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Misconceptions surrounding Family Law

Separation, Divorce, Finance, Children Family Lawyers MelbourneAfter the end of a relationship, many couples struggle to deal with their future, their finances, and their new-found single status.

There are many misconceptions surrounding separation and particularly property settlements such as:

1.  You have to be divorced first
2.  If I get the kids I get most of the assets
3.  I get to keep my inheritance
4.  Only assets at the time of separation count
5.  I did not get married so the Court has no power over my assets and we keep our own
6.  I can do a settlement myself without the Court or a Lawyer

In reality, the truth is as follows:

1. You do not have to be divorced to finalise your property with your estranged spouse.

In accordance with section 48 of the Family Law Act 1975 ("the Act"), the Court is able to make a Divorce Order if the parties have 'separated and thereafter lived separately and apart for a continuous period of not less than 12 months immediately preceding the date of the filing of the application for the Divorce Order'. Therefore you do not need to wait until you are divorced to seek a property settlement. For more information read more about Financial and Property Settlements.

2. The Family Law Act applies equally to de facto relationships.

On 1 March 2009, the law concerning de facto relationships changed, allowing couples previously in a de facto relationship to apply to the Family Court to obtain a property settlement. Therefore the assets of any domestic relationship can be dealt with by the Court. For more information, read up on De Facto Relationships.

3. If the children live with one parent, that parent receives an adjustment but that is nowhere near the full story.

Whilst the future care of the children is a consideration in determining a property settlement and allowance is usually made for this, the law applies a stepped process to determine a property settlement.

The alteration of property interests is determined in accordance with section 79A of the Act for married couples and section 90SM of the Act for de facto couples.

The High Court case of Stanford –v– Stanford (2012) HCA 52 implemented a five step process to resolve a property settlement, amending the previous 'four step test' confirmed in Hickey –v– Hickey and Attorney-General of the Commonwealth of Australia (2003) FamCA 395. The five step process is as follows:

(i) Is it just and equitable to make an order for a property settlement?
(ii) What is the equity pool?
(iii) What are the contributions? E.g. financial and non-financial contributions; inheritances; gifts; windfalls; equity at the commencement and end of a relationship and at the time of making a settlement.
(iv) Do any adjustments need to be made for future needs of the parties? E.g. care of the children; future needs; maintenance.
(v) Is the settlement just and equitable?

For more information, go to Children, Separation and Divorce.

4. An inheritance is not quarantined from the asset pool.

An inheritance is generally considered within the assets of the marriage and is not left to one side. To determine its 'weight' the court will consider:

(i)  When it was received or when it is expected to be received;
(ii) The size of the inheritance compared to the asset pool;
(iii)  How the inheritance was applied;
(iv)  Whether it was 'mixed' with other assets of the parties;
(v)  The contributions of the parties to the inheritance.

For more information read more about Financial and Property Settlements.

5. A property settlement is not binding unless the Court or a Lawyer is involved.

There are only three ways to obtain a legally binding settlement: a Binding Financial Agreement, Consent Orders filed in Court, and an Order made by a Judge. If parties do not settle their case in one of these three ways, they can find that the 'settlement' they thought they had obtained is not actually a settlement at all.

For more information read more about Financial and Property Settlements.

6. All assets at the time of the property settlement are taken into account.

Many estranged couples wait significant periods to commence resolving their property issues. As a result they put themselves at risk of having the other party receive some benefit for their work after the end of the relationship if they wait a long time to resolve their property settlement because the Court looks at the assets at the time of its decision not the time of separation.

For more information read more about Financial and Property Settlements.

Need help?

If you have separated or thinking of separating (or you are concerned that your 'settlement' is not actually a settlement at all), please contact Natalie Fielding, Accredited Family Law Specialist and Director of Family Law, natalief@lewisholdway.com.au or (03) 9629 9629.