Property Settlement - The Good, the Bad and the Ugly

Posted in: Family Law - Property Settlement Friday, 11 May 2018

Can your ex-partner make a financial claim against the assets you divided informally after separation? 
 
If your settlement was not finalised in accordance with family law requirements, a second bite of the cherry is possible.  And that inheritance or Oz Lotto win received after separation is up for grabs!

Finality is possible BUT…

The Family Law provides for finality following the termination of the financial relationships of separated couples, however:
  • A back-of-the-envelope deal will not be binding leaving open a second bite of the cherry by either party;

  • An inheritance or Lotto windfall received after separation can be included in a property settlement claim;

  • Sufficient time passing after divorce or separation does not guarantee immunity from a property settlement claim; and

  • Legislated time limits for bringing an action can be extended by the Family Court.

Don’t be complacent – seek legal advice regarding your Property Settlement Agreement. It could be your best investment possible. 

The Good

An alarming number of separated couples fail to formalise their agreement regarding the division of their family asset pool. Therefore, they risk facing a property settlement claim by their ex-partner when circumstances change. 
 
Fortunately, this risk can be eliminated by seeking legal advice at the time of separation. 
 
Your Family Lawyer will help you achieve the finality and certainty you need by ensuring that documentation recording your property settlement agreement is compliant with Family Law prescribed processes and time frames.

The Bad

A back-of-the-envelope agreement may allow your ex-partner a second bite of the cherry even though family assets have been divided under that agreement.

This could happen after:

  • The assets you received an increase in value over time more than the assets your ex-partner received;

  • Your ex-partner uses up all of the property they received due to a gambling or other addiction while you wisely invest and increase your asset pool; or  

  • You earn a significant salary (e.g. in mining) in the years following separation, accumulating a large superannuation entitlement, whilst your ex-partner with the major parenting role accumulates a meagre superannuation balance from their part-time employment.

The Ugly 

Your inheritance or Oz Lotto win received after separation can be included in a property settlement claim by your ex-partner.

In a recent case* the Family Court counted a significant inheritance received by the husband four years after separation, in the assets available for division. The wife’s claim was allowed to be made more than two years after the time limit. 

The Court confirmed that the inheritance did not have to be treated differently from the other assets.

What is Yours is Mine

An inheritance is just one example of where this can happen. Others are windfall gains such as Lotto winnings, a gift of money or property from relatives or the growth in value of investments such as shares, a business interest or real property.

This is all because the Court’s role is to divide all assets that exist at the time of the hearing before the Court, not at the time of separation, and because the Court has the discretion to extend the time frames prescribed by the legislation**, as in the case mentioned above.

Talk to your Family Lawyer when you separate

Finality and financial certainty for your future are vital and can be achieved following a relationship breakdown. However, you must have your agreed property settlement documented correctly within prescribed time frames and using prescribed processes under Family Law.

Call Murray Crawford or Sarah Marsden of CLO Lawyers to ensure that your property settlement agreement is finalised in accordance with Family Law requirements to achieve future financial certainty. It could be the best money you ever spend.
http://www.clolawyers.com.au/family

Contact CLO Lawyers on 07 4631 9000 

*Calvin & McTier [2017] FamCAFC 125 (12 July 2017)
**12 months from divorce for married couples; 2 years from separation for de facto couples

About the Author

Murray Crawford

Murray Crawford
Director
 | BEc, LLB, LLM (Applied Family Law)

With a passion for the law and a strong social conscience, Murray is a strong advocate who’s focused on achieving positive outcomes for his clients and supports the community through leadership positions with several not-for- profit organisations.

For more information about him, see details here.

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