Very few people find accumulating wealth an easy task, and it comes as no surprise that most of us wish to preserve it as best we can.
In this article, I would like to raise a number of issues which may assist in the protection of your wealth, and some tips on how you might minimise the risk of its loss or failing! That’s just scaring the living daylights out of you, with some observations on how relationship breakdowns can contribute to a potential loss of your wealth.
Like most people who have reached middle age or more, I can claim some experience, although, I would hesitate to claim any expertise in relationships. I must emphasise that I do not practice as a family lawyer, and therefore, when it comes to legal issues arising from a relationship or matrimonial breakdown, expert advice ought to be sought in this area. If you need assistance with a referral to a pragmatic proponent of the art, don’t hesitate to contact us.
What I can say is that the Family Law Court appears to have exceedingly wide powers to order what, in its opinion (which may not coincide with yours), is a fair and equitable distribution of family wealth based upon the needs, and to a lesser extent the contribution, of the parties to that relationship. Those powers range across asset protection structures including superannuation, trusts, companies, joint ventures and other structures, which were previously used with varying degrees of success, to hide or protect assets from the other spouse or partner.
I think you can safely assume these days that, if the relationship breaks down, you can generally look forward to a division, and thereby, reduction in your current joint assets. In these circumstances, the risk and loss minimisation is very much in your hands. We have all heard the words “I can’t afford to get divorced”. As a result, many relationships continue on the basis that Tina Turner immortalised in that very powerful song “What’s love got to do etc.” when the hip pocket is at significant risk.
The reality is, in many cases I’ve seen over the years, that there are clients who are either happily married, happily single or unhappily surviving in both positions, who have accumulated considerable material wealth and assets through skill, hard work and a modicum of good luck or even by marriage, although not necessarily in that order. Frequently, they then fail to take even basic precautions regarding the protection of those assets and often deplete their wealth at a much faster rate than its accumulation.
Let me provide some food for thought, by outlining a number of examples which may resonate with you. Speaking from a male perspective, I have seen sensible professional and businesspeople exit a relationship, only to have their heads very quickly turned by younger, and firmer flesh. It is not uncommon to see large amounts of money and gifts lavished on the new trophy partner. In many cases, she or he seems to posses an admirable capacity to assist in the rapid diminution of wealth, previously so painstakingly accumulated. These events are frequently justified on the basis of a new-found love, lust or a combination of both and indeed, no expense ought to be spared in the successful pursuit of either or both. It occurs to me somewhat cynically perhaps, that attraction does seem to increase proportionately with the presence of a large bank balance, although not always. It does give credence to the old saying “there is no fool like an old fool” and it follows that “a fool and his money are easily parted”. For his read or her as well.
In the interest of a balanced view (which most of us generally aren’t), I should add, I have seen a number of women who have recently exited a relationship (although this normally does not happen as quickly as men), become infatuated with the next partner who unlike their previous partner, pays them a great deal of attention. While they bask in the glow of a new-found self-esteem and confidence (or is it a fake tan), the warning signs frequently fly out the window. They all too quickly place their trust in what sometimes turns out to be a very undeserving object of their attention. Worse, they provide personal guarantees, and commit to financial arrangements, hopefully investing in a wonderful new life together.