgotten and unchanged after the relationship ended.

Isn’t your property settlement enough?

Many people think that once they have divided up their assets, neither partner could have a financial claim on the other in the future (except, of course, for child support if that is relevant). Some people also think that, because they weren’t married, their ex-de facto has no future financial claim. Those assumptions aren’t always correct.

The laws dealing with Wills and inheritances are completely distinct from those relating to division of assets after a relationship breakdown. A family law property settlement does not change someone’s Will, nor can it necessarily prevent someone receiving a gift left to them in their ex-partner’s Will.

So, can your ex-de facto inherit?

The answer to this question will depend on factors such as whether you had a Will, what were its terms, how long you lived together, whether you and your partner had joint children, and any financial support being provided by the deceased to the former partner. The answer may also depend on where you live.

According to a recent Western Australian case, Blyth v Wilken, another relevant factor could be the precise words you used to refer to your ex-de facto in your Will.

That case dealt with a Will in which the deceased left his assets to his now ex-de facto, with the parties having separated three years before the deceased’s death. The Will, made when the couple was living together, left the deceased’s estate to “my de facto wife Kathrine”.

The Court placed considerable importance on the words “my de facto wife Kathrine”, and decided that the deceased didn’t merely intend to benefit Kathrine; he intended to benefit Kathrine because she was his de facto wife. Accordingly, the Court concluded that the deceased would not have wanted Kathrine to benefit from his estate as she was no longer his de facto wife at the time of his death.

Would different words have made a difference?

As the decision in this case depended on the use of the words “my de facto wife Kathrine”, the outcome may have been different if the Will had merely referred to Kathrine by name, without also describing her as “my de facto wife”. That is, despite separating from the deceased years before he died and regardless of whether she had also received a property settlement, Kathrine could have received her former partner’s estate.

Some words of caution

The case of Blyth v Wilken is only one decision of a single Master (not a Judge). The decision is not binding and a Court could come to a different decision on similar facts. Hence, a reference in your Will to “my de facto partner such and such” will not necessarily guarantee that that person will not benefit from your estate in the event that your relationship ends before your death.

In NSW, Victoria, South Australia, Western Australia and the Northern Territory separating from your de facto partner will not change your Will and any gift in your Will to your ex-de facto could still be valid, despite the fact that you have separated and divided up your assets. In the ACT, Tasmania and Queensland, termination of a registered de facto relationship will revoke any gift in your Will to your ex-de facto partner. However, this only applies to registered relationships and registered terminations of them; and in the ACT it only applies to registered same sex relationships.

Depending on the State or Territory in which you live, you may also need to be wary of ex-partners making a claim for financial provision from your estate, even if you have changed your Will and had a property settlement. In general terms, in NSW, Tasmania, Western Australia and the Northern Territory your former de facto could make a claim on your estate if he or she was being maintained by you at the time of your death. Similar provisions apply in Queensland if your ex-partner is also the parent of your minor child. In Victoria, the entitlement to make such a claim is dependant on you and your ex-de facto not having finalised a property settlement by the time of your death.

The ACT and South Australia represent the two extremes. In the ACT, any ex-de facto from a relationship exceeding two years could be entitled to extra provision from your estate, regardless of whether or not he or she was dependant on you at the time of your death. However, the Court will take into account the terms of any post-separation property settlement. In South Australia, on the other hand, ex-de facto partners are not entitled to make such a claim at all.

Conclusion

Regardless of where in Australia you live, if you are going through a relationship breakdown, always speak with your family lawyer about what might happen if you or your former partner dies, even after you have completed your property settlement. It is important to review, and if necessary change, the terms of your Will as soon as possible after the ending of any relationship. In addition, in NSW your family lawyer could assist you to apply to the Supreme Court for approval of an agreement between you and your former partner that neither of you will make a claim on the other’s estate after the other’s death.

If you or someone you know wants more information or needs help or advice, please contact us on 02 6372 3388 or email richard@richardwisesolicitor.com.au.

WHAT IS THE EFFECT OF DIVORCE?

Divorce breaks the legal bonds of marriage between a couple.

It does NOT deal with matters such as where the children will live, maintenance & the division of property. These are separate issues.

The only grounds for divorce is “irretrievable breakdown of the marriage”. The Court will not consider accusations of fault, such as having an affair.

The breakdown is considered to have occured when the couple have lived separately & apart for at least 12 months.

3 COMMON MISCONCEPTIONS ABOUT PROPERTY ENTITLEMENTS

  1. 1. There is an automatic 50-50 split after a marriage ends.
    Answer: No. The Court considers the contribution of each partner towards purchasing & improving assets as well as the needs of the partners, when deciding the percentage split.
  2. 2. If I leave I’ll lose my rights.
    Answer: No. Each partner during a marriage earns a share of the property & does not lose it if it is no longer possible to remain in the house eg for safety reasons.
  3. 3. I owned it before we got married so it’s mine.
    Answer: This depends on the length of the relationship. In a marriage that has lasted for, say, less than 5 years the original owner is more likely to keep that asset. The longer the marriage the less important pre-marriage ownership is.

At what age can children decide where they live?

There is no minimum age for a child to be able to express their view about where they want to live in a parenting dispute.

The Family Court decides how much weight it gives to a child’s view based on the child’s maturity and understanding and whether or not the child has been influenced.

For example, if a 9 year old boy shows high levels of maturity and understanding the Court may place great weight on his views.

If a 14 year old girl wants to live with her dad because he buys her presents, but mum has been the primary carer, a Court may assess her as being influenced by factors not in her best interests and give little weight to her wishes.

The child’s views are obtained through being interviewed by a Court consultant or a report writer. A family report is then prepared for the Court suggesting a parenting arrangement.