Duty of Disclosure

DUTY OF DISCLOSURE

In an earlier blog, I explained ways in which you can be reassured that there is a great onus on the other party to a Family Law proceeding to tell the truth regarding financial matters.

Overriding those practical considerations is the concept and Family Law Rules regarding a Duty of Disclosure.

What is a Duty of Disclosure?

A Duty of Disclosure requires all parties to a Family Law dispute to provide to the other party all information relevant to an issue in the case. This includes information recorded in a paper document or stored by some other means such as a computer storage device and also includes documents that the other parties may not know about. This duty starts with Pre-Action Procedures before the case and continues until the case is finalised.

The Duty of Disclosure is set out in the Family Law Rules and extends to both your direct and indirect financial circumstances. It requires disclosing all sources of earnings, interest, income, property (including property that you actually have and contingent or future interests in property) and other financial resources.

It includes property, financial resources and earnings owned by you directly or by some other person or beneficiary, for example – your child or de facto partner as well as assets held in corporations, Trust companies and other structures.

The Family Law Rules include that you need to disclose any property disposed whether by sale, transfer, assignment or gift in the year immediately prior to separation or since separation.

The Duty of Disclosure continues throughout the Family Law proceedings which mean that there is an onus on a party to continuously disclose and provide information regarding any changes to their financial circumstances. The Family Law Rules provide that if you fail to disclose, the Court may:

• Refuse to allow you to use that information or document as evidence in your case;
• Stay or dismiss all parts of your case;
• Order costs against you;
• Fine you or imprison you on being found guilty of contempt of Court for not disclosing a document.

Honesty really is the best policy. Not only do you need to comply with the Duty of Disclosure but it is really important that you understand it and work with an experienced lawyer, such as the O’Farrell Robertson McMahon Family Lawyers, to ensure that you are complying with the Duty of Disclosure and even more importantly, that everything is done to make sure that the other party is doing so as well.

Marriage equality: we have a right to be 'really boring' too

Not long after his marriage, OFRM lawyer and president of the Bendigo Law Association, Tom Wolff penned an article on marriage equality for the Bendigo Advertiser. The link to the article can be found below. In it Tom reflects on why he and his partner decided to get married and how that contrasts to their friends who do not want to marry and those who are currently prohibited from doing so.

Marriage equality: we have a right to be 'really boring' too

Who is your domestic partner - young adults and superannuation

Last time I wrote about the connection between superannuation and wills, I said that if you do not have a binding death benefit nomination for your superannuation it will go to your spouse which may be a 'domestic partner'. Today I’ll explain further what that means.

Who is my domestic partner?

If you are living with a person (whether of the opposite or same sex) on a permanent domestic basis in the one shared residence then you are probably in a domestic relationship. Marriages are easy to identify - a religious or civil ceremony has occurred. Domestic relationships are not so easy to identify and are certainly difficult to define as having started on a particular date. The commencement of a domestic relationship is more like osmosis. It happens organically over a period of time. A couple might be able to state that three months ago they were not in a domestic relationship, and although they acknowledge that they are in a domestic relationship now, they cannot identify one particular date over the last three months which swings the opinion from two solitary lives to a domestic relationship. For the purposes of superannuation there is no minimum time limit that the domestic relationship must exist in order to qualify for the benefit.

A couple of examples

Jason is 25 years old, in full-time employment, still lives at home, but has a female friend Kylie. They have been in a close relationship for three years. Jason does not have a Will. He has $10,000 accumulated in his superannuation fund plus an insurance death benefit of $250,000. No binding nominations been made. Should Jason die at this point, the superannuation fund is likely to pay the benefit to his parents because he was in an interdependent relationship with them, or they might pay to his estate. Without a will Jason’s parents are his next of kin and will be entitled to his entire estate.

Six months later Jason has moved out of home and is sharing a house with Kylie. They have been in the house for nearly 6 months when Jason dies suddenly. The superannuation will be paid to Kylie as his domestic partner. His estate, because he did not have a Will, will again go to his parents as the next of kin. Kylie only qualifies as the next of kin for his estate if they have been together for two years as a couple.

Let’s suppose Kylie and Jason separate after a few months of sharing the house and Kylie moves out. Nicole then moves into the spare bedroom and shares the rent. Six months later, Jason is still unattached, but he and Nicole have taken advantage of the moment as consenting adults from time to time. Is it friends with benefits? Is it a more modern version of the domestic relationship? Or is it none of these? This time Jason has completed a binding death nomination naming his estate as the beneficiary so the nature of the relationship does not matter.

It is so important to make a binding death benefit nomination, particularly as a young adult. Of course, you should make a Will as well. For advice on this and other will related matters contact the Will & Powers of Attorney team on 03 5445 1000.

Explaining de facto relationships

These days it is very common for people to live together without being married. A de facto relationship can be between a female and male or people of the same sex and can be in circumstances where one person of the relationship is married or in a de facto relationship with another person.

Despite the common misconception, to be considered to be in a de facto relationship, it is not necessary for a couple to have been living together for 2 years.

Under the Family Law Act, a person is in a de facto relationship when:

• The persons are not legally married to each other; and
• The persons are not related by family; and
• Having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.

The Court then looks at the circumstances of the relationship including any or all of the following:

1. the duration of the relationship;
2. the nature and extent of their common residence (de facto relationships have been found to exist even when the parties do not live together)
3. whether a sexual relationship exists;
4. the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
5. the ownership, use and acquisition of their property;
6. the degree of mutual commitment to a shared life;
7. whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
8. the care and support of children;
9. the reputation and public aspects of the relationship.

People in de facto relationships have the same rights as married people when it comes to family law parenting and property matters.

Contact our family law team if you are unsure whether or not your relationship would be considered to be a de facto relationship.

If you are in a de facto relationship you may wish to obtain advice about available steps to protect your assets.

If your de facto relationship has broken down then you should seek advice about property and/or parenting matters. There are also time limits that apply to property settlements in de facto relationships so it is essential that legal advice is sought as quickly as possible. Call us on 03 5445 1000.

Spousal maintenance

Most people are familiar with the idea of child support — the assessment and payment of an amount by one parent to the other as a contribution to the payment of expenses for the children.

A less well understood system for payment between separated people is "spousal maintenance".

As the name suggests, spousal maintenance is not regarding payments for children but rather a contribution to the expenses of one person of the relationship to the other.

The basis of spousal maintenance comes from the concept that the duty in marriage (or defacto relationship) to maintain your spouse does not end on separation. It is payable when one party cannot support themselves after the relationship has ended.

Unlike child support, spousal maintenance isn't administered by a government agency. Rather it is a legal right that can be determined and enforced by a court if parties can't agree.

For a person to be entitled to spousal maintenance 2 key elements must be met:

1. The person claiming spousal maintenance must have a need to receive such maintenance to support themselves
2. The payer must have the capacity to make such payments — that is their income level must enable them to pay such maintenance after they have met their own basic needs and paid child support

You have probably twigged that the combination of those factors means spousal maintenance only happens in a minority of matters. While many people could easily establish they can't support themselves, it is not common that the other person has the capacity to pay.

Unlike child support, spousal maintenance isn't worked out by the application of a formula, instead it is more subjective looking at the need and the capacity to pay and ordering a specific amount.

The payment of spousal maintenance can happen in a variety of ways. There can be urgent spousal maintenance — often useful when separation means a party without their own income is cut off from finances. Interim spousal maintenance will occur while family law proceedings are happening and can be an ongoing amount paid weekly, fortnightly or monthly or a lump sum.

Spousal maintenance can continue to be paid for a specified time after people reach a property settlement — say for a year or two while a person retrains. More commonly spousal maintenance is finalised at the time of a final property settlement with the payment of a lump sum or included in the assets a party keeps.

If separation leaves you without the ability to support yourself you should seek advice from our Family Law team about whether you can obtain spousal maintenance — speak to one of our family lawyers by calling 03 5445 1000.

Pre-Nuptial Agreements — How do they work in Australia?

For about the last 14 years, Australian Family Law Courts have recognised agreements about what is to happen with married couples' property in the event of marriage breakdown.

Since March 2009 this has extended to Family Law Courts who have also recognised these agreements for couples in de facto relationships including same sex couples.

These "Financial Agreements" can be entered into in contemplation of marriage or a de facto relationship, during a marriage or de facto relationship or following separation effectively allowing couples to "contract out" of the law otherwise applicable to property settlements. There are formal requirements and safeguards which must be adhered to. These include that the Agreement is in writing, signed by both parties and that both parties have separate independent legal advice in relation to the effects of the Agreement upon their rights and the advantages and disadvantages of entering into the Agreement.

So, will a valid agreement protect you if your relationship ends and the other party is unhappy with the terms of the agreement?

If a valid Agreement is in place, there are grounds on which a party can seek to set aside the Agreement if they no longer wish to be bound by it. These grounds include where one party has failed to disclose a significant asset or liability which, had the other party known about, they would not have entered into the Agreement. Other grounds include where there is evidence that the Agreement was entered into to defeat a claim by a third party creditor or where the Agreement would otherwise be made void due to principles of Contract Law.

Perhaps the broadest ground is the one that provides for the Agreement to be set aside where there has been a material change in circumstances in relation to the care arrangements of a child of the relationship.

Even if you have a valid agreement, there are risks that a court might set it aside.

Are these agreements always useful?

These Agreements are most useful for parties in subsequent relationships where one or both parties bring to the relationship significant assets or resources which they wish to protect from a Family Law claim, particularly where there are children from a previous relationship.

These Financial Agreements are of course not for everyone, particularly those couples who do not wish to contemplate their relationship ending. They can however be a very useful tool in order to create financial certainty which may reduce any tension or uncertainty in the relationship or the wider family. Anyone considering whether a Binding Financial Agreement would suit their circumstances should discuss this with an experienced Family Lawyer.