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Shann Family Lawyers has now merged to form Culshaw Miller Lawyers Perth. Please click here to go to our new website. Read more about our property legal services here > Property lawyers Perth
Basic Principles
There is no law that parties must divide their assets equally after separation or any formula that gives one party or the other a certain percentage of the assets according to how long they have been married, how many children they have or any other single factor. There is no law that a wife receives half the property once parties have been together for over two years or that she will get an extra 10% for every child of the marriage. Everyone has heard a story about how someone received a certain percentage, so that is what is going to happen to them.
Every case will be treated on the basis of its own facts. Some facts are relevant, some are not.
Generally the law provides that all of the assets and liabilities of the parties be brought into account and a value placed on them – this is the net asset pool available for distribution.
Those assets and liabilities will be brought into account at the time of settlement – not the date of separation or any other date.
After defining the property pool and its value, there will be an assessment of each party’s contributions to determine how one pool of property will be divided (in percentage terms). One party may have brought in significant assets at the beginning or during the relationship or may have received an inheritance and these factors would be relevant in considering the level of contribution.
There then has to be an assessment as to whether one or the other party should receive more than this percentage because of their responsibilities for children under 18, their capacity for employment, income earning capacity, health and age, superannuation entitlements, the length of the marriage and several other factors.
Then finally you need to ask whether the proposed distribution is fair and equitable.
Matrimonial Property
Property is given a very wide definition in family law. As a general principle, matrimonial property is any asset (or liability) in either party’s name and in which they have an interest. It can also, in some circumstances, be an asset in someone else’s name where the party has control or entitlements.
Amendments to the Family Law Act in 2002 now provide that superannuation entitlements will be treated as matrimonial property. Accordingly, it is now possible to split or flag superannuation interests in favour of the non-member spouse. It is important to note that the de facto legislation does not include a provision for the splitting of superannuation.
Resolving Property Disputes
Property disputes can be resolved by negotiation and agreement between the parties to a marriage. However, that agreement, to be binding and enforceable in the Courts, should be committed to writing and filed (in the appropriate form) in the Family Court. There are a variety of ways in which an agreement can be finalised and registered including an Application for Consent Orders or by a Binding Financial Agreement.
There are also provisions under the Family Law Act to enable you to have property distribution settled by an arbitrator.
The alternatives to a registered negotiated settlement are to do nothing (and have little protection or ability to enforce an agreement) or have the matter determined by the Family Court.
Once a matter is before the Family Court you are still able to finalise a property distribution and end those proceedings by agreeing the terms of settlement and filing consent orders in the Court.
Information Required
Parties have an obligation to provide full and frank disclosure of all of relevant financial information when attempting to resolve property disputes – whether by way of agreement or by asking the Court to decide an appropriate division of property.
Relevant financial information is interpreted very widely and may include assets presently in your name as well as assets and liabilities you may have had and disposed of in the past and financial resources such as superannuation, damages claims, inheritances and interests in trusts and business entities.
If you do not provide full and frank disclosure of all relevant information it is possible that any agreement that has been reached or order made may be set aside at a later date. The same may apply if there has been fraud or duress in the course of arriving at a property settlement.
If you are in any doubt as to whether you should disclose particular information you should obtain legal advice.
Non-Disclosure of Information
If the other party does not cooperate in providing all of the relevant financial information you need to assess your entitlements you can make an application to the Family Court to seek an order for disclosure.
Generally a timetable will be put in place quite quickly for the provision of financial information and the other party will be required to file a Financial Statement early in the proceedings.
There may be urgent cases where you believe the other party is hiding or trying to dispose of assets to prevent you from receiving your fair distribution. In these cases you should seek advice about how to best protect your position. The Family Law Act and Family Court Act contains provision to enable parties to protect property and prevent wastage by one party.If the other party does not cooperate in providing all of the relevant financial information you need to assess your entitlements you can make an application to the Family Court to seek an order for disclosure.
Generally a timetable will be put in place quite quickly for the provision of financial information and the other party will be required to file a Financial Statement early in the proceedings.
There may be urgent cases where you believe the other party is hiding or trying to dispose of assets to prevent you from receiving your fair distribution. In these cases you should seek advice about how to best protect your position. The Family Law Act and Family Court Act contains provision to enable parties to protect property and prevent wastage by one party.
Valuation of Property for Family Law
Generally the value of all property, whether it is real estate, motor vehicles or an interest in a business, will be assessed at fair market value for the purposes of inclusion in the asset and liability pool.
Personal property, including furniture and personal effects, will generally be valued at second hand auction value, not replacement cost. This can have a significant effect on a party who has to re-furnish a home after a relationship breakdown.
Valuation of businesses and shares are often quite complicated and may involve using outside experts such as valuers and accountants.
There may be several methods of valuing property including obtaining appraisals, market valuations, sworn valuations, which may have different evidentiary value in family law disputes.
Family Law and Superannuation
Superannuation has long been a major difficulty in family law as it often forms the largest single “asset” of the parties, especially after a marriage of reasonable length.
Prior to December 2002, superannuation was generally regarded as a financial resource of the person who is entitled rather than “property”. The extent of the resource was taken into account in assessing the percentage of property distribution between the parties. The precise way in which the superannuation was taken into account depended entirely on the circumstances of each matter.
The Family Court often adjourned property proceedings (with or without a partial distribution) until a superannuation entitlement became property in the hands of the person entitled to receive it. This enabled the Courts to distribute the proceeds as property when the superannuation entitlements were paid.
Parties are able to make agreements between themselves as to how the superannuation entitlements will be dealt with – for instance, that they will be distributed equally on retirement or some other percentage distribution. These agreements can be filed in the Court as consent arrangements and are enforceable. The trustee of a superannuation fund will not necessarily be bound by these agreements so they must be drafted carefully to protect all parties.
The New Family Law Superannuation Laws
On 28 December 2002 a new law came into force regarding the splitting of superannuation entitlements after the breakdown of a marriage. Superannuation is now regarded as property and can be split by agreement of the parties or by Court order.
The major effect of the new laws is to allow separated couples to split superannuation in the same way as their other assets. The Family Court now has the power to order a split if parties do not agree.
The basic steps under the new superannuation laws for splitting superannuation are:
– – the Court values the superannuation entitlements and allocates an amount to the non-member spouse;
– – the super fund trustee records the amount to be “split” and applies the fund growth factor payment to the non-entitled member is made first.
– – There are also procedures to “caveat” a superannuation interest to prevent its distribution until the non-member spouse’s interest is determined and paid out:
– – a ‘flag’ is set on the interest by agreement or Court order
– – no payment can be made until the flag is lifted
– – when the flag is lifted the superannuation can be divided by the Court (or by agreement).
The Family Court has been given discretion as to the exact division of superannuation entitlements and may take into account factors such as responsibilities for children under 18 and the preservation of farms and other economic units. The splitting must be “fair and reasonable”.
If parties do not wish to split superannuation immediately, they may ‘flag’ the superannuation interest, which is essentially a direction to the trustee of the superannuation fund not to distribute superannuation proceeds until certain events take place.
The use of the flagging option postpones the time for valuing and splitting of the superannuation interest. Flagging may be more appropriate to some types of superannuation interests, such as a defined benefit or a partially vested accumulation interest.
The new laws are complex and issues such as the valuation of different types of superannuation need to be considered carefully and expert advice should be sought.
Contracting Out of the Legal System
Private Arrangements for Property Distribution
Parties can negotiate “binding financial agreements” before they get married or enter into a relationship, while they are married or in a relationship and even after separation. These agreements – if properly executed with appropriate legal advice – prevent the Courts from interfering with property.
There are some restrictions on how far a binding financial agreement will prevent the Courts from interfering and some conditions that must be met before the Courts will uphold an agreement.
However, the situation is now very much different from that which existed previously and parties with significant property should obtain legal advice as to how the new laws will apply in their own particular case.
Binding Financial Agreements – An Alternative Solution
From late 2000 it has been possible to enter into a Binding Financial Agreement which has the effect of excluding the Family Courts from determining property distributions. The Agreements may be entered into prior to, during or after a marriage or relationship has broken down. Previously such agreements (“pre-nuptial agreements”) were not binding and the Family Court could amend (or ignore), at its discretion, any of the terms of the agreement.
Binding financial agreements deal with all or any of the parties’ property, financial resources as well as maintenance.
A financial agreement must be in writing and each party must obtain independent legal advice.
The Benefits of Binding Financial Agreements
A financial agreement may be appropriate in the following instances:
> to protect existing assets or likely inheritances;
> to ensure that children of previous relationships inherit;
> to preserve family farms or other businesses for future generations;
> to give greater weight to the contribution of a higher income earner; or
> to avoid disputes about financial matters at the end of a relationship.
It is very important that you obtain independent legal advice regarding binding financial agreements.
Exclusive Occupation of the Matrimonial Home
If there is domestic violence you should consider whether a restraining order is appropriate. Your solicitor can advise you about this and the steps necessary to obtain an appropriate order in the Magistrates Court.
Exclusive occupancy orders and non-molestation orders can also be obtained from the Family Court. These can be sought by application to the Court and normally will be determined by a Magistrate on the basis of written evidence.
Arbitration as an Alternative
On 1 March 2001 new regulations commenced to facilitate court-ordered and private arbitration of property and spousal maintenance disputes.
The range of non-judicial, dispute resolution services has been increased by introducing a scheme of private arbitration. This will allow qualified arbitrators to settle disputes and make enforceable decisions about the distribution of property after a relationship breakdown.
When parties choose, some aspects of their property can be arbitrated. For example, parties may choose to have complex issues such as superannuation arbitrated with the remainder to be settled either by financial agreement or by court order. Decisions of the arbitrator will be subject to review on questions of law by the Family Court.
The national list of registered arbitrators approved under the Family Law Act is available from the Family Law Section of the (Law Council of Australia). A prerequisite for registration is completion of an arbitration course run by an approved authority such as the Australian Institute of Family Law Arbitrators and Mediators.
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