Tweet

Tweet

Tweet

But what about those of you who have already separated?

Last year we also wrote about the importance of doing a financial settlement as soon as possible after you separate. We don’t propose to re-hash that topic, other than to say it is much better to sever financial ties now rather than delay it, which can cause all sorts of problems.

For many couples separating is not only about severing all financial ties. Many people have children and have the difficult task of deciding on where those children should live and what sort of parenting arrangements should be put in place into the future.

This is not an easy task at the best of times and can be made more difficult when emotions are high and when finances are strained.

When we wrote about the importance of getting a pre-nup, we talked about the importance of putting in place protective measures in the event that you separate, to protect your finances. There is no reason that we cannot apply the same thinking to arrangements for children in separated families.

After a couple separate, agreeing to collaborate rather than litigate, provides that protection for your children. Committing yourself to the collaborative process means that you and your ex:
1. Do not have the threat of Court hanging over your head;
2. Agree to be open and frank with one another and to reach an agreement about your children that will be in their best interests; and that
3. Own and control the collaborative process and thereby own and control the outcomes.

Over the year, we have written a lot about the benefits of collaboration over other more traditional methods of solving family law issues. Unsurprisingly, we have not changed out mind about how great this process is! Though, to keep it fresh for you, we thought that it might be more relevant to give you a practical example of what a collaborated process and outcome for parenting issues might look like next to a litigated outcome and why you should make it your New Year’s Resolution to collaborate. Here goes…..

The collaborated outcome
Elin and Tiger decide that their relationship is over. Though Elin is particularly unhappy about Tiger’s recent indiscretions at Mooseheads, she wants to reach an agreement about what will happen with their two children Sam and Charlie into the future. Elin and Tiger agree to sign up to the collaborative process.

At the first collaboration meeting, Elin feels that it is particularly difficult to start talking about future arrangements for the children when she is still so angry at Tiger about what he did. Tiger feels the same, in that he has not had a chance to explain his actions. Elin and Tiger therefore spend their first meeting talking about these issues. At the end of that meeting, both feel emotionally exhausted but good in that they have been able to say how they feel. Elin and Tiger, together with their lawyers, come up with a plan as to how to manage how they are feeling and how they will explain to Sam and Charlie that they are separating.

In the second, third and fourth meetings, Elin and Tiger, with the help of their lawyers, are able to talk constructively about the children. Tiger tells Elin that it’s important to him that the children have golf lessons. Elin tells Tiger that it is important to her that the children get to visit their grandparents every now and then, who live overseas.

At the end of the collaborate process, Elin and Tiger have a written agreement which sets out all of the future arrangements for the children. Both feel that they have had an input in the outcome and have reached an agreement that is in their children’s best interests. The children are coping well with their parent’s separation because of the way that Elin and Tiger have been able to work together and manage their emotions. Elin and Tiger have both spent money on their lawyers but both feel that they have achieved a positive outcome during the collaborative process.

The litigated outcome
When Elin finds out about Tiger’s Mooseheads indiscretions she goes straight to a litigation lawyer. She is terribly upset, telling the lawyer her story and explaining her concerns about the children’s future. The lawyer asks her to put $5,000 in trust before she is able do anything. Elin cries some more. Then, feeling like she has no other option, she agrees to deposit the money. Her lawyer tells her that the next step is to write to Tiger and if no response then to file Court proceedings.

Elin spends the next two weeks emailing her lawyer back and forth preparing an affidavit. In her affidavit, Elin talks about the fact that she is a much better parent for Sam and Charlie and that Tiger has not and is not a good parent. In her affidavit, Elin talks about Tiger’s many Mooseheads faux pas.

A few days later, Tiger is at the 17th hole at Royal Canberra on a sunny February afternoon. Just as he takes the putt for a birdie, a man runs over to him and serves him with Court documents. Tiger misses the putt.

Tiger goes to see his lawyer and is also asked to put $5,000 in trust. He goes through much the same process as Elin and prepares an affidavit.

On the first Court date, Elin and Tiger sit at opposite ends of the Courtroom. Both look miserable. They listen to their lawyers talking about why each of them are better parents for their children. The judge sitting at the bench does not know anything about either of them, except for what he has read in their affidavits.

Elin and Tiger go through many more Court hearings. They file more affidavits and unsurprisingly their lawyers ask for more money each time. Elin and Tiger feel like they are losing control of the process and are confined by the Court’s and their lawyers timetables and deadlines. Eventually, two years later, they get to a final hearing. The judge makes a decision about their children and their lives which neither of them like. They both feel miserable with the outcome, especially given how much money they have spent.

Separating from your partner can be a complicated and difficult process, made much more complicated when you have children to take account of. For an Out of Court Solution, contact Farrar Gesini Dunn Family & Collaborative Law.

Published in B2B Canberra Magazine

Tweet

For those of you tech-savvy or organised enough to be able to find last year’s “New Year’s Resolutions” list, the review of that list might be a matter of a few ticks, a few crosses, and mostly goals you forgot about in or around February last year, but will definitely appear on this year’s list again.

One commonly named resolution – and one that seems to pop up year after year – is to ‘sort out finances’. This might be as simple as saving more money or consolidating debt. Alternatively, it might not be. Understanding the significance of a properly drafted Will and Estate Plan, as well the effect for you of a Binding Financial Agreement (BFA), can play a huge part in protecting your financial future and your financial health.

Last January we wrote an article encouraging people to include, ‘seek advice about Will/BFA’ in their list of new year’s resolutions. Many people did – BFAs (or pre-nups) are becoming increasingly common. Others didn’t, and the lamentable words, ‘I wish we’d had a pre-nup’ remain some of the most repeated in family law firms and Courts around Australia.

From our perspective, 2011 was an interesting year. With increasing prevalence and legal recognition of defacto relationships, including same-sex relationships, we see a huge range of different relationship problems. They include blended families, many involving new relationships where both parties bring children from previous relationships, increasingly complex financial situations, the reduced usefulness of Family Trust asset structures, self managed super, issues with the tax office – the list goes on.

Interestingly, many of our clients who seek advice at the start of, or during, a new relationship are returning clients. The benefit of hindsight, and the experience of an emotionally and financially draining property settlement is a good incentive to take whatever steps you can to avoid a repeat of that first unpleasant experience. Talking to your new partner about how assets would be treated in the event of a separation at the start (or at any stage during) your relationship enables you to have that discussion without the angst, resentment or hostility of a recent separation. Contrary to popular belief, any agreement you reach can be drafted into a binding and enforceable agreement in a relatively efficient and inexpensive way.

For example, take Jack and Jennifer. Jack and Jennifer are a young couple, who have a small asset pool. One or both of them might have wealthy parents. They may or may not want to have children. They may or may not be high income earners, small business entrepreneurs, conservative or high-risk investors. The future is uncertain for Jack and Jennifer, their relationship, and any ensuing property settlement if their relationship breaks down.

Most people are surprised to hear that many agreements are so simple as to provide; whatever assets are in Jack’s name will be Jack’s, whatever assets are in Jennifer’s name will be Jennifer’s, and any assets in joint names will be divided equally (or in some other proportion). If they so decide, the Agreement might cease having effect after five years, when they marry, when they have children, or never. They should also discuss each of their Wills and Estate Plans, which extends to powers of attorney, superannuation beneficiaries, and guardianship of children.

The options available to them are almost unlimited. At this stage in their relationship they do not have the burden of Jack having started a new relationship with his colleague or Jennifer having spent $20,000 after separation on the racehorses. They are able to have a calm and reasoned discussion about what a fair settlement is in the event they separate in the future. It has (accurately) been described as relationship insurance. One wonders why most Canberrans insure against house fire, whereas very few against relationship breakdown. Our preliminary investigation shows relationship breakdown is a bit more common than house fire!

We offer our congratulations to all those who set and achieved goals in 2011. Losing weight, getting fit, saving money, reducing your golf handicap – all are difficult things which require a lot of hard work, but will result in huge benefits in the future (well, all except the golf). We again encourage you to consider ‘improve financial state of health’ amongst the goals you set personally and for your clients in 2012. Including a properly drafted Will and seeking advice about a BFA is a key element of making that goal a ‘tick’ in January next year.

Published in B2B Canberra Magazine

Tweet

Tweet

1. Divorce

Often people ring my office and ask to see me about a Divorce. They do not actually mean a Divorce. They want to see me about property settlement, child support, and working out arrangements for their children. ‘Divorce’ itself is an entirely separate process and is not dependent on the other issues being resolved. As most people are aware, you cannot apply for a Divorce until you have been separated for 12 months. Most people want to make arrangements about property settlement, children and child support sooner than that.

2. Joint credit cards

Many clients tell me that they have a joint credit card. This is generally not the case. One person is the primary card holder and the other person is the secondary card holder. It is the primary card holder’s responsibility to make the payments each month. It is therefore very important for people to work out who is the primary card holder and arrange for the secondary card holder to return or destroy their card. Each financial institution has different rules but obviously you would not want to be in the position of a man I once saw whose wife held a secondary card on his Visa card and who was refusing to surrender it and, worst of all, paying for her lawyers’ bills from it.

3. Valuation and Appraisal

Some clients say to me that they have obtained a valuation of their home from a real estate agent. What they have obtained is an appraisal. An appraisal is given by a real estate agent and it will list a range of prices for which the property could be sold (for example, $520,000-550,000). A valuation, on the other hand, is a lengthy document prepared after research and inspection by a registered valuer which places a figure as to the value of the home. Some parties are happy to negotiate a property settlement based on appraisals whereas others consider that the necessary expense in obtaining a valuation is worthwhile.

4. Mortgage

Some people view the words “mortgage” and “loan” as being interchangeable. The media frequently talks about mortgage rates. In fact, they are talking about home loan rates. A mortgage is a special contract between you and your financial institution. It is registered at the Land Titles Office against the title of the property referred to in the mortgage. It can secure a multitude of loans (even credit card debt). Quite often a loan has been repaid but the mortgage remains registered. This is because, when you finally clear your home loan after many years, the bank does not automatically discharge the mortgage. They will only do so if you ask them – and there will be a fee – and then they will release the Certificate of Title. For some people in a property settlement, it is a simple matter of paying the fee to have the mortgage discharged, but many people have discovered that in fact the reason why a mortgage is still registered against their property is because it is security for other loans, including car loans, personal loans, etc.

5. Owner, life insured, beneficiary

Broadly, there are three concepts in relation to a life insurance policy. The first is who owns the policy, the second is who is the life insured on the policy and the third is who is beneficiary of the policy. In the simplest of cases, the three all relate to the same person. I can own a policy on my own life and the beneficiary is listed as being my estate. However other people have what is known as cross insurance whereby the owner and beneficiary of the policy is the wife, but the life insured is the husband (and vice versa). These need to be sorted out when there is a property settlement. No one would want their ex to be the beneficiary of a policy on their life!

Published in B2B Canberra Magazine

Tweet

We are excited to announce that Farrar Gesini & Dunn and Consensus Family Lawyers are joining forces into a new business called Farrar Gesini Dunn, Family and Collaborative Lawyers.

The marriage of our specialist collaborative firm to our traditional litigation firm means Farrar Gesini Dunn, Family and Collaborative Lawyers will be the largest specialist Family Law firm in Canberra and the region, with expertise in both litigation and out of court solutions.

Often your business lawyer is not able to be your lawyer in your family law matter as they may have acted for your spouse as well as you over the years. They may have prepared your Wills or acted for you in the buying and selling of homes. This is called having a conflict of interest. Even if they have not acted for your spouse, your business lawyer may have met your spouse over the years and feel uncomfortable about acting against that person. In addition, many business lawyers do not practice in family law and recognise that you need a specialist (“horses for courses”).

A good family lawyer needs to be sympathetic to you but will not always agree with you. You are not paying a lawyer to agree with you. You are paying a lawyer to give you their professional opinion and advice based on their experience and expertise.

Family lawyers need to have a working knowledge of many areas of law. A relationship breakdown impinges on many areas of law: from criminal law to bankruptcy; from property to tax law. A good family lawyer will know enough to seek advice from other specialist lawyers when your case requires it. A good family lawyer will also liaise with your accountant and financial planner, both to seek advice when needed, but also to make sure that the financial goals you were trying to achieve with them are consistent with the approach that is being taken in your family law matter.

You need to feel at ease with your family lawyer. Some clients express surprise at the amount of detail we need from them. Therefore before making an appointment you might wish to consider whether you feel more comfortable talking about private matters with a man or a woman or whether you want someone your age, older or younger? Different cases necessitate different levels of personal detail.

You should feel confident in seeking a second opinion if you just don’t feel right about something your lawyer is advising.

In seeking information about who to see, consult family and friends whose opinions you value. Your business lawyer, accountant or financial planner can also be a source of information and most firms have a website where you can gain a feel about the firm.

One of the most important things to remember in choosing your family lawyer, however, is not to leave it too long. If you are the instigator of the breakup then you may wish to get advice prior to separation. If the break up has come as a shock, you should have it as one of your priorities to obtain family law advice so you know where you stand. Some of the most important decisions are made at or very soon after the time of separation, and forming a trusting relationship with a family lawyer early on is an enormous benefit.

Published in B2B Canberra Magazine

Tweet

These situations are exacerbated because the ‘status quo’ established immediately after separation, both in property and parenting situations, can have a significant or even determinative effect on the final outcome. Where there is urgency, such as the need for a restraint to stop one party liquidating a trust fund or to stop a parent abducting children out of Australia, the stress is heightened further and the urgency rises to a new level.

In October, my colleague Juliette Ford wrote about collaborative law, and avoiding the litigation battlefield, as a preferable way to resolve disputes. Certainly in most, if not all, cases that is true. Litigation can be financially and emotionally difficult for people, if not properly managed. Further, in many situations, lawyers are unable to give their clients a satisfactory answer as to how long a case will take, and exactly how much it will cost, or to guarantee what the outcome will be.

With all those ‘cons’, it is understandable to think; why would anyone start Court proceedings? Sometimes, however, there is no choice. Some people are unwilling to negotiate, or they take provocative steps, with money and children, which leave the other party with no option but to go to court. Sometimes one party takes a “head in the sand” approach and refuses to deal with the issue. Many months of emotional angst and thousands of dollars can be spent writing letters, sending invitations to mediation, and trying to find creative solutions. Attempts to avoid Court are often fruitless. Ultimately, there are only two ways a dispute can be resolved; by agreement of the parties or by Court intervention.

There are ways to minimise the financial, emotional and time costs of litigation. The most important of these is to make sure every client understands what is happening at Court, the restrictions imposed by the process, and the opportunities to end the litigation by settlement.

Ensuring that clients have proper emotional support – from family and friends and also from professionals – is important. Firstly it is important for maintaining a good state of mind through a process that can last up to two years. Secondly, decisions in the Family Court are often ‘black and white’ decisions about financial matters – cost/benefit type decisions. Clients who are able to separate the emotional from the financial make better decisions earlier in the process.

Once litigation commences it is important not to just “go through the motions.” Each case has to be tailored to the client’s needs. Being proactive, using the litigation techniques that are available as to collating necessary information and using experts such as financial planners, child psychologists and superannuation experts can generate a better and often quicker outcome. Most people do not know that of 100 cases that start in the Family Court, only approximately 7 are ultimately determined by a Judge. The other 93 settle.

Litigation is not easy, but sometimes there is no other choice. The court process has inherent uncertainties and challenges. It is a difficult and complicated process that can, without good management, get out of control. Having an experienced family lawyer who you can talk to in order to help understand what is going on is a huge plus.

However, in addition, having a family lawyer who is client focussed from the outset, who knows when to litigate and when to hold off, who helps the client manage the fees, makes appropriate referrals to support services and who manages the inevitable shortcomings of the court system, will mean that whatever the outcome, the client will be satisfied that the most professional job was done.

For experts in family law litigation contact Farrar Gesini & Dunn.

Published in B2B Canberra Magazine

Tweet