What are some of the things to be aware of regarding your property rights after you go through a family separation
A solicitor’s job is not to take on the role of a counsellor because there are many more qualified persons to help in that respect. Solicitors do however see the end part of marriages quite occasionally in their work.
In all cases, parties and their children suffer financially and emotionally whenever there is a marriage break up. However, in some cases such a break up may be inevitable and may occasionally result in 2 separate but happier families.
These are some matters that will have to be considered in the event of a marriage break up.
3 matters need to be considered when there is a break up.
- Property settlement;
- Matters related to the children including contact or access and child maintenance.
- This newsletter discusses property settlement only.
What is property settlement?
If you are married to someone and you separate or divorce, you will want to split up the property accumulated during the marriage at some stage. This process is called "property settlement."
The 1st question is what is included in the legal definition of "property"?
In the context of the Family Court, property includes many different types of assets, eg:
- home or land;
- parties’ bank accounts;
- household furniture;
- shares and debentures;
- paintings, antiques, and other works of art;
- clothing and jewellery;
- superannuation entitlements;
- insurance policies.
In fact anything that can be given a monetary value is included.
Thinking about a property settlement
You do not need to be divorced before considering property separation. You can apply to a Court before your divorce or after. However you have 12 months after the "decree absolute" of your divorce to finally file for property settlement. The Court may tell you that you are out of time if you file after the 12 month period. You can ask the Court for permission to file an application out of time if you have good reasons.
What law applies?
The Family Law Act (Commonwealth) and the Family Court Act (WA) covers all areas of property division. In Western Australia, if you have been in a defacto relationship, you are now able to access the Family Law courts.
Do I need to consult a lawyer?
It depends on the assets that you own, but usually it is well worth employing a lawyer to make sure you get what you are entitled to. Property settlement issues can be very tricky. The effect of a bad settlement may be difficult to change through the Court system.
Important matters to consider:
Protecting your home
The first thing your solicitor should advise you to do if you have a home or any other land is to lodge a caveat to prevent it from being sold without your knowledge.
If you are joint owners on the title of a home, no one can buy the property without your permission. If the property is only in your husband/wife’s name, or the name of a company in which they have an interest, you need to put a caveat on the title to protect your interest.
A caveat prevents the Titles Office from allowing the property to be dealt with unless you are notified and given the opportunity to object to any sale or transfer of the title.
It currently costs approximately $400 to lodge a caveat.
It may also be important to inform your bank to disallow any further borrowing on the property.
Getting Ready to Commence Proceedings: What to think about
How can I prepare?
You should sit down and list all the assets you both own. These should include properties in one party’s name.
You should try to include the date and the cost of the purchase of each asset.
Gather as much paper evidence as possible.
How does the Court decide on how to split the assets between my spouse and I.
The Court will usually place all your properties into one basket and total out the values. It is important to ensure proper valuations are obtained of all your assets so that proper negotiations can be conducted with your spouse.
Thereafter debts like hire purchase or mortgages will be deducted from the value of the assets. For instance, if a boat is worth twenty thousand dollars, but there is eight thousand dollars left to pay on hire purchase, it will be valued at twelve thousand dollars.
An overdraft, loan, lease agreement, tax debts, credit card balance, and any other outstanding debt will be taken into account as a liability.
The Court will therefore deduct all liabilities from the asset value to reach a lump sum for distribution between the parties.
The next question is how does the Court decide what proportions should be given to each spouse.
Some of the things the Court may consider:
Pre Marriage assets.
The relevance of pre–marriage assets depends on how long you were married before the separation. If the marriage was short, the ownership of these assets will usually be retained by the person who brought it into the marriage.
The longer the marriage, the more chance that both partners have contributed to its maintenance. For example, one of you may have looked after the children and the house, while the other worked.
Home maker contributions if you did not work
The Court recognises contributions made by the person who has looked after the children and home, and allowed the other person to study, earn a living or run a business. The fact that one person paid for the asset is not the only consideration when deciding how the property is divided.
Gifts before and during the marriage
The Court will try to work out the intention of the person who made the gift. For instance, your husband/wife’s parents or your parents may have given the gift to the entire family, even if the gift was made in the name of one partner only.
The Court considers the future needs of the spouse. For example, if the wife is going to be looking after young children of the marriage or the likelihood of the wife being able to find gainful employment.
Are there any rules?
There are but it’s very difficult to predict what the split will be. The Court tries to make a fair decision based on your past contributions and your future needs – this can be a very subjective process.
You often hear of parties splitting their assets 50-50% or 60-40% or even 70-30%.
There is no clear cut rule and that is why legal advice needs to be sought.
For example, a 50-50% split may be ordered if the parties are young and have no children. Both parties may also be employed. If the contribution was equal, then a 50-50% split may be ordered.
A 70-30% split may be ordered because one party has been looking after the children for many years and have no real prospect of employment while the other spouse has a high paying job.
So it is difficult to say unless a solicitor has spent a few hours getting all relevant information about your relationship.
Do I have to go to Court to get property settlement?
No, but if you want your agreement to be binding it must be approved by the Court. The Court then makes what is called "Consent Orders". These can then be enforced through the Court.
If you are transferring a house to your spouse as part of an agreement, the transfer of the house will attract stamp duty as if you were buying a house. However, if you obtain a Family Court order, the transfer will attract a minimal amount of stamp duty. That means that it may well be worth it to formalise your property settlement by way of a Court order to save cost on stamp duty.
How do we do this?
You should think seriously about using a lawyer for property settlements. They can help negotiate an agreement and look after all the formal Court requirements.
2 possible methods to finalise property settlement.
Form 11 Consent agreement.
If the parties are able to reach an agreement on how they want to split their assets, a form 11 agreement can be prepared. The form is rather simple to complete. However it would probably be prudent to seek legal advice on the drafting of the orders that you want the Court to make to finalise your property settlement.
Your intentions need to be properly formalised and worded so that there is no confusion as to how your properties are to be dealt with.
The document should usually be signed before a solicitor after general advice on the fairness of the document is discussed.
The Form 11 agreement is then signed by both parties and lodged in Court. The Court will consider the fairness of the agreement again before making the orders. The orders when made are as good as if the parties had gone to a full Court hearing to sort out their property settlement.
What if we cannot agree?
In the event that the parties cannot agree on how to split up their property, then the new Family Law rules lists out certain procedural requirements that must be complied with before an application can be filed in the Family Law Courts.
BEFORE YOU FILE AN APPLICATION IN THE FAMILY COURT
PRE-ACTION PROCEDURES FOR FINANCIAL CASES
The court rules now require all applicants in the family court to comply with various pre action procedure before the court will accept any family court applications for orders in respect of property settlement and or maintenance.
There are exceptions to the need to follow the pre action procedures. They are cases where:
- the matter is urgent
- there are allegations of family violence
- there are allegations of fraud
- where there is an intractable dispute eg, where one party refuses to negotiate.
- Where there will be prejudice if the other party becomes aware of the pending action
- Where a time limitation is expiring
- Where there has been a previous application in the last 12 months.
If the above situations do not apply, then the applicant has to do the following:
Any person considering an application to the courts need to:
- Give a copy of the pre action procedure to the other party
- Invite the other party to participate in primary dispute resolution. This could be as simple as an informal conference.
Each party must:
- Agree on an appropriate primary dispute resolution service
- Make a genuine effort to resolve the matter.
In the event that the parties reach agreement, then a Consent order or Form 11 is signed.
In the event that the parties cannot reach agreement then the party considering making an application to the courts must give written notice to the other party stating:
- The issues in dispute
- The orders that the party is seeking
- A genuine offer to settle the dispute
- A nominated time for a response, usually 14 days.
Again the pre action procedure information will need to be given to the other party.
The other party upon receiving the information in step3 has to reply in writing within the nominated time with their proposals for settlement.
The other party can either agree to a form 11 consent order or set out the matters in step 3 as far as they are concerned.
In the event that steps 1-4 does not resolve the matter, then the parties are free to file an application in the family courts.
In that event, it is necessary for the applicant to disclose to the other party all relevant financial information and documents in their possession. This is to avoid an ambush of the other party. This is called "discovery of documents".
You should see a lawyer for advice on what documents are relevant in respect of discovery.
WHAT HAPPENS WHEN THE APPLICATION IS FILED IN THE FAMILY COURTS
The applicant files a Form 1 in Court. A Form 1 application basically sets out the parties’ personal details and includes a section where the orders sought by either the Husband and Wife is included. A Form 13, which outlines the financial details of the applicant, also has to be submitted.
The Form 1 is served on the other spouse. The other spouse then has a given time to file a Form 1A which is essentially a response that outlines what orders the other spouse seeks. The responding spouse needs, also, to file a Form 13.
Upon filing the Form 1 and Form 13, the court provides a first hearing date and the documents then need to be served on the responding party.
What will happen at the first hearing?
Court staff will allocate a date for a Procedural Hearing at the time your application is filed. This will usually be about 4 to 6 weeks later.
If the parties come to an agreement the Magistrate will be able to finalise the proceedings. Otherwise the Magistrate will allocate a date for a Conciliation Conference, which both parties must attend to try to resolve the dispute. The conference will be conducted by a Court Registrar about 8 to 12 weeks after the Procedural Hearing.
You can come to an agreement at any time – you don’t have to wait until the Conciliation Conference. If you reach an agreement you should file a Minute of Consent Orders signed by all parties and ask a Court Registrar to deal with the case in his or her office. Court staff can tell you how to do this.
The Conciliation Conference is where all parties meet with their solicitors (if any) and a Registrar who acts like a mediator. The Registrar’s job is to try and get the parties to settle their matter out of Court.
In our experience, about 70% of cases settle at the Conciliation Conference stage. The other 30% may progress to a full trial before a judge. Even though a matter is set for trial, the parties can still negotiate an out of Court settlement at any stage. We would say that of the 30% of cases that proceed to be set down for trial, another 20% of cases settle just outside the Court doors before the trial proceeds.
The balance of the 10%, where the parties cannot agree at all, are decided by a Judge after a full hearing into the life history of the parties. Unfortunately, in most instances, by the time the matter reaches a Judge at trial, both of the parties would have spent a considerable amount of funds and experienced a lot of anguish.
Court approved property settlement
At any time after a Form 1 is filed, the Court can consider an out of Court settlement. The Court will look closely at your agreement and assess whether it meets the legal principles relevant to property division. Just because you are happy with the terms of the agreement, does not mean the Court will be.
Matters the Court will consider:
- whether the agreement is fair to both of you; and
- your specific circumstances, such as your age, health, income, assets and liabilities, etc.
It’s difficult to change a property agreement once it’s approved. Courts try to make sure that it is right the first time. By using a lawyer you have a better chance of the Court accepting your agreement, because the lawyer will understand the requirements of the Court.
We often say that the only person who wins, as a result of feuding parties especially in a matrimonial matter, are the lawyers. It is therefore important that you find a lawyer who is looking after your interest and not looking to prolong the matter. You should feel comfortable with your lawyer and trust that he or she is doing everything to help to resolve your problem in as effective a method as possible.
Tan and Tan take instructions on Family Law matters and would be glad to listen to your problems and try and find a solution to them.
To cut a long story short…
We once acted for an European lady who was involved in protracted negotiations with her Asian husband on property settlement matters. There was, obviously, cultural differences which resulted in their estrangement. To say the negotiations were unfriendly would be an understatement. There was lot of anguish and acrimony between the 2 parties. Luckily both myself and the other lawyer knew that it would cost both parties a lot of money to get the matter to a final hearing just because of the anger they had for each other.
We got the matter to a pre-trial conference. To make sure the parties did not get at each other’s throat, the other lawyer and I kept them at 2 different floors at the Court house. The other lawyer and I walked up and down the 2 levels going between the 2 estranged spouse from 9 am to 5 pm while the negotiations were in progress. It was one of those settlements where the parties argued over who would take the salt and pepper shaker.
Fortunately the matter was settled out of Court without the parties having to go to trial. They may have spent 8 hours (with a lunch break) negotiating on every item of their property, but it was still less expensive then if the matter had gone to trial.
I suppose the matter would be very different if both lawyers were impatient and pushed the parties to go to a trial to resolve their differences.
Moral of the story: Make sure your lawyer is looking after your interest as best as he or she can and do not let anger and emotion cloud your better judgment.
On The Light Side…
A famous lawyer found himself at heaven’s gates confronting St. Peter. He protested that it was all a mistake — he was only 49 and far too young to be dead. "That’s odd," said St. Peter, "according to the hours you’ve billed you’re 119 years old."
A gang of robbers broke into a lawyer’s club by mistake. The old legal lions gave them a fight for their life and their money. The gang was very happy to escape. "It ain’t so bad," one crook noted. "We got $25 between us." The boss screamed: "I warned you to stay clear of lawyers — we had $100 when we broke in!"
Client: Excuse me, do you have a moment? If I pay you $150, will you answer three questions for me? Lawyers: Yes. Yes. Now then, what is your third question?
Lawyer: Now that your case is settled, I’d like to explain my fees to you. You owe me $500 now and $347.26 a month for the next 36 months. Client: "I’ve never heard of such a fee schedule! Why, it sounds like car payments!" Lawyer: "You’re right — mine.
Why the law has changed.
According to surveys and census taken recently the number of persons who are in defacto relationships are on a steady increase.
Although most of the other States have recognised de facto relationship rights for years, Western Australia law gave very limited rights to parties in de facto relationships. Issues regarding children could be argued in the Family Court. However, if a de facto relationship breaks down, or one of the partners passes away, there was no formal process for resolving disputes over property and maintenance.
The only avenue for any de facto couples if they wish to argue about property rights was to go the Supreme Court. Every one knows that to go to the Supreme Court means big bucks.
Thankfully for some, December 1, 2002 has seen a radical change in the law. Persons in de facto relationships can now apply to the family Court for resolution of their family problems.
It is better to apply to the Family Court as it is much less expensive and is completely confidential. It also provides access to alternative dispute resolution processes.
The law now:
The new laws only apply to de facto couples whose relationship ends after December 1, 2002.
As a result of the new laws, if you can show that you have been in a de facto relationship for at least 2 years, you can:
- Apply to the Family Court for property and maintenance orders.
- Contributions made towards the accumulation of assets will be taken into account compared to the previous law where for eg. if your name was not in a property, you were unable to claim an interest in the property.
- Parties can be ordered to go for mediation and counselling.
To fall within the new law, the 1st point is to show that you have been in a de facto relationship.
In making that assessment, the courts will consider the following matters:
- Whether the parties had been together for more than two years
- Whether the parties lived in the same residence
- The degree of financial dependence, or the financial arrangements, between the parties.
- The ownership, use and purchase of the parties’ property.
- Whether there is, or has been, a sexual relationship between the parties.
- The degree of commitment by the parties to a shared life.
- Whether the parties care for and support children.
- How the parties’ relationship is perceived by others.
- The age of the parties. Generally, the parties should be at least 18 years of age.
- Whether one or both of the parties are resident usually in Western Australia. The requirement is that both parties must have lived in Western Australia for at least 1/3 of the period of their relationship.
It does not matter whether:
- The people are of different sexes or of the same sex.
- Either of the people are legally married to someone else or in another de facto relationship.
In the event that you are able to prove the existence of a de facto relationship that falls within the Act, the Family Court can make the following types of orders to resolve property disputes and maintenance issues.
One of the most important rights that have been granted to de facto spouses is the right to claim maintenance.
If a former partner is unable to support himself or herself adequately, for example, if the applicant has the care of a very young child or a young disabled child, then an application may be made for maintenance.
Matters the Family Court will consider include:
- income, property and financial resources of each partner;
- physical and mental capacity of each partner for suitable employment;
- financial needs of each partner;
- responsibilities of each partner to support someone else; and
- terms of any property adjustment order.
Property issues the Family Court can consider.
The court may only make a property order in three situations:
- Where the parties have been in a de facto relationship for at least 2 years.
- Where there is a child of the partners of the de facto relationship who is less than 18 years of age and a serious injustice would result to a partner; or
- Where the applicant made substantial contributions to property and a serious injustice would otherwise result.
The matters that the Family Court will have to consider before making any orders to adjust property rights include:
- nature and length of the relationship;
- direct and non-direct contributions made by each partner to the welfare of the other partner or a child of the partners;
- age and health of each partner;
- direct and non-direct contributions made by each partner;
- income, property and financial resources of each partner; and
- earning capacity and financial needs of each partner.
How about my rights if my partner has passed away.
Another big impact of the new law is the right of a partner whose de facto spouse has passed away. This new law will allow de facto partners to make claims against the estate of their deceased partners.
So what do I do if I am in a de facto relationship.
The legislation provides an opportunity for de facto couples to make agreements that will have the effect of reducing the impact of the new laws. They can do so by signing agreements that are similar to pre-nuptial agreements.
If a de facto couple has entered into a recognised financial agreement, then the agreement will be enforceable by the court. The problem is how do you broach the subject of signing such an agreement without impacting the relationship in a negative way.
In certain circumstances, even though there is an agreement that attempts to nullify the effects of the new laws, the court can still vary such an agreement if:
- there is serious injustice or,
- where there has been a material change in circumstances
- or if it is impracticable for the agreement to be carried out.
If you have any questions regarding the new laws, you should consult a lawyer to see how your new property rights have improved or how your property rights have been eroded (depending on which side of the coin you are at).
On The Light Side…
One day, a teacher, a garbage collector, and a lawyer all died and went to heaven.
St. Peter was there, having a bad day because heaven was getting crowded. When they got to the gate, St. Peter informed them that there would be a test to get into Heaven: They each had to answer a single question.
To the teacher, he said, "What was the name of the ship that crashed into an iceberg and sunk with all its passengers?"
The teacher thought for a second, and then replied: "That would have been the Titanic, right?" St. Peter let him through the gate.
Next, St. Peter turned to the garbage man, and figuring that heaven didn’t really need all the stink that this guy would bring in, decided to make the question a little harder. "How many people died on the ship?"
The garbage man guessed 1228, to which St. Peter said, "That happens to be right. Go ahead."
St. Peter then turned to the lawyer. "What were their names?"