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Inheritances and Family Law

Family Law

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 a 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.

Amount received

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 favor 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 formalized, 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 finalize and formalize 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 favor of the other party who does not receive the inheritance.

Future inheritances

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 finalize 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 enquiries@mflaw.com.au.

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Mediation Mediation and Family Dispute Resolution (FDR)

Family Law and Mediation – Is Mediation Appropriate For Me?

dispute resolution lawyer

Mediation (also known as ‘Family Dispute Resolution) is a powerful tool for resolving parenting child custody and property settlement asset division disputes following separation and divorce, with a greater sense of satisfaction and ownership by the parties of the resulting agreement.

You may be feeling uncertain about whether or not FDR / mediation is ‘appropriate’ for you.

The answer to this question may or may not be obvious, for example:

  1. FDR / mediation will be obviously not appropriate if a party refuses an invitation to attend an initial intake meeting with an FDRP / mediator –all FDR / mediations commence with an initial intake session, including risk assessment. The decision to participate in FDR / mediation must be voluntary and cannot be ‘imposed’.
  2.  FDR / mediation may be appropriate even if a party expresses concern about a power imbalance and their capacity to participate – alternative modes of FDR / mediation will be considered at the initial intake meeting, including the options of joint sessions, shuttle mediation, remote attendance via skype/telephone/email. The availability of alternative modes enhances access to FDR / mediation.
  3. FDR / mediation will be appropriate if both parties consent to attend – a choice of mode of attendance ensures that parties wishing for a non-litigious approach have the opportunity to utilize FDR / mediation notwithstanding concern about doing so.

For more than a decade Vanessa Mathews, accredited family law specialist and accredited FDRP and Mediator, has been providing FDR / mediation services in conjunction with her work as a family lawyer in Melbourne’s eastern suburbs. During this time Vanessa has provided FDR / mediation to hundreds of clients. Whilst there will always be the need for the Family Court to resolve the most complex parenting child custody and property settlement asset division matters, Vanessa continues to be in awe of, and humbled by, clients who choose to take responsibility for their parenting child custody and property settlement asset division and spousal maintenance issues via FDR / mediation – rather than have a Family Court Judge do this for them.

Vanessa is available to assist you to achieve a mediated agreement to:

1. Resolve your parenting issues including:

  1. Interim issues:
    i. Child custody following separation, eg shared care
    ii. Single issue disputes, eg choice of school
  2. Final issues:
    i. Child custody when one parent wishes to relocate with the children
    ii. Ongoing parenting child custody arrangements
  3. Documentation of agreements
    i. Parenting Plan
    ii. Family Court Consent Orders

2. Negotiate property settlement and spousal maintenance issues including:

  1. Interim issues:
    i. The use or sale of the home following separation
    ii. Child support
    iii. Spousal maintenance
    iv. Disclosure and valuation of assets
  2. Final issues
    i. Property settlement asset division
    ii. Child support
    iii. Spousal maintenance
    iv. Superannuation splitting
  3. Finalization of the agreement:
    i. Family Court Consent Orders
    ii. Binding Financial Agreements

Please contact Mathews Family Law & Mediation Specialists on 1300 635 529 to discuss your FDR / mediation needs.

Mathews Family Law & Mediation Specialists offer fixed fees for FDR / Mediation.

In 2019:

  • Vanessa Mathews and Mathews Family Law & Mediation Specialists are rated by ‘Three Best Rated’ as one of the three best divorce lawyers in Melbourne.
  • Vanessa Mathews is recognized by Doyle’s Guide to the Legal Professional as a ‘Recommended Family Lawyer’ and ‘Recommended Family Law Mediator’ in Melbourne.
  • Mathews Family Law & Mediation Specialists won the Global Law Experts Awards for ‘Best Family Law Firm Australia’ and ‘Best Family Law Mediator Australia’ awards.
  • Mathews Family Law & Mediation Specialists is a family law firm in the eastern suburbs of Melbourne – Level 2, 599 Malvern Road, Toorak.
Categories
Articles Property Disputes Property Settlements

Property Disputes – Negotiate and Settle ASAP

The importance of family law settlement negotiations cannot be overstated.

In a recent Family Court decision, the judge made a costs order against the wife – that she pay the husband $30,000!

Why?

Because, in the judge’s opinion, the wife had let her anger and distress ‘drive the litigation’ and she had failed to make a ‘meaningful attempt’ to negotiate a settlement, including aggressively rejecting the husband’s settlement offer which ended up being more than the judge awarded her.

So, the wife’s poor attitude to settlement resulted in:

1. A lesser share of the asset pool

2. A costs order.

I wonder how she’s feeling now – even more, angry and distressed?

The moral of the story – negotiate, negotiate, negotiate and settle, settle, settle.

Vanessa Mathews is an accredited family lawyer and mediator.

If you want to reach a negotiated settlement ASAP,

contact Vanessa on 1300 635 529 or vanessam@mflaw.com.au

Categories
Divorce divorce

Why is the divorce rate declining?

divorce process australia

By 2016 the marriage rate in Australia had declined from 9.3 marriages per 1,000 residents to 4.9 in 2016.

The divorce rate has also been in steady decline since its height in 1976 (for obvious reasons) to 1.9 in 2016.

I wonder if the reasons for the declines set out in this American study – that who gets divorced is a function of who gets married – are applicable to the Australian social context?

https://www.theatlantic.com/family/archive/2018/09/millennials-divorce-baby-boomers/571282/

Categories
Articles Case Studies Property and Superannuation

A Curly Case for the Commissioner of Taxation

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A CURLY CASE FOR THE COMMISSIONER OF TAXATION

CAO & TRONG AND ANOR [2018] FAMILY COURT OF AUSTRALIA

There is no escaping the Family Court and the Commissioner …

The wife filed an application for a final property settlement, including an order that:

1. The husband indemnify her ‘against any liability present or contingent including tax … in respect of E Pty Ltd’; and
2. The husband be responsible ‘for all income tax assessed on income received or deemed to have been received by the husband’.

In the period 2005 -2012, the husband incurred a tax liability of $5,519,200 (unpaid).

The Commissioner of Taxation sought leave to intervene in the property settlement proceedings and an order that the court first makes provision for the payment of tax liabilities to the Commissioner prior to any property distribution to the parties.

Before the matter could be determined by the court, the parties effectively withdrew their respective applications for final property settlement orders.

The wife advised the Commissioner that there was therefore now no basis for it to intervene.

The Commissioner was successful in its application for an order that the court does have the jurisdiction and power to determine a claim against a creditor pursuant to section 79 property settlement proceedings – even if the parties have withdrawn their applications.

The case was run by the Commissioner of Taxation as a ‘test case’ and confirmed that even when the parties themselves no longer seek the assistance of the court to achieve a final property settlement, if the Commissioner has already intervened in those proceedings, the court has jurisdiction to make a final order in its favor – and the liabilities owed to it enforced as an order of the Family Court.

In other words – there’s no avoiding the Commissioner – no matter what agreement the parties themselves might ‘agree on, there’s no way around their obligations to it.

I hope that the year is treating you well – even though it is flying by.

We continue to offer a free 15-minute telephone consultation to your clients in need of family law advice – they can call me on 9804 7991 or email enquiries@mflaw.com.au to book a time.

And remember, we’re always happy to help you out with your own ‘curly cases’.

Stay in touch,

Vanessa and the Team at Mathews Family Law & Mediation Specialists

Categories
4 Step Property Settlement Process Property Settlements

Inheritances and Divorce Property Settlement?

family law property settlement

Inheritance – What Happens to Them In Divorce Property Settlement

An article was written for accountants and financial advisors by Vanessa Mathews of Mathews Family Law & Mediation Specialists.

Your client has the good fortune to receive a ‘windfall’, such as an inheritance or a lotto Your client and their partner separate.

Will the windfall be included in the property settlement asset pool?

Your client will likely answer ‘No Way!

From the court’s perspective, windfalls are not a special category of contributions and they must be:

  1. Included in the asset pool.
  2. Considered in the same manner as, and holistically with, all of the other contributions made during the relationship– financial, non-financial, homemaker and parenting.

The timing of the windfall will however be relevant as to how the windfall is ‘shared’:

  • A windfall received early in the relationship is likely to be treated equally.
  • A windfall received shortly before separation is less likely to be treated equally.
  • A windfall received after separation is even less likely to be treated equally.

The short answer is that the windfall is unlikely to be retained in full by your client.

I’ll leave it to you to break the bad news to them.

Next Steps Before a Divorce Property Settlement

You and/or your client may benefit from discussing the circumstances of the inheritance or other windfall and divorce property settlement before taking any action such as distributing or disposing of the asset in a manner that may adversely impact your client.

Vanessa Mathews is a family law specialist with the expertise and experience to advise you about your family law property settlement issues.

Please call Mathews Family Law & Mediation Specialists on 03 9804 7991 or email enquiries@mflaw.com.au to speak with Vanessa Mathews.

Resources

Mathews Family Law – Dividing the Property: http://mathewsfamilylaw.com.au/divorce/divorce-videos/dividing-the-property-in-victoria/

Family Court of Australia: http://www.familycourt.gov.au/wps/wcm/connect/fcoaweb/home

Federal Circuit Court of Australia: http://www.federalcircuitcourt.gov.au/wps/wcm/connect/fccweb/home