Aug 28, 2024 | Family Law
When couples separate, a property settlement will determine who owns which assets. This process can be straightforward when the assets are clearly defined – such as with a house, car, or investment property. However, when it comes to superannuation, the division of assets in a property settlement can become much more complicated.
Types of superannuation
There are a number of different superannuation schemes, each with its own advantages and disadvantages.
With a defined benefit scheme for example, a person can receive a pension or a lump sum when they reach a certain age. Although, as this plan is pre-established, they are often inflexible.
An accumulation scheme on the other hand will allow for you and your employer to gradually contribute to your superannuation fund. Though you will eventually receive your accumulated contributions, these funds cannot be accessed until you reach retirement age. However, there are limited circumstances in which you may be eligible to access your superannuation funds before your retirement.
How is superannuation split in a property settlement?
Though superannuation is treated as a form of property in a property settlement, it is not converted into a cash asset. This means that super interests and payments are subject to super fund rules and superannuation laws.
Part VIIIB and Part VIIIC of the Family Law Act 1975 (Cth) establishes how superannuation interests are split between parties in a property settlement.
There are a number of methods separating couples can choose when splitting superannuation.
- Enter into a formal written agreement. A lawyer can sign a certificate of independent legal advice to certify an agreement to split superannuation.
- Apply for consent orders. Consent orders are a legally binding agreement that can be used to formalise the splitting of superannuation. An application for consent orders will require the full disclosure of each party’s financial circumstances. This means that you will need to obtain superannuation information from the relevant superannuation fund trustee to be able to disclose it to your former spouse.
How do I obtain superannuation information?
The Federal Circuit and Family Court of Australia (FCFCOA) website provides a Superannuation Information Kit containing the relevant forms for obtaining superannuation information.
When requesting information from the trustee of an eligible superannuation plan, a Form 6 Declaration must accompany your Superannuation Information Request Form. This declaration satisfies the trustee that you are requesting information for an approved purpose.
Parties in a current property settlement proceeding can apply to the FCFCOA to request access to their partner’s superannuation information.
Superannuation interests can also be valued by an actuary to ensure a fair division of assets.
Superannuation splitting orders
If you cannot reach an agreement with your former partner, the FCFCOA can issue a court order to split superannuation funds and payments.
The Family Law (Superannuation) Regulations 2001 set out the methods and calculations for determining the split of superannuation interests between parties.
The FCFCOA can order that a certain amount of a superannuation income stream is converted into a lump sum and be paid to the non-member partner when it becomes payable to the member partner. In other circumstances, the superannuation income stream can be split into two regular payments from the same income steam.
To learn more about the consequences of splitting orders on superannuation interests, please refer to the Australian Taxation Office website.
Can superannuation fund trustees affect my orders?
Yes, the superannuation fund trustee must be given the opportunity to attend a court hearing or object to the proposed orders. This is known as ‘procedural fairness’.
The FCFCOA must receive evidence of procedural fairness prior to making an order.
To satisfy procedural fairness, you must serve a sealed copy of your application on the trustee of the eligible superannuation plan. The trustee must also be notified in writing of the terms of the order at least 28 days before the trial.
Seek legal advice
Superannuation splitting can be a complicated process if not properly understood. Seeking professional advice is crucial to ensuring a fair division of superannuation interests in property settlement proceedings.
To learn which superannuation splitting option is right for you, please contact Etheringtons Solicitors on (02) 9963 9800 or via our contact form.
Jul 5, 2024 | Family Law, Wills and Estates
What is undue influence in Will making?
Undue influence in Will making refers to the coercion of a testator (Will maker) into making decisions that go against their wishes. This form of coercion will often occur when the testator is vulnerable and dependent on others for support. A person may exert undue influence to ensure the testator favours them to the detriment of others.
Whereas fraud is the act of misleading, undue influence occurs when the testator is coerced into doing what they do not desire.
How is undue influence established?
The doctrine of undue influence can be established in two ways; actual or presumed. These differ in the evidence provided by the parties, with the overall onus of proof lying with the person asserting undue influence.
Actual
Actual undue influence arises when it is proven as a fact, that the actions were to such a degree that the Will maker was unable to exercise their independent will.
When contesting the Will on this basis, proof of the accused party’s influence over the mind of the testator must be established in order for equity to intervene.
Presumed
Presumed undue influence arises from proof of the nature of the relationship between the relevant parties. This relationship must show one party exercised dominance over the other due to the testator’s trust and confidence in the dominant party.
If presumed undue influence is established, the dominant party must prove that decisions under the Will were voluntary and well understood by the testator.
How do I prove Will making under undue influence has occurred?
To prove undue influence, the complainant must contest the Will in Court after the testator’s death. The following factors must be evidenced:
- The Will bequeathed property in an unforeseen manner without obvious explanation.
- The testator was dependent on, or trusted, the person exerting influence.
- The testator was vulnerable due to illness or frailty.
- The influencer took advantage of the testator and benefitted from the asset distribution under the Will.
The process of undue influence relies upon credible witnesses who knew the testator and can testify to the relationship between the testator and the defendant (person benefitting from the Will).
Court rulings in cases of Will making under undue influence
A rule of ‘suspicious circumstances’ calls upon the Courts not to grant probate without being fully and entirely satisfied that the Will expresses the true intentions of the deceased.
This rule is also outlined in the Succession Act 2006 No 80 s96 (2)(b) wherein the Court is granted power to revoke approval of probate if the Will was obtained by fraud or undue influence.
If undue influence has been proven to have affected the entirety of the Will, the entire Will may will be invalid. If only part of the Will has been affected, the remainder is still valid.
Examples of undue influence in Will making: Case Law
Edwards v Edwards & Ors [2007] EWHC 1119 (Ch)
The son of the deceased alleged that his brother used undue influence to persuade the mother to exclude the plaintiff from the Will. The Court ruled that the child deliberately fed false information to sway the mother’s mind in his favour resulting in undue influence.
Hayward (As executor of Felton Estate) v Speedy & Felton (2021) NSWSC 943
A dispute between siblings concerning the father’s gift of money to the daughter as being procured through undue influence. The parents were both vulnerable to exploitation being frail, cognitively impaired and elderly with a large dependence on their daughter for daily activities. Furthermore, no independent legal advice was obtained regarding the gifts, which were so substantial as not to be reasonably accounted for on the ground of friendship and relationship. As a result, the father’s estate retained the gifts initially bequeathed to the daughter, as it would be unjust for her to receive benefit when she had exercised undue influence.
Contact Us
If you believe someone has exerted undue influence in the making of a Will, we recommend seeking independent legal advice.
If you would like to discuss your matter with a legal professional, please contact Etheringtons Solicitors on (02) 9963 9800 or via our online contact form.
May 7, 2024 | Family Law
On 6 May 2024, changes to the Family Law Act 1975 (Cth) (‘Family Law Act’) came into effect. These new laws include changes to the parenting order framework and enforcement of child-related orders.
Changes relating to parenting matters are set out in the Family Law Amendment Act (No 87) 2023 (Cth) (‘Family Law Amendment Act’).
Why has the Family Law Act changed?
The Family Law Act has changed to further protect the best interests of the child.
Changes to the Family Law Act were informed by recommendations made in the Australian Law Reform Commission’s inquiry into the family law system. The final report offered 60 recommendations to reform and simplify a number of family law provisions, arrangements and procedures.
In particular, the Family Law Amendment Act has redrafted the parenting arrangements under Part VII of the Family Law Act. The Family Law Amendment Act simplifies judicial decision making, the best interest factors as well as parental arrangements and provisions.
Why did the best interest factors for parenting orders need to be changed?
When deciding whether to make a parenting order, the Family Court must regard the best interests of the child as the paramount consideration.
Under the previous legislative framework, the Court’s determination of the best interests of the child was based on ‘primary’ and ‘additional considerations’. However, the Australian Law Reform Commission concluded that this list of factors was overly complex and detracted focus from the best interests of the child.
New best interest factors for parenting orders
Consequently, the Family Law Amendment Act has revised s 60CC of the Family Law Act to create a new list of best interest factors for the Court to consider. These factors include:
- The arrangements in place to promote the safety of the child and the child’s carer
- Any views expressed by the child
- The developmental, psychological, emotional and cultural needs of the child
- The capacity of each proposed carer of the child to provide for the child’s needs
- The benefit of the child being able to have relationships with their parents and other people who are significant to them.
Repeal of the presumption of equal shared parental responsibility
The Family Law Amendment Act has omitted s 61DA of the Family Law Act relating to the presumption of equal shared parental responsibility when making parenting orders.
The Family Law Amendment Act has also repealed s 65DAA and s 65DAC of the Family Law Act. These sections relate to the considerations of equal time or substantial and significant time with the child’s parent and the effect of parenting orders that provide for shared parental responsibility.
Why has the presumption of equal shared parental responsibility been repealed?
The explanatory memorandum to the Family Law Amendment Bill 2023 argues that the repealing of these provisions is due to the misconception of parental arrangements after separation being determined by a parent’s entitlement to equal time instead of an assessment of the child’s best interests.
The explanatory memorandum also notes that the repealing of the presumption of equal shared parental responsibility is intended to prevent parents from agreeing to unsafe and unfair arrangements and to discourage parties from prolonged litigation owing to incorrect expectations of equal time.
Changes to the Family Law Act ensure that the best interests of the child are made paramount to prevent misconceptions from influencing parenting orders and arrangements.
How Etheringtons Solicitors can help
For the full list of changes to the Family Law Act, please visit the Federal Circuit and Family Court of Australia website.
If you would like to clarify how changes to the Family Law Act impact your own parenting orders or arrangements, we recommend speaking with a legal professional. To discuss your family law matter, please contact one of our experienced solicitors on (02) 9963 9800 or via our online contact form.
Apr 2, 2024 | Family Law
Following the breakdown of a marriage, separated or divorced parties must agree on how to divide their joint assets. As the division of property and finances is not included in a divorce order, a separate agreement must be made between you and your wife.
Reaching an amicable agreement with your wife about the division of joint assets will save you time, money and stress. Alternative dispute resolution processes such as mediation can assist in resolving any disagreements that may arise during this process.
If you cannot reach an agreement with your wife through these means, you can apply to the Federal Circuit and Family Court of Australia (‘the Court’) to have financial orders made that will settle the dispute for you.
What is a financial order?
A financial order is a set of orders made by the Court relating to the division of property or finances. When applying for a financial order, the Court will hear evidence presented by you and your wife and make a just and equitable decision. This decision may include altering property interests, redistributing finances, and ordering for the payment of spousal maintenance.
What factors affect the Court’s decision?
Contrary to the belief of a 50/50 split, there is no established formula or percentage the Court will use when making financial orders. Instead, decisions are made on a case-by-case basis depending on the individual circumstances of the separated parties.
The Family Law Act 1975 (Cth) s 79(4) sets out a number of factors for the Court to consider when making financial orders. These factors include but are not limited to:
- The ‘net asset pool’ comprising of the current value of all assets and liabilities. This includes superannuation entitlements, personal assets, assets in partnership, trust, or companies.
- Direct financial contributions toward the acquisition, conservation or improvement of any property of each party. This includes assets owned at the beginning of the relationship.
- Indirect financial contributions such as gifts or inheritances.
- Non-financial contributions toward the acquisition, conservation or improvement of any property of each party. For example, home improvement or renovations to increase the value of the family home.
- Financial contributions made to the welfare of the family, including any contribution made in the capacity of a homemaker or parent.
- The future needs of each party with regard to age, health, financial resources, superannuation, childcare, and earning capacity.
The Court’s decision may involve the alteration of property interests and asset ownership to allow for the just and equitable redistribution of finances between parties.
Am I required to pay my wife spousal maintenance?
Spousal maintenance is financial support that is paid to your wife if she cannot adequately support herself following separation or divorce. This obligation depends on the financial capacity and needs of each party. Husbands and wives share an equal duty to support and maintain one another should the circumstances call for it.
For example, if your wife is unable to support herself after separation, and you have the financial means to support her, you may be required to provide your wife with spousal maintenance.
Ultimately, an order for spousal maintenance is decided by an overall assessment of each party’s ability to adequately support themselves, and if they are unable to do so, whether the other party has the capacity to meet those expenses and support them.
Contact Us
It is important to remember that there is no presumption of equality when dividing assets following a separation or divorce. If you are considering separation, or have already separated from your wife, we recommend seeking independent legal advice.
If you would like to discuss your unique situation with a family lawyer, please contact Etheringtons Solicitors in North Sydney on (02) 9963 9800 or via our online contact form.
Apr 2, 2024 | Family Law
Following the breakdown of a marriage, separated or divorced parties must agree on how to divide their joint assets. As the division of property and finances is not included in a divorce order, a separate agreement must be made between you and your husband.
Reaching an amicable agreement with your husband about the division of joint assets will save you time, money and stress. Alternative dispute resolution processes such as mediation can assist in resolving any disagreements that may arise during this process.
If you cannot reach an agreement with your husband through these means, you can apply to the Federal Circuit and Family Court of Australia (‘the Court’) to have financial orders made that will settle the dispute for you.
What is a financial order?
A financial order is a set of orders made by the Court relating to the division of property or finances. When applying for a financial order, the Court will hear evidence presented by you and your husband and make a just and equitable decision. This decision may include altering property interests, redistributing finances, and ordering for the payment of spousal maintenance.
What factors affect the Court’s decision?
Contrary to the belief of a 50/50 split, there is no established formula or percentage the Court will use when making financial orders. Instead, decisions are made on a case-by-case basis depending on the individual circumstances of the separated parties.
The Family Law Act 1975 (Cth) s 79(4) sets out a number of factors for the Court to consider when making financial orders. These factors include but are not limited to:
- The ‘net asset pool’ comprising of the current value of all assets and liabilities. This includes superannuation entitlements, personal assets, assets in partnership, trust, or companies.
- Direct financial contributions toward the acquisition, conservation or improvement of any property of each party. This includes assets owned at the beginning of the relationship.
- Indirect financial contributions such as gifts or inheritances.
- Non-financial contributions toward the acquisition, conservation or improvement of any property of each party. For example, home improvement or renovations to increase the value of the family home.
- Financial contributions made to the welfare of the family, including any contribution made in the capacity of a homemaker or parent.
- The future needs of each party with regard to age, health, financial resources, superannuation, childcare, and earning capacity.
The Court’s decision may involve the alteration of property interests and asset ownership to allow for the just and equitable redistribution of finances between parties.
Am I required to pay my husband spousal maintenance?
Spousal maintenance is financial support that is paid to your husband if he cannot adequately support himself following separation or divorce. This obligation depends on the financial capacity and needs of each party. Husbands and wives share an equal duty to support and maintain one another should the circumstances call for it.
For example, if your husband is unable to support himself after separation, and you have the financial means to support him, you may be required to provide your husband with spousal maintenance.
Ultimately, an order for spousal maintenance is decided by an overall assessment of each party’s ability to adequately support themselves, and if they are unable to do so, whether the other party has the capacity to meet those expenses and support them.
Contact Us
It is important to remember that there is no presumption of equality when dividing assets following a separation or divorce. If you are considering separation, or have already separated from your husband, we recommend seeking independent legal advice.
If you would like to discuss your unique situation with a family lawyer, please contact Etheringtons Solicitors in North Sydney on (02) 9963 9800 or via our online contact form.
Jul 28, 2023 | Family Law
In 2021, there were 56,244 divorces granted in Australia – the highest number of divorces recorded since 1976. With this apparent increase in separations, it is important to prepare for any eventuality before entering into a marriage or de-facto relationship. One such precaution is to enter into a prenuptial agreement, or prenup, which ensures that your personal finances and assets are protected in the event of separation.
What is a Prenup?
In Australia, a prenup is referred to as a Binding Financial Agreement (BFA). A BFA is a legal agreement between parties in a relationship and sets out how their assets and finances will be divided should their marriage or de-facto relationship end. Without a BFA, the division of finances in a separation is determined by the Family Law Act (No 53) 1975 (Cth).
A BFA takes into account the assets and liabilities of each person in the relationship. Types of marital and non-marital assets that can be included in a BFA are:
- Spousal maintenance
- Real-estate and businesses
- Insurance, superannuation and pensions
- Inheritances.
It should be noted that a BFA does not cover parenting or child custody arrangements. A Child Support Agreement will outline provisions relating to child support.
When can you enter into a Prenup?
- Prior to getting married or at the start of a de-facto relationship
- During the marriage or de-facto relationship
- After separation following a marriage or de-facto relationship.
Benefits of a Prenuptial Agreement
A prenup promotes open communication and transparency about the financial circumstances of the relationship. Other practical benefits of a prenup include:
- Security and flexibility – Parties are able to negotiate how their joint assets will be reasonably distributed. Parties are also able to secure the property they have accumulated prior to the relationship to ensure the just division of assets.
- Tax benefits – Parties are eligible for transfer duty exemptions or capital gains tax rollover on assets transferred under the agreement.
- Efficiency and cost effectiveness – Preparing a BFA is usually more time efficient and cost effective than working out a final division after separation.
How is a prenup enforced?
As a BFA operates to oust the jurisdiction of the Family Court, there are many requirements that must be fulfilled to ensure the BFA is enforceable. Some of these conditions include:
- The agreement must be signed by all parties.
- Each party must have received independent legal advice before signing the prenup or provided a statement
- Each party must have signed the prenup voluntarily.
- The prenup must contain a complete disclosure of each party’s financial standing.
The validity and effectiveness of a prenup is determined by the court. The court may set aside a prenup if the above requirements are not followed or if at the time of the agreement a party’s conduct was unconscionable and possessed reckless disregard for the interests of the other parties or if the acquisition of property was on fraudulent and unjust terms.
To learn more about the importance of executing an enforceable financial agreement and the circumstances in which a BFA may be set aside, please read our article.
Contact Us
To ensure your assets and property are protected in the event of a relationship breakdown, we recommend seeking professional legal advice. If you would like to discuss the creation or amendment of a Binding Financial Agreement please contact us on (02) 9963 9800 or via our online contact form.
