Time Limits for a property settlement - Am I out of Time?

Breakups can be emotional, overwhelming and stressful, often far from your mind is the idea that there is a deadline for a property settlement.

The Family Law Act sets limitation periods in bringing an application to the Court for a property settlement for both married and de facto couples. It is important to be aware of these time limits, otherwise you could run out of time to make a claim through the court.

Time limits for married couples

For married couples, the time limit for filling an application for a property settlement is one year after a divorce order takes effect. Whilst this time may appear to be short, keep in mind that because you must be separated for a period of 12 months before being eligible to apply for a divorce order. Therefore you effectively have at least 2 years before time runs out and the clock doesn’t start ticking until you are divorced.

Therefore, it is essential to make sure you have your property settlement effectively legally sorted when you are divorced. However, I would advise you to seek legal advice regarding property matters at least as soon as you separate, you can then make informed decision as to when is the best time to pursue a property settlement and make sure the assets are protected in the meantime

Time limits for de facto couples

Alternatively, those in a de facto relationship have a time limit of two years after separation (there is no divorce for de facto couples).

Although the date can be clear cut in some relationships, often it is not. For example, if you separated but continued to live under the one roof or had periods of reconciliation, there is scope for disagreement over when the date of separation actually occurred. (In 10 Things to Know about Divorce I explain further what separation looks like). Again, seeking legal advice early on in the process is preferable, especially if there is some doubt about when the clock starts ticking.

Oops, I missed the deadlines

Ran out of time? Don’t panic just yet.

Under section 44(6) of the Family Law Act, the Court has the power to grant parties leave to file an application to the Court for a property settlement out of time.

To allow this, the Court must be satisfied that hardship would be caused to the party or a child of the relationship if leave is not granted. Hardship is not defined within the Family Law Act, and so the Court considers what constitutes hardship on a case by case basis.

In bringing an application out of time you therefore need to give a reason for your delay in brining proceedings and further demonstrate how hardship is caused or else leave may not be granted. Also keep in mind that the mere loss of the opportunity to bring proceedings is not in of itself hardship and so this reason alone may not be sufficient enough to be granted leave.

These set time limits demonstrate once again why it is so important to seek timely legal advice and discuss your circumstances with a family lawyer. Here at OFRM, there are 5 family lawyers, including 2 family law specialists, available to meet with you to discuss your circumstances and best way forward from here. Call 03 5445 1000 to speak to someone.

10 things to know about divorce

10 things to know about divorce

When a married couple separate, the whole event is often described as a divorce.

However, divorce has a very specific meaning under Australian law. It is not a property settlement, it is not a separation, it is not sorting out the arrangements for children. A divorce is a court order ending a marriage. It is like the official tearing up of your marriage certificate. There are a lot of myths and misunderstandings around divorce, so here’s 10 key things to know about divorce.

1. For a divorce order to be made, your marriage must be broken down irretrievably.

That is, you will not resume married life. You’ve made up your mind and it is final.

2. You do not need to provide the court for a reason for your divorce.

The Family Law Act 1975 established the principle of no-fault divorce in Australia. Therefore, the court does not need to hear or judge the reason why the marriage has irretrievably broken down, that can stay between the two of you.

3. You must have been living ‘separate and apart’ for at least 12 months.

This is easiest to prove when one of you has moved out of the former matrimonial home and you have been separated ever since. It is common for people to been separated but have lived separately under the one roof for all or some of the 12 months of separation. To prove you were separated during this time, you must show there was a change in the way you related to each other after separation in comparison to beforehand. This could include:

• Sleeping in separate bedrooms;
• No sexual relations or intimacy;
• Not helping each other out with household chores such as cooking each other dinner or doing the other persons laundry;
• Having separate finances ;
• Not attending social functions or events together;
• Not socialising together.

Periods of Reconciliation

It is also common for people to attempt reconciliation after they have separated.

If the reconciliation lasts for a period of less than 3 months, you may add the periods before and after the reconciliation together to obtain the necessary 12 months.

However if the reconciliation lasts for a period longer than 3 months, the clock starts again for the 12 month period at the end of the reconciliation period.

4. You must demonstrate to the court that there have been reasonable arrangements made for the care and welfare of any children under the age of 18.

This involves explaining the arrangements made for the child in line with their:

• Living needs
• Schooling needs
• Health needs

5. If you are applying for a divorce within two years of when you got married, you will need to prove that you have attended counselling.

Visit the Family Relationship Centre website for a list of court certified counsellors that can give you a certificate demonstrating to the court you and your spouse have attended counselling.

6. You must have a jurisdictional connection to Australia in order to apply for a divorce here.

Either you or your to be ex-spouse must either:

• Regard Australia as their home and intend to live here indefinitely after the divorce; or
• Be an Australian citizen by birth, descent or by grant of Australian citizenship; or
• Ordinarily live in Australia and have done so for 12 months immediately before filing the divorce application.

As long as one of the above criteria is satisfied the Court will be able to hear your Divorce Application, regardless of where you were married or where you previously lived.

7. The Court will only focus on your divorce application.

Many people come to us thinking a divorce application also encompasses a property settlement, spousal maintenance, child support and interim orders. Although this may be the case on US TV shows, it doesn’t work that way in Australia. The court will only consider whether or not it should grant a divorce. The court does not have to have any regard for if both parties of the marriage want to get a divorce or if only one party does.

Property and children’s matters are separate court applications.

8. A divorce is not obtained overnight.

When the application is filed the Court will list it in court for a hearing. The date of the hearing will most likely be a couple of months away.

Provided that the court is satisfied that you have met all of the requirements a Divorce Order will be made but it does not take effect until one month and one day after the hearing.

9. Until your divorce is final, neither of you are able to get married to anyone else.

If you do, you will be committing bigamy which is a criminal offence in Australia. Perhaps just put a few more months into the wedding planning and wait for after the divorce has taken effect.

10. The Will you made during your marriage will now be invalid.

If you have a Will at the time the divorce is obtained certain clauses will be revoked because of the divorce. These clauses include any provision you have made for your former spouse, any grant of power you have given them or if you appointed them as an executor of your will.

Any clauses that appoint your former spouse as a trustee of a trust in which the beneficiaries of the trust include children of your former spouse will not be revoked. This means your former spouse will have control over money or property you have your children.

If you separate from your spouse and do not have a Will, your former spouse may still inherit if you die before a Divorce Order is issued by the Court. If you have never made a Will, only a Divorce Order will ensure that your former spouse will not be able to inherit your assets.

Rather than leave these matters to chance it is best to be on the safe side and make a new Will after your divorce to ensure your intentions concerning your former spouse are crystal clear.

Does marriage matter?

Thankfully, many laws that discriminated between married and unmarried couples or against same sex couples have been rectified in recent years, such as superannuation laws.

However, whether or not a couple were married still does create a difference in family law.

The reason for this goes right back to the constitution — without wanting to sound too Dennis Denuto! When the constitution was adopted in 1901 it was the result of intense negotiations between the states as to what powers would be given to the Commonwealth and what would be kept by the state. The negotiations were intense because it meant who got the money from the powers — like taxes.

Back in 1901 the constitution drafters probably only thought of marriage, not other relationships and so pursuant to s51 (xxi) the Commonwealth has power “to make laws for the peace, order and good Government of the Commonwealth with respect to marriage.”

That’s where the Commonwealth has the power to make laws regarding marriage — and the breakdown of marriage being the Family Law Act

However, that meant that for many years the Family Law Act couldn’t cover property settlements between non-married (de facto) couples. That was eventually worked around by the States referring their relevant powers for that to the Commonwealth.

So now, the Family Law Act can sort out property matters for both married and non-married couples on the breakdown of their relationship.

However, if there has been no marriage, the path to a property settlement is a little different, which means that same sex couples, because they still can’t be married in Australia, are left with only the no marriage path.

So what’s the difference?

The big difference is the time limits.

If your relationship has ended and you are married you can apply to a court for a property settlement any time up until 12 months after your divorce. You don’t have to get a divorce (unless you are remarrying). Therefore, if you don’t get divorced you could apply to the court for a property settlement 20 years after you separated if you were married.

By contrast, if you are not married, you only have 2 years from the date of separation to bring an application for a property settlement.

How you prove you are eligible for a property settlement is a different test between married and unmarried couples, a difference which unfairly impacts upon same sex couple who can’t currently choose not to be married.

If you are married, you just need to be able to prove your marriage with your marriage certificate to be eligible for a property settlement.

By contrast if you are not married your property settlement has to be pursuant to Part VIIIAB of the Family Law Act — “Financial matters relating to de facto relationships”, which means you need to be able to prove you were in a de facto relationship to be eligible for a property settlement.

A de facto relationship is defined by the Family Law Act as, “a couple living together on a genuine domestic basis,” with the

Court taking into account circumstances such as the following to decide whether it is such a relationship:

• The duration of the relationship
• The nature and extent of their common residence
• Whether a sexual relationship exists
• The degree of financial dependence or interdependence and any arrangements for financial support between them
• The ownership, use and acquisition of their property
• The degree of mutual commitment to a shared life
• Whether the relationship is or was registered
• The care and support of children
• The reputation and public aspects of the relationship

I’m sure you can envisage the types of evidence and arguments over those tests.

For many separated couples, they both want the property sorted so there is no dispute about whether or not there was a de facto relationship.

For some though there may be a dispute about when exactly the de facto relationship commenced or when it ended, which could be significant when it comes to who gets what.

However, too many times there is an argument about whether the relationship was even a de facto one. Without the current option of marriage this is always a risk for same sex couples and can lead to difficult proceedings and too many details of the relationship being aired.

So not being able to be married does lead to legal differences. Unfair legal differences that can have serious and long lasting effects upon people.

How does marriage affect a will?

https://ofrm.com.au/blog/2016/10/10/why-make-a-will-on-separation

When you are excitedly preparing for your wedding, updating your will is often the last thing on your mind. However it is important to understand how putting the ring on the finger will impact your existing will. The key impacts are:

• A Will is normally revoked by you getting married after the will is signed
• There is an exception that if a gift in the Will is in favour of someone who you subsequently marry, then that gift will survive but the rest of the Will is still revoked.
• However your will won’t be revoked if in your will has in it that it was made “in contemplation of the marriage”
• If you are in a domestic relationship (commonly known as a defacto relationship, living together but not married) and there is a chance you will subsequently marry, then you can save the will being revoked upon your marriage by expressly stating in the Will that any subsequent marriage will not revoke the Will

Yes, this is all a bit technical and quite confusing. Best way to avoid this is to make sure you make a new will if you start to live with someone and review your will if you are getting married or have married.

Divorce is different. A divorce does not revoke a Will. However, any gift to a divorced spouse is revoked. The appointment of your spouse as executor is revoked if divorce subsequently occurs unless the provisions in the Will benefit your children.

Don’t wait until you are divorced to think about your Will though. Have a read of this earlier blog I wrote about why you should make a new will when you separate.

Russell Robertson is Bendigo’s only Accredited Wills and Estate Specialist. If you wish to chat about your will or how to make sure you can ensure your funeral arrangements, please phone Russell on 03 5445 1020 or email r.robertson@ofrm.com.au

Getting agreement about property through the courts

Most family law property matters are resolved by agreement.

Sam McGee has written previously about how family law disputes can be resolved without going through the courts at all.

Even when court proceedings have been started, in the vast majority of cases a compromised agreement is reached at some point.

Whether or not there are court proceedings on foot, it is critical that once an agreement has been reached it is made binding. One of the ways to make an agreement binding is to apply for final orders to be made by consent.

Even when by consent, final orders can only be made by the court if the court is satisfied that, in all the circumstances, it is just and equitable to make those orders.

This means that getting final orders by consent really has two steps:

1. Coming to an agreement with the other party, and
2. Persuading the court that the agreement is “just and equitable” so that orders can be made.

In a recent case listed in Melbourne, a husband and wife reached an agreement for a property settlement that provided for the wife to receive a payment from the husband of $30,000. This was out of an overall property pool of $251,000 (non-super) and $54,000 (super). The husband was retaining the rest of the pool and all of his super.

Effectively, the wife was getting between 9% and 10% of the overall pool.

Court proceedings were already on foot (and a final hearing was a week away) when the agreement was reached. The husband and wife sent their agreement to the court and requested that final orders be made by consent. The agreement appears to have been sent to the court without any supporting information explaining how the agreement was a just and equitable outcome.

Federal Circuit Court Judge Anthony Kelly directed that the parties file an agreed Statement of Agreed Facts so his Honour could consider whether he could make the orders as agreed.

A statement of agreed facts was filed, but his Honour found that he “could not, without more, make a final order approving the parties’ proposed compromise.”

Reading the judgment, it seems that there was just not enough meat on the bones in the Statement of Agreed Facts to justify the agreement. This resulted in an exchange in court where his Honour commented “I am concerned that an award of 9% [to the wife] for even a relatively brief marriage is not just or equitable and I cannot approve it and will not approve it.”

It is difficult to imagine that after that exchange the wife would have still been prepared to agree to only a payment of $30,000.

To me, the lesson from this case is less about whether or not the agreement was fair and more that it is very important that when asking a court to make consent orders a lot of care and attention goes into explaining why the agreement is an appropriate outcome. Skimping on this step can result in further delays, more costs and – worst of all – it can disturb the agreement altogether.

It is possible to make agreements about family law property settlements binding without going through the court system and for advice about that or any other aspect of your family law matters you can see a member of our Family Law team by calling 03 5445 1000.

Is the expectation of an inheritance relevant to my property settlement?

A common issue that arises in property settlement negotiations is how do you take into account that one party is likely to inherit a significant amount in the future.

An expectation of inheritance is not property that can be divided. However it can, in certain circumstances, be taken into account by a Court as a financial resource of the party who is expecting the inheritance which can therefore adjust the percentage division.

The circumstances in which a Court can take into account an expectation of inheritance are very narrow and will ultimately depend on the unique facts and circumstances of each case. Circumstances lending the Court to take such matters into account are as follows:

1. Where the likelihood of the inheritance is high – for example the party is the only child of elderly parents
2. The value of the expected inheritance as compared to the assets currently for division between the parties.
3. The age and health of the person expected to provide the inheritance, in particular whether this person has lost capacity to alter their Will. If there is a reasonable prospect that a Will could be altered then such expected inheritance will not be taken into account at all.

One of the difficulties in seeking to include an expectation of an inheritance in the property settlement negotiations is obtaining evidence of the expectation.

The relevant person who’s will is in issue, usually a parent, is under no obligation to produce their Will unless in a very narrow set of circumstances. Such circumstances are usually where the testator no longer has testamentary capacity to make a new Will. The relevant testator is otherwise under no obligation to make any disclosure as to their financial circumstances.

In summary, an expectation of an inheritance can be taken into account in property settlement negotiations but only in a relatively narrow set of circumstances and you should speak to a member of our Family Law team on 03 5445 1000 for advice.

Getting married? Add “update Will” to your checklist

Amongst the busyness of planning a wedding and getting married, updating your Will is probably not on your "to do" checklist.

However many people may not realise that marriage actually revokes a Will.

If you die without updating your Will after marrying, the rules of intestacy apply. As discussed in greater detail ("The perils of leaving it to chance"), if you do not have any children, then 100% of your assets will go to your spouse, which is what you may want anyway, however if you have children, they may be entitled to some of the assets. This is of course problematic if the only asset is the family home, which you intended would be transferred to your spouse alone.

Additionally, if you have a blended family, then the outcome of the intestacy may not be at all in accordance with your wishes.

How can I avoid this situation happening?

Obviously, the best way to ensure that your wishes are carried out is to update your Will as soon as you marry. However if you and your partner are making a new Will and marriage is pending you can make your Will "in contemplation of marriage" to your future spouse. In this case, your Will remains valid after the marriage, giving you peace of mind while you are on your honeymoon!

What about separation and divorce?

It is also important to keep in mind the effect of other relationship changes on your Will. Separation from a spouse does not invalidate your Will or any of the clauses in it. Therefore it is essential to update your Will as soon as possible after separating, to avoid a situation when a sudden death leaves all of your assets going to your ex-partner.

Similarly, although divorce does not invalidate your whole Will, it does invalidate the clauses relating to or benefiting your ex-spouse.

To avoid being caught out in a messy situation, remember to add "update Will" to your checklist if you’re getting married, separating or when your divorce is made. Speak to one of our Will & Powers of Attorney team at OFRM who will happily guide you through the process and ensure your Will is valid and up to date. Call 03 5445 1000.

Cash under the mattress – when is a final property order not a final property order?

Whether in court or around the living room table, former couples trying to agree on property settlement have an obligation to provide a complete picture of their financial circumstances.

This obligation is very broad and set out in some detail in the Family Law Rules 2004.

Even when making property settlement orders by agreement, the court needs to be satisfied that the proposed split of property is just and equitable. There is no way a court can determine that if there is not a complete picture of each party’s property, liabilities, income and financial resources.

This obligation can also work to level the playing field where perhaps one spouse has a lot more control or understanding of the finances then the other.

What happens if not everything is disclosed?

Even after final orders have been made, a party can apply to set aside all or part of those orders taking into account the non-disclosure.

If that party can prove to the satisfaction of the court that there has been a non-disclosure that amounts to a miscarriage of justice, the orders can be set aside, varied or replaced with new orders.

The same may go for a party failing to disclose something before signing a binding financial agreement (or “pre-nup”).

Before making such an application, there are some things to consider, including:

• Can I prove the non-disclosure? You may find payslips or bank statements showing income or savings that were never disclosed, it may be that simple. But what if the allegation is under-the-table payments or cash under the mattress – what evidence can you provide to the court to show it exists?
• Did you request detailed financial disclosure before the orders were made?
• Is the non-disclosure so significant that it makes the orders unfair? What orders would be made instead? Would I be better off? Could I be worse off?
• Have I disclosed everything? Make sure your own house is in order.

Of course, it is much better to not have to um and ah about applying to set aside final orders by ensuring that there is full and frank financial disclosure before any final agreement is reached. An experienced family lawyer should be able to advise you about what disclosure should be requested and exchanged to enable a swift and appropriate agreement about your property matters.

There are other circumstances that can lead to an application to set aside final orders. If you need advice about this or other aspects of family law, make an appointment with one of our family law team.