Disentangling your business and financial interests in a divorce can be a messy business. Nonetheless, it must be done to lay the foundation for the next phase of your life. At the outset, it may be helpful to understand the process of financial settlement, appreciate that the marital assets to be divided may include far more than you think, and prepare to negotiate. Australian courts generally require a one-year period of separation before granting a divorce. Many couples use that year to settle their affairs, including financial interests. De facto couples, of course, need not divorce, but the financial settlement process is the same. Reaching a voluntary financial agreement If a couple can agree about how property should be divided, that agreement must be formalised in one of two ways: either through a Financial Settlement Agreement or a Consent Order. A Financial Settlement Agreement must be based on independent financial advice received by each party and certified to the court. The requirement of independent advice is intended, among other things, to ensure that both parties fully disclose all assets. With a Consent Order, the court will review the agreement with respect to disclosure and equitable division. On approval a Consent Order is filed with the Family Law Registry. Most divorcing couples find that this voluntary route, in either of its variations, saves time, money and stress. It may be the best alternative for protecting financial interests because it allows the couple to allocate assets, trading the business for the boat, for example, in a way that makes sense for both. Alternatively, if no agreement can be reached even after participation in dispute resolution, an application for a Property Order must be submitted to either the Family Court or the Federal Magistrates Court. The Court will then divide assets on the basis of full disclosure and a hearing. What is a Property Order? In this situation, the Court takes over the task that the divorcing couple cannot complete themselves. In doing so, it will consider four factors, which are the same four that would have been considered by independent financial advisors:
- The total value of all assets owned by either or both parties. Courts cast a very wide net, including property acquired before or during the marriage, as well as after separation, business assets, superannuation funds, and assets that either party does not own outright but over which he or she has influence, control or prospective entitlement.
- Contributions to the marriage, including non-financial contributions made as a homemaker or parent.
- The future needs of each party based on factors including age, health, parenting responsibilities, financial resources and capacity for employment, the standard of living that is reasonable under the circumstances and the financial implications of new relationships.
- The overarching practical implications for the division and whether it is just and equitable.
What about superannuation? Each party’s superannuation funds are also pulled into the pool of assets to be divided. Determination of future value is often a difficult process, and requires close collaboration with the trustee. The division itself will be accomplished on the basis of the four factors listed above, which may not produce an even split. It is also important to realise that funds will become available only at retirement age. About Owen Hodge Lawyers In most situations, a family lawyer, like those at Owen Hodge Lawyers, may serve clients best by helping them to reach a fair and equitable out-of-court settlement. Where recourse to the court is necessary, we will also see you through to the best possible arrangement. Call us at 1 800 770 780, and let us help you find the best solutions for protecting your business and financial interests during a divorce. www.owenhodge.com.au
