Whilst there is no mathematical equation that we can apply to determine what division of property is “just and equitable” on the breakdown of a marriage or a defacto relationship there is a fairly clear 4 step process to follow.
1st we need to identify and value the assets of your relationship. When you instruct us you will need to give us as much detail as you can about your assets and liabilities, whether those are in your name, your spouses name, or a trust or a company name.
2nd we need to determine what financial and non financial contributions each of you have made to the build up of the assets and liabilities of your relationship. You will need to give us information about such things as assets and liabilities each of you had at the beginning or your relationship, any inheritances, gifts or other lump sums either of you have received as well as your employment and care for you family and children.
3rd we will need you tell us about your respective earning capacities, your state of health and that of the children, the number and ages of the children and how they are to be cared for and a range of other facts that might give us some insight into your future needs.
4th we will need to primarily look at how any settlement might be structured to ensure that the outcome is a just and equitable one. We will need you tell us whether, for example retaining your home is more important than retaining a large amount of superannuation, or visa versa, or a whole range of other issues around which assets are to be retained, which are to be sold and which are to be shared in some way in order to achieve a result that is just and equitable for both parties.
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There are a variety of options available to address these concerns and ensure assets are protected during the negotiation or Court process.
The most important thing you can do is to ask for our advice and assistance as early as possible and provide us with as much information as you have about the potential dangers.
We will give you immediate and practical advice about what you can do to best protect your assets so they are available for division as intended by the legislation.
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Often people will have a combination of different structures as part of their financial, tax and asset protection strategy and the dismantling or reorganization of those structures on the breakdown of relationships can potentially expose people to issues of stamp duty, capital gains tax, GST, income tax and other issues with the potential to create significant exposure to financial liability.
We will work with your traditional advisors to ensure we understand your long term objectives and to ensure that we, with your advisors, take a holistic view of your needs going forward into your financial future that will include not just a consideration of percentage entitlements but also a consideration of the often much more difficult and complex issues associated with taxation, financial planning and asset protection.
A result that delivers you the percentage you want but leaves you with a taxation liability or limited future financial planning opportunities will prove to be a disappointment in the long term.
If you don’t have established advisors in the areas of taxation, superannuation, financial planning and advice and asset protection we can refer you to well qualified and experienced professionals with whom we can work during your negotiations and who you can retain in the longer term if you so desire.
Third parties, who can be anyone from parents or other relatives who might have provided financial assistance, to banks or other financial institutions, creditors, trustees in bankruptcy, unrelated directors or shareholders and others involved in spouses’ financial affairs all have the capacity to be involved in court proceedings between spouses. Again, the involvement of these people can create much greater complexity, and sometimes flexibility of outcome and you need the expert advice of an experienced Family Law team to assist you in these circumstances.
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For couples who are or have been married, superannuation entitlements can usually, depending on the type of superannuation fund involved, be split between the spouses creating an entitlement to superannuation in a spouse who previously didn’t have a fund or achieving an equalization of entitlements between spouses or achieving a percentage adjustment between the spouses which can either reflect the agreed percentage division of the other assets or achieve a result that otherwise assists in achieving a result that is just and equitable in an overall sense.
The rules that apply to the splitting of superannuation are complex and the valuation of the interests held in those funds are subject to particular valuation formulae that in many instances result in a value that can be very different to the amounts shown on the face of the superannuation statement that funds are required to provide to their members at least annually.
Those superannuation statements can provide us as your lawyer with a great deal of useful information and if you can provide us with a copy of a statement for the superannuation fund of which you or your spouse is a member then it will be easier for us to have the fund properly valued and ensure you receive the correct amount by way of superannuation.
If you don’t have the information necessary then we can, as long as we know the name of the fund, in most instances, obtain the necessary information from the Trustees of the superannuation fund on a confidential basis.
Many people now have Self Managed Superannuation Funds (SMSF) (there are about 250,000 of these funds in existence in Australia). There are special rules that apply to these funds and severe penalties that apply if those rules are breached in a way that makes them “non-complying”. We have a team of consultants with whom we work closely on all issues relating to SMFS. The processes required to split the assets in SMSFs are also complex and require specialist knowledge. The possibilities to be creative in the ways in which assets can be divided in a way that has the potential to ensure both spouses can move forward confidently into their financial future can be greatly enhanced with expert knowledge in the area of SMSFs.
Defacto Couples
Superannuation splitting is, unfortunately, not available as an option to those couples who have never been married.
That doesn’t mean that superannuation isn’t relevant. It remains a very important factor in the division of assets and we can show you the very real ways in which the existence of superannuation assets can make a real and often substantial difference in the division of property between defacto and same sex couples.
