It is easily the most talked about but least properly understood area of law, yet everyone seems to have an opinion about it, mostly built on urban myth and mistruths rather than actual experience and knowledge. At Di Rosa Lawyers, we are all about educating our clients, as well as solving their problems.
It is important to understand the nature of the legal problem, to appreciate the solution and the processes that have to be carried out to achieve that solution. Time and time again, we find ourselves dispelling myths and misunderstandings about this most personal area of law.
Here are the top 8 myths we have exposed to our clients in relation to the breakdown of a relationship and the division of assets:
- Possession is nine tenths of the law.
The definition of “property” is very broad under the Family Law Act.
Whether you or your spouse are the registered owner of a property is almost totally irrelevant, because the property of one or other or both of the parties to a marriage or relationship is considered property of that marriage or relationship.
Similarly, if you or your spouse is in possession of an asset, for example, the former matrimonial home, does not necessarily mean that they will end up with that asset in the settlement.
2. All marriages end in 50/50 settlements.
Perhaps the biggest myth in family law. There is no presumption that parties to a marriage or relationship have to divide their assets equally in the event of separation.
A number of factors need to be considered, including, period of the relationship, the financial and non-financial contributions of either party to the assets of the relationship, future needs of either party and so on. It is true, though, that the longer the relationship, the more likely the Courts will view the contributions and future needs of the parties as being equal, but there is still no assumption or presumption at play here and all factors need to be considered.
- Post separation assets are irrelevant.
One of the most important reasons for having a property settlement is to finalise your financial ties with your former spouse. Until that happens, any assets of the parties, whether acquired during or after the end of the relationship, are considered assets of the relationship.
The Family Law Courts can only decide how assets are to be divided by looking at the financial circumstances of the parties at the date of the hearing, not the date of separation Therefore, there are situations where property or debt acquired after separation by one party is brought into the property pool. Examples of this are real estate or assets acquired after separation (even with another person), increases in superannuation and savings, and increases in values in the former matrimonial home.
- Separation is the other party’s fault, and they should have to pay for it.
It is not uncommon for separated spouses to be motivated to make life difficult for the other party in property or parenting proceedings following a bitter breakdown of the marriage where they perceive that the other party is at fault for the breakdown (eg because of infidelity).
However the Family Law Act 1975 established the principle of no-fault divorce in Australian law. This means that the Courts do not consider which spouse was at fault in the marriage breakdown. Fault as such is rarely used as a device in Court proceedings unless the conduct of a party is relevant to the issue of which of the parents the children should live or issues such as property settlement.
The fact that a spouse may be perceived by the other party as lazy or not good with money will not usually impact on the issue of property settlement, but there may be instances where the conduct of a party may have had a significant effect of the assets available for division (such as where a party has gambled away significant money, or deliberately run down their business).
- Pre-nuptial agreements are only used in America.
Pre-nuptial agreements, or “pre-nups” as they’re colloquially known, have been used in the United States for many years and are often referred to in the Hollywood press. You may not realize that “pre-nups”, or Binding Financial Agreements as they are known in our part of the world, have been a feature of Australian family law for nearly 15 years and are widely used as an asset protection mechanism by people going into a new relationship or marriage. In simple terms a BFA records what assets and debts each person brings into the relationship. Finally, it sets out what will happen in the event that the relationship breaks down in particular how the couple’s finances are dealt with and how the assets are divided. Provided the BFAs are prepared and signed in accordance with the Family Law Act they are legally binding.
- I can exclude assets from settlement by putting them in someone else’s name.
The Family Law Courts follow a procedure when deciding how to divide up a couple’s property interests. Essentially, that process is based on the parties’ respective contributions, whether financial or non-financial. The Courts need to work out the ‘pool of assets’, which must include all of the assets owned by the parties regardless of how they came about.
After working out how the property pool is comprised, the Courts will then look at how those assets came into being and consider the various contributions made by both parties to the accumulation of the assets.
Therefore, it is not appropriate for a party to take it upon him or herself to transfer ownership of a property or other asset that they don’t want to have included in the asset pool, because such a transfer would be deemed an attempt to defeat a claim and accordingly may be set aside by the Courts. It is also not appropriate to claim that an asset which is not registered in your name, but over which you have control (such as a family trust) is not your asset and therefore an asset of the marriage.
- I have to get a divorce first before I can settle with my ex spouse.
A common misconception, Australians sometimes talk about “divorce”in the same terms as “separation”.
The fact is that once you become separated, you can immediately start negotiating a financial settlement. You do not need to wait to get a “divorce” which you are only entitled to after 12 months of separation.
On the other hand if you have not finalised your property settlement by the time of your divorce, you need to do so within 12 months of your divorce. This is because there is a time limit of 12 months to start Court proceedings after you are divorced.
- I’m entitled to 100% of what I put into the relationship.
As stated above, there is no rule that property should be equally divided on a 50\50 basis. A person will not necessarily get half of everything, or be able to keep those things in her or his name that they brought into the relationship or he paid for during the relationshiip. It all depends on each person’s contribution and their needs.
The Courts have very wide powers to divide the property in whatever way it thinks is fair. No two cases are the same and each person should get independent legal advice on their case from a lawyer who specialises in family property law. The Courts consider two separate factors when making decisions on property – first, the contributions each person has made to the property and secondly, their future needs.
It may be that, in very short relationships, say less than 5 years, the Family Law Courts are more likely to give greater weight to the contributions of one party compared to the other which may result in that party being awarded an asset that they brought into the relationship.
It is perhaps understandable that there are myths and misunderstandings in family law, particularly around property settlements. How often does it happen in one’s life? Hopefully never. It is important to understand that no two cases are the same and the Courts have very wide discretion to make decisions, which gives rise to sometimes wildly different outcomes for clients.
If you are unsure of your legal position, don’t rely on gossip from your neighbour or “bush lawyer” advice from your mate who happens to be a JP. Talk to us now on 8354 2233. The first telephone call is free, confidential and completely without obligation.