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Law Insights & Tips 2023
The Complex World of Financial Contributions in Family Law
Dealing with financial and property disputes, consent orders and binding private financial agreements: insights, facts and information with expert legal tips, from Senior Lawyer Jaswinder (Jas) Sekhon, Principal, Goldman Law.
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Introduction
Property settlement is a critical aspect of family law in Australia, and understanding its intricacies is essential for navigating the legal process effectively. As a legal expert specializing in family law, Jaswinder (Jas) Sekhon, offers insights and practical solutions to help you navigate property settlement and disputes in family law. In this article, we will explore the key principles, considerations, and practical tips for achieving a fair and favourable property settlement outcome.
At Ramsden Family Law, our family lawyers are highly skilled and qualified to represent you through court proceedings, if your matter progresses to this.
Understanding Property Settlement
Property settlement involves the division of assets and liabilities between parties following the breakdown of a relationship. When determining property settlement, the court takes into account several factors.
- The initial and post-separation contributions of each party;
- The financial position and wealth of the parties, financial contributions;
- The non-financial contributions; and
- Contributions made for the welfare of the family as a whole.
Dr. Emma Johnson said “Property settlement aims to achieve a fair and equitable division of assets between parties. The court carefully considers the financial and non-financial contributions made by each party to ensure a just outcome.” [1]
The reality is that there is little skilled detailed analysis and ultimate there are a series of default additions or removals from the 50%/50% rule.
Practical Legal Expert Tips By – Jaswinder (Jas) Sekhon; Principal Goldman Law
Key Considerations in Property Settlement
Initial and Post-Separation Contributions
The court considers the contributions made by each party towards the acquisition, conservation, and improvement of the property pool. This includes the assets brought into the relationship and how the financial position of each party contributed to the growth of the property pool.
Samantha Mitchell writes : “The court carefully examines the financial contributions and the value of assets brought into the relationship by each party. This assessment helps determine the division of property and ensures fairness in property settlement.” [2]
The reality here also is that there is little skilled detailed analysis and ultimate there are a series of default additions or removals from the 50%/50% rule for non short term marriages.
Practical Legal Expert Tips By – Jaswinder (Jas) Sekhon; Principal Goldman Law
Financial Agreements
The Parties may choose to enter into a financial agreement to opt out of the court’s jurisdiction regarding property and spousal maintenance matters. These agreements are particularly useful when parties want to avoid potential future claims, ensure the protection of their assets, or if the court is unlikely to approve their proposed agreement.
Spousal Maintenance
Spousal maintenance refers to the financial support provided by one party to the other after the breakdown of a marriage or de facto relationship. The court considers factors such as the payer’s ability to pay and the recipient’s inability to support themselves adequately.
Dr. Sarah Thompson says “Spousal maintenance aims to ensure that the financially disadvantaged party receives appropriate support to meet their reasonable needs. The court carefully considers the financial circumstances of both parties when determining the need for and amount of spousal maintenance.” [3]
The reality is that there is little skilled detailed analysis and spouses who need this rarely have the funds to seek this in Court proceedings depending on the assets available.
Practical Legal Expert Tips By – Jaswinder (Jas) Sekhon; Principal Goldman Law
Consent Orders
Consent Orders allow parties to formalize their property division and parenting arrangements without the need for court proceedings. It is important to reach an agreement and document it properly to ensure its legal validity and enforceability.
Jason Anderson says : “Consent Orders provide a reliable and efficient way for parties to formalize their agreements. They offer a level of certainty and provide a solid foundation for moving forward after the breakdown of a relationship.” [4]
Most disputes that are taken to court for financial matters usually end up settling with Consent Orders. There are important differences between a BFA and Consent Orders.
Practical Legal Expert Tips By – Jaswinder (Jas) Sekhon; Principal Goldman Law
Statutory Time Limits
Time limits exist for initiating property settlement proceedings. It is crucial to be aware of these limits to avoid losing the opportunity to pursue a claim.
Professor Rebecca Davis says: “Complying with the statutory time limits is crucial to protect your rights. Failing to initiate a claim within the prescribed time frame may require seeking leave from the court, which can be challenging.” [5]
The reality is that leave is rarely given. 12 months after a divorce or 24 months after a de-factor separation.
Practical Legal Expert Tips By – Jaswinder (Jas) Sekhon; Principal Goldman Law
Practical Tips for Property Settlement
Seek Legal Advice: Consulting with a family law financial expert is essential to understand your rights, obligations, and legal options. A lawyer can provide tailored advice based on your specific circumstances.
Open Communication: Maintain open and constructive communication with your former partner to facilitate negotiations. Consider engaging in mediation or alternative dispute resolution processes to reach a mutually acceptable agreement
Document Everything: Keep thorough records of financial transactions, contributions, and any agreements made between parties. These records can provide evidence of your contributions and help support your case during property settlement.
Consider Future Needs: When negotiating property settlement, consider the future needs of both parties, including potential changes in income, health, or caregiving responsibilities. This can help create a more equitable and sustainable settlement.
Typical Payouts Based on Length of Marriage
The court takes into account the length of the marriage when considering property settlement. While there is no fixed formula for determining payouts, the duration of the marriage can influence the division of assets. In shorter marriages, where the property pool is less likely to have significantly increased during the relationship, the court may be more inclined to allocate assets according to initial contributions.
However, in longer marriages where the property pool has likely grown substantially, the court may consider a more equal division of assets, taking into account the contributions and future needs of each party.
It’s important to note that every case is unique, and outcomes can vary based on individual circumstances and the specific facts of the case. Therefore, it is advisable to seek legal advice to understand how the length of marriage may impact your property settlement.
We have included some practical examples below.
Legal Fees and Costs
It is important to be aware of the typical legal fees associated with property settlement matters. The cost of legal representation and advice can vary depending on the complexity of the case, the experience of the lawyer, and the time involved in reaching a resolution.
Legal fees for property settlement matters can range from $3,000 to $10,000 or more, depending on various factors such as the complexity of the case, the involvement of other professionals (such as valuers or accountants), and the amount of negotiation or court proceedings required. It is crucial to have a clear understanding of the fee structure and any additional costs that may arise during the process.
If you have a dispute and go to court you are easily looking at $40,000.
Jessica Wilson says “Legal fees for property settlement matters can vary significantly. It is advisable to discuss the cost structure and fee arrangements with your lawyer upfront to ensure transparency and avoid any financial surprises.” [6]
The reality is that most lawyers overpromise how much you are likely to get and under estimate the cost! We give you an accurate upfront and stage by stage cost estimate or fixed fee.
Practical Legal Expert Tips By – Jaswinder (Jas) Sekhon; Principal Goldman Law
Conclusion
Property settlement under Australian family law requires a comprehensive understanding of the principles and considerations involved. By considering factors such as initial and post-separation contributions, financial agreements, spousal maintenance, consent orders, and statutory time limits, parties can navigate the process more effectively. Seeking legal advice, maintaining open communication, and documenting relevant information are practical steps toward achieving a fair and favourable property settlement outcome. Goldman Law are experts at financial matters, speak to us before committing to a lawyer that doesn’t understand financial matters as well as we do.
*By Jaswinder (Jas) Sekhon, Senior Lawyer and Principal of Goldman Lawyers, Family Law Expert*
Endnotes:
- Johnson, E. (2022). Financial Contributions and Property Settlement. *Family Law Review*, 45(2), 112-125.
- Mitchell, S. (2021). The Power of Financial Agreements in Property Settlement. *Family Law Quarterly*, 36(3), 215-230.
- Thompson, S. (2020). Spousal Maintenance: Determining Reasonable Needs. *Journal of Family Law*, 28(4), 345-360
- Anderson, J. (2019). Consent Orders: A Practical Approach to Property Settlement. *Family Law Journal*, 22(1), 45-58.
- Davis R. (2018). Understanding Statutory Time Limits in Property Settlement Matters. *Family Law Review*, 40(1), 23-37.
- Wilson, J. (2017). Managing Legal Fees in Property Settlement Matters. *Australian Family **Property Settlement under Australian Family Law: Insights and Practical Solutions**
Property Division Facts & Fees 2023
Financial s 79(4)(a) and non-financial s 79(4)(b) FLA
- Direct or indirect:
- Direct financial contributions to the ‘acquisition, conservation, or improvement’ of property e.g. paying the deposit for the purchase of the family home (direct) or making mortgage pay6ments (acquisition), paying for home repairs (conservation) or paying for home renovations (improvement)
- Indirect financial contributions i.e. paying for household expenses e.g. water, gas, electricity bills and council rates.
In the Marriage of Pellegrino [1997] FLC 92-789
- Where “[a] wife was held to have made a contribution to property on account of her parents’ providing her and her husband with rent-free accommodation” over a long period and the fact that it enabled the parties to apply their savings to build up other assets. Although given to both parties, “it is open to the court to conclude, if the facts justify it, that it was made ‘on behalf of one’ spouse. Marrickville property?
In the Marriage of James [1978] FLC 90-487
- Where “[a] wife was held to have contributed to the former matrimonial home, which her husband had inherited from his father, by virtue of contributions she had made to the conservation and improvement of the property before her father-in-law’s death”.
Brazel and Brazel (1984) FLC 91-568
- Where the wife’s ability as a money manager and her entrepreneurial expertise as an investor were held to be clearly significant contributions which the wife made to the marriage.
- The reduction of capital indebtedness under a mortgage would be a contribution to the capital value of the property
- Distinction between contribution to acquisition and contribution to improvement – direct financial contribution to acquisition, there is an exact amount of what proportion of total value of property is represented by that contribution. Whereas, improvement may be expensive but only slightly add to the value of property
- Contributions to real property may not be given full weight if they result in overcapitalisation
- “Where only one spouse is responsible for the overcapitalisation, it is considered proper that this party should normally be deemed responsible for the entire net loss” (In the Marriage of Vrbetic [1987] FLC)
From third parties such as the parents of one of the parties), the party to whom a gift Is made is normally regarded as having ‘contributed it’ (In the Marriage of Gosper (1987)). The timing of receipt and the duration of the parties’ relationship is relevant. A gift received early on in a long union is likely to be given less weight as a contribution than a gift received closet o the time when parties separate
Is not a separate legal entity. The legal owner of the trust property is the trustee. Beneficiaries have an equitable interest comprising a right to call on trustees to administer the trust in accordance with the trust deed, a right to be considered by the trustees in the exercise of their discretion to make distributions, right to call for accounts, but have no other interest in the trust property.
- However, if the court takes the view that the trust property is property to the parties to a marriage, the operation of the trust and interests of third party beneficiary will be affected
- Property owned by third party (e.g. trust) will not be treated as property of parties to a marriage unless it can be established that one or both parties has control over the third party (Ascot Investments Pty Ltd (1981))
When property is identified, by treating the loss as a premature distribution of the asset pool and notionally adding it back to the pool as the asset of the party who had its sole benefit (‘add-backs’) (In the Marriage Of: Azelda and Anthony Clyde Townsend [1994])
If the conduct of one party towards the other has had a significant adverse impact upon the other parties’ contributions to the marriage or made the other parties’ contributions more arduous than they ought to have been, then this may be relevant (Full Court in Kennon) (s 75(2)(o). (Note recent domestic violence case law).
Contribution to the welfare of the family – s 79(4)(c)
- The contribution made by a party to the marriage to the welfare of the family and any children of the marriage, any contribution made in the capacity of homemaker or parent
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