Generally speaking, inheritances are not excluded or otherwise quarantined from the asset pool to be divided between separating parties, and will not automatically be allocated back to the party who received them.
Some of the relevant factors the Court takes into account are as follows:
Timing and length of relationship
For example, an inheritance received very early in a long relationship might not result in a significantly higher contributions assessment to the party who received it, because the other party might have made other contributions over the years which offset the effect of the inheritance.
An inheritance received late in the relationship or after separation in a short relationship, is more likely to result in a higher contribution assessment to the party who received it.
The amount received – and compared with the asset pool to divide – will affect the Court’s ultimate decision.
For example, a smaller amount (say $20,000 inheritance in a pool of $1.5m) is less likely to result in contributions being assessed in favour of the party who received it than a larger amount (say $1m in a pool of $1.5m).
How it was applied
If the money was used for family holidays or otherwise spent and is no longer represented in the asset pool, it will carry less weight when assessing contributions than if it was used to purchase real estate or shares and those assets still exist at the time the Court is making a determination. It may also be relevant if the funds have been kept separate and not otherwise mingled with the parties’ assets.
Financial circumstances of the parties at the time the Court makes a decision
In a pool of $1m, where one party receives a post-separation inheritance of $500,000, it might not be just and equitable for one party to receive half of the net assets ($500,000) and the other to receive the other half plus the whole inheritance ($500,000 plus $500,000). The Court will consider the whole financial situation.
Inheritances received after separation
If one party receives an inheritance after separation but before property settlement has been agreed and formalised, the inheritance will be taken into account in the property settlement as the Court must consider all of the current financial circumstances at the time the determination is being made.
This is one of the reasons why it is recommended that separating parties finalise and formalise their property settlement as soon as possible.
This does not necessarily mean that the other party will receive a portion of the inheritance. The Court might determine that the other party made no contribution to the inheritance, but it will be taken into account and adjustments might be made in favour of the other party who does not receive the inheritance.
A future inheritance will usually only be taken into account if the death of the testator is imminent.
As the inheritance has not yet been received, the Court could not include it in the asset pool, but can take it into account in assessing the respective future needs of the parties.
How can an inheritance be protected against claims by the other party?
Parties to a marriage or de facto relationship can protect future inheritances by entering into a Binding Financial Agreement which sets out how any inheritance would be dealt with in the event of separation.
If parties have separated and there is a possibility that one party will receive an inheritance in the future, it is recommended that they finalise their property settlement as soon as possible, and before the death of the testator.
Specialist Family Law advice is essential. Let your client know about our free initial telephone consultation service by calling Vanessa Mathews on 9804 7991.
We’re operating as usual at Mathews Family Law. If you have any questions or concerns about how COVID-19 may impact your client’s position in relation to their family law matter, call Vanessa Mathews on 9804 7991 or email firstname.lastname@example.org.
Not surprisingly, Family Law clients are expecting business valuers to take into account the economic impact of the COVID-19 pandemic in their valuation reports. This is a difficult, if not impossible, task where a valuer can only take into account information known or knowable at the date of valuation.
Most valuations currently being prepared would be based upon 30 June 2019 or 31 December 2019 figures. The existence of COVID-19 was not known as at 30 June 2019, and its impact upon the Australian economy (and specifically upon the business under consideration, which might be impacted negatively or positively depending upon the nature of the business) was not known as at 31 December 2019.
It is difficult to know when will be the right time to value a business as we do not know how long restrictions will continue or when the full impact of the pandemic will be identifiable. Other related complexities include the adjustments to reported results for trading and profitability which will be required over the affected period, and taking into account the temporary effect of government and bank concessions. Accordingly it is likely to be some time before a valuation can accurately reflect the full impact of COVID-19.
The current health climate has brought along with it a range of questions and uncertainties, and introduced additional pressures and stresses associated with the pandemic. To assist clients (and service providers alike) in navigating these times whilst simultaneously managing their family law matters, the following five points for clients to navigate Covid-19 can assist clients during this period and help to alleviate some of the associated uncertainties:
1. The Importance Of Parties And Practitioners Not Exacerbating Issues
Per the recent advice from the Legal Services Commissioner, it is imperative that whilst clients may be tempted to use present circumstances brought on by the global pandemic for their own personal benefit, practitioners have a duty to inform their clients that it is not appropriate to engage in sharp practice or exploit those who are vulnerable. For example, a client may be unreasonably withholding a child (contrary to a court order or parenting plan) on the basis that the child should not leave the home due to the pandemic. Parents should exercise their best judgement and a common-sense approach to determine what is, and what is not appropriate in the circumstances and seek alternative solutions, rather than exploiting the pandemic for personal gain.
2. Complying With Obligations
The pandemic does not provide an excuse for parties to ignore and unilaterally change their obligations pursuant to court orders and agreements. Unless a reasonable excuse applies, obligations to court order and/or agreements must be adhered to. In the event that a diversion from a current arrangement is unavoidable, again, parties should use a reasonable and common sense approach to find solutions to challenges. Affording the other party adequate notice if a change is anticipated, along with employing a solution-focused approach, will help to avoid unnecessary conflict.
3. Seek Intermediate Solutions
Access to the courts and the resulting delay to the progression of matters is understandably a primary concern parties may be experiencing. As such, parties can seek alternative dispute resolution solutions for discrete issues that require a timely response. Mathews Family Law and Mediation Services is available to provide interim FDR (parenting) and mediation (financial) to address such issues, with sessions that can be tailored to meet the clients particular needs, including shorter or longer sessions depending on the complexity of the issues.
4. Be Adaptive, Cooperative And Solution-Focused
We are all currently being required to adapt to changes in circumstances, whether they be working from home, or meeting with family and friends digitally as opposed to in-person. If, in a parenting matter for example, time arrangements with a parent or other person is unable to occur, rather than cancelling that time altogether, seek alternative methods to meet those obligations, such as video conferencing and/or– other digital communications. Wherever possible, engaging in honest, open and pragmatic communication with the other parent will assist in navigating the difficulties with changed circumstances.
5. Stay Healthy – Mentally And Physically
The importance of maintaining your mental and physical wellbeing is imperative, particularly in circumstances where you are unable to do so in the manner that you are accustomed. If working from home, try to maintain a healthy balance by allocating specific work hours, taking regular breaks and establishing a dedicated workspace. Try to maintain an exercise routine – for example, following an online training class, or even taking a walk around the block. If you would like to discuss your client’s particular interim issues and how Mathews Family Law may work with you to best assist and assure them, please contact us on 1300 635 529 or at email@example.com.
Oftentimes, particularly in circumstances where parties to separation are amicable and consider that they “get along well”, spouses divide their assets according to a personal agreement – that is, an agreement negotiated personally between the parties without the use of lawyers or the Australian courts.
Such an arrangement is not legally binding, and until an agreement is documented in one of the approved manners, the agreement is considered to be an informal agreement.
One of the most significant consequences of not formalizing your property settlement is the possibility that your former spouse is able to make an application for a property settlement in the future – one, two, or even several years later. Being required to undertake a settlement years after your separation can have detrimental impacts on your financial and mental wellbeing and makes it difficult to plan your personal affairs. This is particularly so when as far as you knew, the matter was dealt with and is in the past.
It is important, and a principal consideration of the Australian courts, that parties finalize the financial aspects of their relationship so that they can get on with their lives.
How Do I Formalise A Property Settlement?
Australian family law affords former spouses (or parties to a de facto relationship) two ways in which they can formally finalize a property settlement. These are:
1. Making an application to the court for consent orders; or
2. Entering into a binding financial agreement (‘BFA’) (also colloquially known as a ‘pre-nap’).
To reiterate, an agreement is not legally binding unless and until it is documented in one of these manners.
1. Consent Orders
Parties to a separation that have reached an agreement about their property settlement are able to apply to the Family Court of Australia for orders to formalize the agreement so that it is legally binding. This application documents and details:
The agreement reached by the parties; and
Its practical application.
When considering an application for consent orders in respect of a property settlement, the Family Court must be satisfied that the orders proposed are just and equitable.
Although the parties are not required to obtain legal advice in relation to an application for orders, it is highly advisable that you do so, as the documents required are technical in nature, and the consequences of an agreement not being documented correctly can be costly and time-consuming.
2. Binding Financial Agreements
Parties to a marriage or de facto relationshipcan enter into a binding legal agreement (essentially a contract) that details the financial arrangements should their marriage or de facto relationship break down.
A binding financial agreement can be entered into:
A binding financial agreement is capable of covering:
Financial support of a spouse (i.e. spousal maintenance), or the termination thereof that is, to prevent a former spouse from making an application for maintenance in the future should their circumstance change. This protection is not afforded solely by consent orders.
Unlike an application for consent orders, in order for a financial agreement to be binding, both parties must seek independent legal advice as to the effect of the agreement on the rights of either party and the advantages and disadvantages thereof. Additionally, and as distinct from an application for consent orders, a binding financial agreement is not required to be deemed as just and equitable by the Australian courts.
Other Important Considerations
You are not required to be divorced to formalize your property arrangements – in Australia, divorce is a largely administrative process and is distinct from property settlement matters.
You should also consider that when you are divorced, you have twelve months from the date that the divorce is granted to bring an application for a property settlement to the court. After this time, ‘leave’ (i.e. permission) from the courts to apply for property orders may not be granted, or may nevertheless be costly and time-consuming to pursue. De facto couples have two years from the date of separation in which to apply to the court for property orders.
Where To From Here?
Our accredited family law specialists are available to assist in all matters pertaining to your property settlement and can advise as to the method that is most suited to your particular circumstances. If you would like to speak to one of our family law specialists about any of your family law matters, please contact us on 1300 635 529 or email firstname.lastname@example.org arrange a free telephone consultation.
Divorce is painful for everyone concerned, especially children. During this challenging period, children need love, support and contact with both parents.
Creating certainty about the future is crucial for children when their parents separate. Parents coming to a mutual agreement about parenting arrangements can help to provide clarity and certainty.
When parents agree
Following separation, parents may agree on a parenting arrangement that works for them and the children. The agreement should focus on providing for the needs of the children and may include financial arrangements.
A parenting arrangement can be agreed orally, in writing or put into a formal court order known as ‘consent orders’ (which requires an application to the court but does not require a court appearance).
When parents don’t agree
If parents can’t agree on parenting arrangements, they can apply to the court for a parenting order. Usually (except in the case of family violence and other specific circumstances), parents are not permitted to apply for a parenting court order until they have first attempted family dispute resolution (mediation).
The court’s primary concern will be to protect the children from psychological or physical harm. The court will address this before deciding about parenting arrangements.
The Australian Government has published a book to help develop parenting plans. This resource can help prepare clear, practical parenting arrangements that are focused on what’s best for the children.
What to consider when creating a parenting agreement?
When making parenting arrangements, parents may consider a range of issues including:
The capacity of each parent to provide day-to-day care?
The age of the children?
The arrangements for the children before and after school and during school holidays?
Will the children spend their time with other significant people in their lives, like grandparents or other relatives?
The children’s educational needs?
Any cultural considerations?
The special needs of the children, including educational and medical?
The children’s wishes, having regard to their age and stage of development?
Other practical considerations such as transport and accommodation expenses?
While a routine may be best for your children overall, flexibility is likely to be an essential ingredient of a parenting agreement.
Relocating with children
If you are thinking of relocating with your children at a distance that would dramatically affect the time they spend with the other parent, you will need to come to an agreement with the other parent. If agreement is not reached, an application to the family law courts seeking permission to relocate the children will be required.
The proposed relocation destination may involve moving intrastate, interstate or overseas. Consider how the relocation will affect the children’s relationship with the other parent and ask yourself the question ‘Would the move be in the children’s best interests?’ – the court will ask the same question.
Consider what is best for your children’s short-term and long-term wellbeing.
Work out what concerns need to be addressed in your parenting arrangement.
Decide whether you want the parenting agreement to be an informal oral or written agreement, a parenting plan signed and dated by both parents or a court order obtained by consent or by order of the court (judge made order).
Contact an accredited family law specialist or family dispute resolution practitioner to obtain the advice that you need to resolve your post-separation parenting issues.
Separation and divorce hurts. There’s no getting around that fact.
Without special care and attention, children can be the unintended victims of separation and divorce. For them, their parent’s separation can open a floodgate of emotions, which, for children of any age can be difficult to process and express.
Many of the parents we speak with of course to want to minimise the impact of their divorce on their children, but do not always know what signs to look for. So how can you identify the signs that your child may be being adversely affected by your separation and divorce?
Although every child is unique, there are some clear signs to look out for:
Your child is feeling sad and cries more than usual
Your child could be sad and cry a lot. It might be more difficult than usual to comfort them. They might cry for no reason or react disproportionately to that which to you seem to be minor issues.
The things they cry over may have nothing to do with the separation and divorce however due to difficulty in understanding and accepting the changes to their family, their ability to deal with other issues may be diminished and they can become easily upset.
Your child gets separation anxiety
You or your former partner might find that your children don’t want to leave your side, or that they want to stay with the other parent and resist going with the other parent.
Separation anxiety for children is common when parents separate. Their anxiety is a result of the significant changes they are experiencing and staying close to one or both parents is their way of managing.
Your child is overly emotional and gets angry
When parents separate, it may cause the children to feel uncertain, insecure, worried or anxious. The complex emotions they feel and their inability to express their feelings may be ‘acted out’, such as angry verbal or physical outbursts or uncooperative behavior. Helping your children to express those complex emotions can help to release the anger and improve their wellbeing and anxiety.
Your child is withdrawn and has lost interest in activities
The stress of parents separating can result in children withdrawing into themselves and refusing to engage in activities they have enjoyed in the past. Some children stop hanging out with their friends, preferring to spend all their time in their room, keeping a distance from their family and doing things by themselves.
Decline in school performance
When children are tackling a stressful situation at home, it can directly impact on their performance at school. The stress at home takes so much of their attention and energy and they may have difficulty focusing in class.
At home, they may be anxious and distracted, unable to focus on homework, negatively affecting their academic performance.
The dip in academic performance can result in further anxiety for the child; they feel terrible about falling behind, compounding the situation with another stressful situation. If your child is struggling at school after separation, it is a good idea to inform the school about the situation at home.
Separated parents feel responsible for their child’s suffering. Parents must remain united in their commitment to ensuring that any adverse impact on their children is kept to a minimum, and, if any are identified they are immediately met with an appropriate united response. Conflict between parents will certainly exacerbate the impact on the children, potentially dramatically.
If you detect a dramatic change in your children’s behavior and emotions, and your efforts to support them aren’t helping, please seek urgent help. Early intervention can help both you and your children to get the support required to see you through this difficult time.
Australian family law and the family law courts recognize the close connection between family breakdown and family violence, and the resultant impact this has on victims of family violence – both adults and children.
Often when we hear references to family violence, our minds instinctually think of ‘violence’ in the traditional sense and behaviors such as:
Physical abuse (such as hitting or pushing someone);
Sexual abuse; or
Emotional and/or psychological abuse (such as yelling or insulting someone, undermining their self-worth or humiliating a person).
Australian family law legislation provides a wide interpretation and definition of the term ‘family violence’ and The Family Law Act and the family law courts recognize financial abuse (or economic abuse) as a form of family and domestic violence.
Financial abuse (or economic abuse) occurs when you are unreasonably denied financial autonomy that you would otherwise have had, and are denied any control over your personal and/or the relationship’s finances. In many cases, this type of abuse is subtle and not obvious and can be difficult to recognize. Financial abuse can also manifest slowly over the course of a relationship – steadily ‘creeping up’ until it becomes the new normal.
Some common examples of financial abuse include (but are not limited to):
Being denied financial autonomy and control of your own finances (e.g. a spouse/domestic partner taking complete control of the relationship’s money and finances).
Being provided with inadequate funds and having money withheld to meet your (and your children’s) reasonable living expenses. This is especially the case in circumstances where you are entirely or partially dependent on your spouse/domestic partner for that financial support.
Being constantly monitored, harassed and questioned about what you spend money on.
Having access to your bank accounts and credit/debit cards is restricted or blocked.
Being forbidden to work and earn an income of your own.
Having your pay taken from you and your access to it restricted.
Being made to feel that you are irresponsible and incapable of handling money.
Your spouse/domestic partner refusing to work or contribute to household expenses.
Your spouse/domestic partner incurring debts in your name (this is related to identity theft).
Being forced to sign financial documents (such as mortgage documents or personal loans) without being allowed to read or consider them.
Financial abuse is often accompanied by other forms of family violence, such as verbal abuse (e.g. angry outbursts and threats of violence), as well as physical abuse. Experiencing financial abuse can be just as damaging as physical abuse, and the affected family members often aren’t aware of how to seek and access support.
Our accreditedfamily law specialists are available to assist in matters involving family violence and financial abuse, along with all other facets of your family law matter. If you would like to speak to one of our family law specialists about any of your family law issues, please contact us on 1300 635 529 or email email@example.com a free telephone consultation.