Property Settlement and Financial Matters
Property Settlement and financial matters – General
When parties separate there are a number of financial matters which need to be dealt with, including:
- How to divide assets (referred to in family law as ‘adjustment of property’- see Section 79 of the Family Law Act). This is more than just assets in joint names- it also includes assets in one party’s name; and in some cases in the name of third parties including individuals, companies, or trusts.
- Part of the adjustment of property also involves looking at superannuation.
- Whether spousal maintenance will be needed.
- Arrangements for financial support of children (child support) or support for adult children (child maintenance).
Collaborative is our preferred method of resolving matters in relation to child custody and/or financial matters, in those cases where the circumstances are appropriate.
Collaborative law is a process used to resolve family law disputes. We find that Collaboration allows parties to be involved in and control the process in ways that they otherwise would not if the matter went to Court. Collaboration works well for both ‘easy’ cases and ‘tough’ cases, this includes where the other party is difficult to deal with and/or where the circumstances of the case are complex.
The process starts by you and your former partner agreeing not to go to Court. Although this doesn’t necessarily mean that you like each other or that you are able to get along, it does mean that you both recognise that Court is damaging for families and you want a process which leaves you and your family better off, as opposed to further from being able to work together for the sake of the family in the future.
It is a dignified and confidential process, whereby your private matters are not aired in open Court and where the parties all agree not to disclose confidential matters which are raised in the Collaboration.
If the process fails (and the statistics as well as our experience tell us that very few do fail), both parties’ lawyers and other professionals who are involved in the process can no longer act for the parties.
Collaboration is a process whereby the focus is on your interests (what is important to you) not necessarily only on what your legal rights are, or just what the law says is ‘fair’ (which is often very uncertain and doesn’t necessarily match up to what you think is fair).
Importantly, in the process you are not left on your own. Each party has their own lawyer who is there to understand what is fully important to you and to ensure that is taken into account in the negotiations. This means that you can ensure that you can take into account things that are important to you, which would not necessarily be taken into account if the matter were determined by the Court (e.g. how can I try to ensure that the children will not have to switch schools as a result of a property settlement and having to sell the matrimonial home).
The two lawyers work as a team, along with other relevant professionals when appropriate, such as accountants, financial planners, child psychologists and coaches.
Collaboration is generally more cost effective and faster than litigation. And in Collaboration, it is often the case that one of the preliminary matters that is dealt with is agreeing on how the parties pay for the process. This often means that instead of one party having incentive to delay matters and ‘run up’ the legal costs for the other party, that incentive is removed.
Although it is not possible to issue subpoenas in a Collaboration, there are other (and more effective in our view) ways to gather information. This may include having the other party sign an authority which authorises you to ask questions and get information directly from that party’s accountant and/or banks; or by having the party’s accountant participate in the Collaboration and provide you with an explanation of financial circumstances. This can be a far more effective way of obtaining information than simply issuing a subpoena which may or may not contain the documents which give you the right information.
Any agreement reached via the Collaborative process is binding and enforceable, this includes agreements in relation to children if the parties decide that the agreement should be formalised.
Property settlement- principles according to the Family Law Act
When considering how property should be divided the Family Law Act tells us that the property settlement must be ‘just and equitable’. The Act gives the Court a wide discretion to determine what is fair in all of the circumstances of your family.
In considering property matters the Court generally follows a process which involves:
- Identifying the assets which are considered to be in the asset pool. This process usually involves evidence about the value of assets such as businesses; real estate; and superannuation etc. It is often the case that there is a dispute not only about the value of the property, but also what is considered ‘property’ in the asset pool.
- Considering contributions of the parties, including non-financial contributions; financial contributions; parenting contributions; homemaker contributions; and sometimes negative contributions when the circumstances permit (‘wastage’)- not only during the relationship but sometimes before the relationship commenced and after the relationship finished.
- Identifying each party’s future needs and considering ‘any other factors’ which may be relevant.
- Determining what is ‘just and equitable’.
There are many factors which impact upon this process. We are experts in providing technical; strategic; and legal advice and helping you to use this process to get the best results for you and your family. We recommend that you make an appointment with us to obtain advice that is targeted to your circumstances.
There is a complex regime for dividing (or ‘splitting’) superannuation which is governed by the Family Law Act; the Superannuation Industry (Supervision) Regulations 1994; Income Tax Assessment Act 1997; Retirement Savings Accounts Act 1997; as well as a number of other relevant legislative instruments.
In a property settlement, one of the most important assets to consider are the parties’ superannuation entitlements. For some people, superannuation is their greatest asset apart from their house, for others it is even more valuable. This is why it is important to pay close attention superannuation in the context of a property settlement. And it is also important to engage lawyers who have an expert understanding of superannuation, which we do.
It is important to have a clear understanding of the type of superannuation that the parties have (it is different depending on the type of fund, including self-managed super funds (SMSF); defined benefit funds; accumulation funds; and industry funds), as well as what the value of the fund is for the purposes of family law.
The value of a superannuation entitlement for family law purposes is different from the value on the statement in most cases. This is one of the reasons why it is very important to get targeted advice on how to maximise your chances of getting an equitable settlement.
One of the unforeseen benefits of property settlement in family law breakdown is that it may be an opportunity to restructure the assets in a way that is more tax effective or beneficial for the family. We are skilled in helping our clients identify ways in which they may maximise their superannuation (and other assets) in the course of property settlement. We do this by identifying opportunities which may be available and liaising with experts who can provide appropriate financial advice.
Stephen Bourke, the leading expert in superannuation splitting in family law, who was instrumental in writing the relevant provisions of the legislation in the superannuation splitting regime of family law, and the author of the book “SuperSplitting for Family Lawyers” is part of our team and always on hand for specialist advice.
If your matter proceeds to Court (and also prior to commencing proceedings) the evidence that is gathered, and how it is gathered is crucial to how the matter may proceed, and the ultimate outcome.
In property cases there are a number of key pieces of evidence that may or may not be appropriate, these include:
- Affidavits by you and possibly supporting witnesses. Affidavits are sworn written statements of fact which are used to support why you say the Court should make the Orders you want it to make. In order to ensure that the Court does not exclude your Affidavit or parts of it, it is important to make sure that the Affidavit complies with all the rules of evidence in order to be admissible before the Court. Other reasons why the Court may exclude your affidavit include that it does not comply with the rules of the Court (including Federal Circuit Court Rules and the Family Law Rules); that it is not relevant; that it is written in a way that is not appropriate. Depending on what Court you are in, you may or may not be required to file an affidavit at the initial stages of property proceedings. There are important considerations to take into account from a strategic and practical perspective at this stage and we strongly advise you to seek legal advice before submitted evidence to the Court, whether it is by way of affidavit or otherwise, as this can have long lasting implications for the outcome of your matter.
- Valuations including of real property; chattels; businesses; and superannuation. The Family Court has special rules about who can value assets and about the process of obtaining valuations. It is very important that the valuation is done correctly and by the best person to do the valuation in order to avoid the situation of spending time and money on a valuation which may not be accepted by the Court or which is easy to dispute by the other party.
- Financial Statement– This is a document which parties in Family Law proceedings submit to the Court. It sets out the assets and liabilities of the party as well as their income and expenses and financial resources. It is important that this document is completed correctly for a number of reasons, particularly because if a Financial Statement is not completed correctly it can be used to show that you have not been honest with the Court which can have severe consequences. You can find the blank Financial Statement on the Family Court website.
- Expert witnesses- The rules for obtaining expert evidence in Family Court matters are very specific. In some matters parties are required to have a single expert, and in other cases the parties are able to obtain their own experts. When there is a single expert there are opportunities to challenge the opinion of the single expert if you do not agree with their opinion. There are a number of tactics that can be used to challenge (or bolster) the opinion of an expert. We recommend that you get advice early on in your matter in relation to this.
- Subpoenas are another way to get evidence before the Court. There are three types of subpoenas:
- Subpoenas to produce documents;
- Subpoenas to give evidence;
- Subpoenas for production of documents and to give evidence.
- In some cases you need the Court’s permission to issue a subpoena. In other cases you need to wait until you are at a certain stage of the proceedings to issue a subpoena. It is important that your subpoena is carefully drafted in order not to be set aside for reasons such as that the subpoena is asking for information which is not relevant; it is too broad in what is being asked for; or another of the prescribed reasons that subpoenas are found to be set aside pursuant to the law.
The Court has the power to make Orders that a party pay parts of or all of the other party’s costs (and/or costs of third party’s). Whether an order for costs will be made and what that costs order will be (for example, whether it will be for the payment of just a portion of the costs or all of the other party’s costs), is at the discretion of the Court. There are a number of factors that impact upon whether such a costs order will be made (see for example Section 117 of Family Law Act). One of the many factors that the Court may consider when using its discretion to make an order for costs is the behaviour of the parties throughout the proceedings (and prior to the proceedings). In order to obtain the best advice about whether you could be entitled to receive an order for costs or liable to pay an order for costs, or how to avoid being found to be liable to pay an order for costs, we recommend that you seek further advice from us.
Other important factors in determining whether costs could be ordered in property proceedings and the amount that the costs order could be for relate to offers of settlement. Which is why it is especially important to get advice prior to making an offer of settlement or once you receive an offer of settlement from the other party.