PART 1 – What is “property” and why do I have to tell the ex what assets I have?
A common request from our Clients in relation to separating their assets is, “I want it over and done with now.” So, we’ve put together a three-part blog series on what is “property” to help you better understand your financial separation.
To be able to finalise the property of the relationship:
- We, need to know the values of all the assets and liabilities;
- You, must understand you cannot hide anything from your ex-partner, and must disclose the financial documents requested by your lawyer, or your ex’s lawyer;
- Some assets are not worth what you think they may be worth; this is because the item in question:
- May have a sentimental value, which is only valuable to you; or
- The asset cannot be valued with the insurance value placed on it, or how much it would cost you to replace it if it was broken or lost.
Another question we often get asked is, what is ‘property’ when it is defined and described in Family Law? Property can be defined as everything you and your partner own or owe. It does include and is not just limited to, superannuation, the jet ski, boat, cars, tools in the shed, furniture, the stamp collection, the coin collection, the Rembrandt on the wall, and the antique table Aunty Joyce left you in her will, pets if they are producing an income for the home, a directorship of a company, the business which provides the family income, and the children’s bank accounts. Property however, does not include your children personally.
To help people settle and divide the relationship property quickly, the Family Law Act (Cth) 1975, (The Act), provides two methods to finalise the property by agreement, the first is an Application for Consent Orders and the second is a Binding Financial Agreement.
The difference is between them is that the Application for Consent Orders is filed with the Court, and the Court assesses whether the Agreement to finalise the property is just and equitable. The Binding Financial Agreement can be drafted to prevent any future claim by one against the other for spouse maintenance, and it is not filed with the Court, but it must be drafted correctly.
The Act does provide strict rules to ensure that a Binding Financial Agreement is binding. This is stipulated at Part VIIIA for marriages and Part VIIIAB for de facto relationships. These rules must be complied with, the law is not optional. One element of these rules to ensure that the Binding Financial Agreement is binding, is before each party signs the agreement, they must be given independent legal advice, in writing from their lawyer, on the advantages and disadvantages of the agreement and the effect the arrangement will have on their rights.
You cannot be advised on the effect of the agreement, or the advantages and disadvantages if you do not disclose your financial position, or if the other side refuses to disclose their financial positon. You can waiver your right to know the full extent of transactions, however it is not in your best interests to do so. The Act mandates that the lawyer will still need to see the balances of the accounts, and superannuation to advise you correctly in relation to your rights and the effect of the agreement.
In the event that after you and your ex have signed the Binding Financial Agreement, you find out your ex actually was hiding assets, you can commence proceedings in the Federal Circuit Court or Family Court to have the Binding Financial Agreement set aside, and an order made for a property division which is just and equitable in all the circumstances.
We would strongly advise that you do not cut corners, because to rectify wrongs in the future is always a very expensive process for your health as well as your bank balance. While you might think the rules are a waste of time and a lack of trust, remember the lack of trust was one of the reasons you decided to separate from your ex. You will do yourself a favour financially and emotionally to be fully informed and receive experienced advice from a Family Lawyer, before you agree to separate your relationship property on a final basis.
Contact us on 5679 8016 to have a free chat about how we can help you financially separate from your ex-spouse!