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What You Need to Know About Division of Assets Owned by a Third Party

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When you are going through the process of dividing your assets during a divorce, it can be easy to assume that the only people who will be involved are you and your ex-partner. However, in situations where assets owed to, or owned by, a third party are tied up in the individuals involved in the divorce process, aforementioned third parties can become involved in the proceedings also. The following information explains how this can occur and what the result may be for the people involved.

You may be wondering how your divorce/separation can involve other individuals or entities…

Despite the fact that divorce and separation is often a very personal legal process, the truth is that it can have a wider effect on certain parties involved with the married individuals. The Family Law Act gives the court power to make orders which are not only binding on third parties, but can affect their rights and interests also.

The people who may be considered relevant third parties can range from…

  • Friends and relatives who may hold investments or personal loans with the individuals seeking a property settlement.
  • Companies or partnerships with whom the separating parties have shareholding interests.
  • Executors of deceased estates.
  • Banks and other financial institutions.
  • Trusts, trustees and appointors of trusts.
  • Business partners of one or both of the divorcing parties.
  • Creditors and Bankruptcy Trustees.

While the concept of involving other people, especially family and friends, in your divorce can seem daunting, it’s important to remember that the court only makes orders in a just and equitable manner. The order must be reasonably necessary and appropriate so as to preserve the rights of the third parties who may become involved.

 

So what are the situations in which third party assets become involved?

There are many situations in which a court may make an order that affects a third party. For example, in the situation where the divorcing parties gave a personal loan to friends or family, the court may order that all monetary reimbursement of that loan is to be given to one individual, rather than as a shared asset. This is also true if money is owed to a third party; the court may find that one individual should incur the financial responsibility of paying it back. Similarly, in situations where companies are involved, the court has the power to order the transfer of debt or shares into one individual’s name.

In every situation, the court takes the appropriate measures to ensure that the order is appropriate and fair on all individuals or groups involved by looking at the relevant facts presented by the relevant parties.  It is important not only for the separating individuals to get advice from a specialist family lawyer, but also for the third party to get such advice as to their rights and entitlements.

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Your Guide on Appealing a Court’s Decision

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When it comes to matters of family law, it can often be hard to accept a decision that a judge has made as it often affects areas of our lives that matter most to us. However, it is possible to have the case reconsidered in some circumstances where there is legitimate reason to believe that the judge made an error. This is called an appeal, but before you decide to go down this avenue, there are a few things you should be aware of.

What is the process of filing for an appeal?

As mentioned previously, you cannot appeal a decision simply because you are unhappy with it; you must prove that there are valid grounds on which to assume that there was an error in law or fact. Because of this, you must follow a strict procedure to ensure that all the necessary needs are met within a specific timeframe.

The process is as follows…

Within 28 days of an order being made from a judge, a Notice of Appeal can be filed in the Regional Appeal Registry. When doing so, the appellant must pay a filing fee.

An appellant must also submit a draft index to the appeal books within 28 days of filing the Notice of Appeal. If this requirement is not met within the prescribed timeframe, the appeal is considered to be abandoned.

Once the draft index is filed, the appeal is then taken to a procedural hearing. During this hearing, the appellant will receive orders in regards to what documents and other information is required for the Full Court hearing.

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Appeal hearings are taken before the Full Court, which in family law is three judges from the Family Court.

What you should know before pursuing an appeal

Like any legal process, appeals can be lengthy, expensive and very emotionally taxing on all parties involved. Before you file for appeal, it is important that you speak to an experienced family lawyer about your options and get their advice as to whether you should proceed in this direction.

An important thing to remember during this process is that appealing a court’s decision does not stop that order taking effect. This means that all parties involved must obey the order handed down from the court until it is overturned by the Full Court, if it is at all.  Your may therefore wish to apply for a “stay” of the original decision until the appeal has been heard.  Your lawyer can assist you with this process also.

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What You Need to Know Before Filing for Divorce

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It goes without saying that the breakdown of a marriage is difficult for everyone involved, especially when you’re working through the emotional and legal repercussions at the same time. While divorce proceedings are rarely a walk in the park, there are a few important things for you to know before you go ahead with such a big decision.

It’s a process

In Australia, the dissolution of marriage is done in multiple separate steps; the granting of a divorce order, property arrangements and, if there are kids involved, parenting arrangements (although not necessarily in that order). Contrary to what many people expect, the granting of a divorce is usually the most straightforward step, while the other arrangements are lengthier and more tedious due to the nature of what is being discussed and agreed upon. Some simple research from reputable sources either online or in person will help you better prepare for what is to come.

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Going to court shouldn’t be the goal

We hear it in movies all the time – “I’ll see you in court!” – but when it comes to divorce proceedings, it’s best to try and avoid this situation altogether. What the movies don’t tell you is that walking into the courtroom to fight with your ex-husband or wife is not only emotionally taxing, but time consuming and expensive. That’s why it’s always best to explore other avenues for resolution, such as mediation or arbitration, leaving a court case as a last resort if you can’t seem to come to a fair agreement. This will allow you to discuss your wants and needs with your ex-partner in person, with the hopes of it remaining civil and both of you can leave happy with what is agreed upon.

You will want the advice of professionals

Divorce can be tricky, especially if you’re not on the friendliest of terms with your ex-partner. Luckily, there are a range of professionals who you can go to for valuable advice about how to move through the process in a way that will hopefully provide you with a fair outcome. Finding a good family lawyer whom you feel comfortable speaking openly with is crucial to achieving a positive outcome that you are happy with. You might need to talk to a few different lawyers before you find the person you want representing you, but it will be worth it in the long run. Consulting a financial advisor or accountant, in conjunction with your lawyer, is also a great way to determine what you should be asking for in the settlement. And finally, a therapist or counsellor for you or your kids should be a priority, as it will ensure that you get the emotional support you need during such a difficult time.

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What Is a Prenuptial Agreement and Do I Need One?

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Whether you are married or in a de-facto relationship with your partner, putting the appropriate framework in place to easily and fairly divide your assets in the event that you separate is very important. A Financial Agreement (“prenuptial agreement”) helps to do this by representing both of your wishes in a way that is recognised by the court, with the aim being to make the process easier if the need to redistribute your common assets ever arises.

Also known simply as a “prenup”, a common misconception about these contracts is that they are only for couples who are about to get married. While this is certainly one situation in which a prenuptial agreement is signed, the truth is that any two individuals in a relationship can enter into one of these contracts before, during or after the relationship.

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So how do you know if a Financial Agreement is right for you and your relationship?

Contrary to what many people think, these agreements aren’t only beneficial to couples in a high income bracket, or for people who earn significantly more than their partner. A “prenup” is a great option for any situation where one or both people involved are bringing significant assets into the relationship, or to protect anticipated future assets, such as a future inheritance. This can include property, businesses in your name and any money that might be in a savings account. It’s also a good way to determine how you will split any common assets you may already have – such as a house or a car – if you happen to end the relationship. As many of us know, deciding who gets what after a break up or a divorce can get very messy very quickly, so it’s wise to agree upon a civil resolution while you are in the midst of love.

However, for some people, it’s not about the assets at all; it’s about the debts. Throughout the prenuptial process, you and your partner can contractually agree on how you will go about paying off important financial obligations such as outstanding loans, university fees or credit card debt. Along with this, you can also get into detail about how this will influence the amount each person contributes to other costs like household fees and bills etc.

While nobody enjoys thinking about the potential for their relationship to not last the distance, a Financial Agreement provides a foundation of open communication and transparency on which two people can build their lives. Not only does it ensure that you both have your respective assets accounted for, but it can help you to avoid a lot of post break up stress if you ever have to go your separate ways.

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One Family Law Myth Exposed

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Do we start at 50/50?

After the breakdown of a de facto relationship or marriage, parties are usually uncomfortable about their financial and property entitlements.

There is a myth that there is a presumption that assets should be divided equally. There is, however, no automatic entitlement in property and financial matters. Each parties’ entitlement depends on their circumstances and the entitlement should be determined and estimated by an experienced family lawyer.

There is no presumption of a percentage entitlement in relation to a property or financial settlement.

The things that are taken into account when determining a property/financial settlement.

In Australia, the Family Court determines how property and financial matters are to, the Family Court determines how property and financial matters are to be settled by reference to the Family Law Act. Family lawyers will tell you what is to be taken into consideration by the Court. Again, there is no formula to be applied as the settlements are based on all of the facts provided and the discretion given to the Court by the Act in deciding each case.

The Court will, however, take into account the following factors:-

  1. Whether it is just and equitable to make an order in the first place.
  2. The value of all assets and liabilities are identified so as to establish the net assets, including assets held individually, in partnership, by companies and by trusts.
  3. The contributions made by each party to the acquisition, maintenance and improvement of the assets, including financial contributions, assets owned at the commencement of the relationship, windfalls such as gifts from parents, inheritances, redundancy packages, etc.
  4. Non-financial contributions made by each party such as where one party looks after domestic matters or children to the detriment of their career.
  5. Indirect financial contributions such as giving up a career to allow the other party to further their own career.
  6. The future needs of the parties such as whether they have responsibility for the care of children, their income earning capacity, their qualifications, age, financial resources, health and superannuation.

Conclusion

Remember that there is no presumption of a 50/50 split as a starting point and that each matter is decided upon the particular circumstances of each case.

The Family Court can make Orders that are just and equitable in relation to division of property.

Separating parties should obtain independent legal advice about their entitlements at the earliest opportunity.

Should you seek assistance with property settlement entitlements following the breakdown of your marriage or relationship, email us [email protected] or call 03 9088 3184 (Melbourne) or 02 9188 2031 (Sydney).

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What is a Prenup?

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Marriages and defacto relationships often fail leaving parties in a quandary as to how to settle their financial affairs. In the event that you are organised and have a Pre-Nuptial/Financial Agreement, then your property and finances will, in all likelihood, be divided in accordance with your wishes in the event that your relationship breaks down.

Pre-Nuptial/Financial Agreements can be made at the start of a relationship, during the course of a relationship or after the relationship has broken down.

Pre-Nuptial/Financial Agreements are regulated by the law and include a provision that each party must be represented by an independent legal advisor who must give those parties certain advice and certify that they have done so. In the event that these technical requirements are not adhered to, then it is quite possible that a Court will overturn the Agreement and it may be of no effect.

Pre-Nuptial/Financial Agreements apply not only to marriages but in relation to defacto relationships as well. You are living in a defacto relationship when you and your partner are living together on a genuine domestic basis but you are not married to each other. A large number of matters are looked at to define defacto relationships, including the length of time that you have been in the relationship, whether finances are intermingled, whether you live together under the one roof and whether you have children together. There are other matters that are considered as well.

In the event that your relationship breaks down and you do not have a Pre-Nuptial/Financial Agreement, then it is essential that you obtain immediate legal advice on your rights and obligations. We can assist you negotiating a settlement, however, it is always wise to give early consideration to entering into a Pre-Nuptial/Financial Agreement so that the future contains some certainty.

Should you have a query, contact one of our lawyers on (03) 9088 3184.