Most people know someone who has been affected by a family breakup. It is usually a very stressful and emotional time where people are anxious about the separation, property settlement and the emotional wellbeing and care arrangements for their children.
Unfortunately, this is reflected in a great quantity of inaccurate statements, often regarded as fact by those in the community.
Every family law situation is different, and it is important that people get the right advice and are able to make informed decisions about their family, and their own future before entering into any agreement or going to Court.
In this article we have identified the top 5 issues where ambiguities exist, and we have set the record straight.
Myth 1: You need to be divorced before you can divide your property
No, not at all. Your do not have to be divorced before you are able to negotiate a financial settlement.
You are only eligible to file for a divorce after you and your former spouse have been separated for 12 months.
You can otherwise immediately start negotiating your financial settlement with your former spouse once separated.
In fact, if you are divorced and you have not yet finalised your property settlement matters, then you have a period of 12 months from the date your divorce becomes absolute to either resolve your property settlement matters by agreement between you both or commence proceedings in the Federal Circuit and Family Court of Australia.
Myth 2: I owned it before we got together, so it’s mine if we separate
No, not necessarily. A party will not necessarily be able to retain assets in their name that they brought into the relationship, or that were paid for individually during the relationship.
The Family Law Act sets out the relevant considerations to be taken into account when the Court considers how property is to be divided upon separation.
This is not a mathematical approach. The Court will consider all contributions by the parties, whether financial or non-financial made during the relationship.
The Court may give greater weight to the individual contributions of one party in a very short relationship, which may result in a party being awarded an asset that they brought into the relationship.
The Court otherwise has a wide discretion when assessing parties’ entitlements, and it is important you obtain advice from a family law solicitor as to property division.
Myth 3: Property will always be split 50/50 in a property settlement
This is usually the most common myth in family law. There is no rule or presumption parties have to divide their assets equally when they separate.
The Family Law Act sets out the relevant matters to be taken into consideration when adjusting property between parties who have separated, which includes their contributions (both financial and non-financial) and their future needs.
The percentage outcome depends on many factors, which may include:
- The length of the relationship;
- The financial contributions of each person;
- The non-financial contributions of each person; and
- The current and future needs of each person.
The above are just some factors taken into account when adjusting assets. It is important that advice is received by an experienced family law solicitor.
Myth 4: The assets are held by a company or trust, so they are excluded from a property settlement
When a marriage or de facto relationship breaks down property can be divided between the parties.
The definition of “property” is very broad under the Family Law Act.
In the case of assets owned by a company or trust, the Court will look at who has control over the company or trust. Even if a person is not a director, if the entity is under the control of one of the parties, the Court has the power to deal with the assets as an asset of the relationship.
Usually, assets held by a company or trusts will come within the definition of property.
Myth 5: Pre-nuptial agreements are only used in the USA
The use of pre-nuptial agreements or “pre-nups”, as they are often known, has been popularised, sometimes sensationalised by their use in the USA. There have been plenty of newspaper stories and even movie storylines about them and their enforceability.
So, do we have them in Australia?
In fact, we do. In Australia they are known by the somewhat less sensational name of Financial Agreements or Binding Financial Agreements.
A Financial Agreement is often used as an asset protection mechanism by people going into a new relationship or marriage. It allows the couple to agree in advance on an acceptable division of assets should they separate.
After a relationship breaks down, a Financial Agreement can reduce the financial stress of a separation and allow the couple to amicably separate without the need for costly, time consuming and stressful litigation.
Financial Agreements must be properly drafted and executed to ensure the agreed property distribution is enforceable, so it is sensible to discuss this with your family lawyer to ensure your assets are protected.
Conclusion
No two family law cases are the same.
The Courts will always take into account the individual circumstances of each case before applying their wide discretion to make decisions.
It is important to obtain independent legal advice from an experienced family law solicitor who will help you to understand the processes involved concerning your particular circumstances.
If you or someone you know wants more information or needs help or advice, please contact us on (07) 5536 1140 or email [email protected].