How to stable your wealth

 

Very few people find the accumulation of 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, so many relationships continue on the basis that Tina Turner immortalised in that very powerful song “What’s love got to do etc 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 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 manage to deplete their material wealth, generally, 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.

Is there a need for a Will?

 

If you are convinced that you are not going to die, or you don’t intend to die in the foreseeable future, then read no further.

If, on the other hand, you have accepted your mortality, and know it is only a question of when, not if, you will pass on to another, hopefully better place, I would like to acquaint you with a few issues relating to the need for a Will.

Wills are not only for those in fear of an imminent demise or those in wedded bliss – or otherwise. They are equally important for singles, and particularly important for those who have just exited a relationship, or are about to contemplate a new relationship, or even serial relationships.

Some time ago in The Weekend Australia Magazine, the journalist Victoria Laurie wrote an excellent article titled ‘Estate of Play’. In it she suggests that almost half of the eligible adults will fail to make a Will, or do not possess a current Will. She also mentions, tongue in cheek but nevertheless a sound piece of advice: “If you have led a complicated life, simplify it with your death or a Will”. Many people are aware that an existing Will becomes void on marriage. However, few are aware that a Will made in marriage is not automatically revoked on separation or divorce. As you can imagine, an untimely death, which incidentally most deaths are in one way or another, can have unforeseen, unintended, far-reaching and, in many cases, unwanted consequences.

Our laws include rules for Intestacy (dying without a Will) which provides a set formula for the distribution of your estate. However, this may, and probably will, produce a distribution of your estate which could be at odds with your intentions, especially if you have recently come out of a relationship .The issues today are further complicated with multiple marriages, de facto partnerships, same sex couples and offspring arising from one or more unions, including from time to time ex-nuptial children whose presence often comes to light at the most inconvenient and unexpected times, but almost certainly when the prospect of a distribution or inheritance is at hand.

I strongly recommend if you do not have a Will, or if you recently exited a relationship, you should consult an adviser about the intended distribution of your estate in the event of your undoubtedly undeserved demise. For those who have recently regained single status, whether through design or circumstances, this is just as important.

For further information or enquiry on the above, please contact us or sarah.slattery@nevile.com.au.

Getting Married ?

 

 

We understand that there is a never-ending list of things to plan before getting married or entering into a lifetime commitment but have you thought about the important legal protections you and your loved one may need?

 Our services will help you in every stage of your relationship.

 Before starting your journey together, you should consider preparing a Binding Financial Agreement. This is especially important where parties bring unequal contributions to the relationship.

It can be a sensitive area, however it is much easier to discuss prior to entering a lifelong relationship and creates certainty of outcome should circumstances change in the future.

 We can also help you find the best options to protect assets in your relationship for you, your partner and other loved ones.

 Our Wills and Enduring Powers of Attorney package provide you with the documentation needed to ensure your wishes are known and can be honoured and reduce stress on your loved ones during difficult times.

 No one ever wants things to go wrong but with a plan in place you will be better equipped to deal with whatever life throws your way.

 In the unfortunate circumstance that something does happen, legal documentation is the last thing you want to have to deal with.  Thinking about your options now will save you heartache, time and money in the future. Let us advise you on important issues which are often overlooked in the lead-up to a lifelong commitment.

Please contact our office to discuss your options and to organise an initial meeting free of charge with one of our friendly team.

 

Property division in short-term relationships: Where do you stand?

Family Law Act s.90SB

Property division in short-term relationships: Where do you stand?

It was meant to be forever. Turns out forever was closer to 18 months. But it’s not always as simple as calling the removalists and downloading Tinder. Even short-term relationships can lead to complex wrangling over property in the Family Court.

But we weren’t married and don’t have kids!

If your de facto relationship (with no kids) lasted at least 2 years, then the Family Law Act applies to property division. This is also the case for same-sex de facto couples. However, the court may be able to make an exception for relationships of less than 2 years duration, provided an Applicant can prove:

1. That there was a relationship

Time is not the only factor used to determine the existence of a relationship (in the absence of official paperwork). The Court can also consider other aspects such as: your living arrangements, whether there was sexual involvement and whether others considered you a couple.

And, (in accordance with s.90SB of the Family Law Act), that:

2. That the party seeking the orders has made substantial contributions

This means the Applicant has to prove that, during the relationship, he or she made substantial contributions to the acquisition, and/or maintenance and/or improvement of assets. This could include real estate, bank accounts, shares, vehicles and superannuation.

And;

3. A failure to make the orders sought would result in serious injustice to that party.

What the Court needs to see is that it would be manifestly unfair not to make an order. This involves providing evidence that not having the matter heard in the Family Court would likely cause the Applicant future suffering. An Applicant may also have to prove that there is no alternative or more appropriate venue to deal with the case.

Assuming a relationship is proven, if the court is not satisfied of points 2 and 3 means the Court does not have jurisdiction under the Family Law Act and the Application will be dismissed. (We’ll get to the issue of legal costs another time!) If the Application is rejected, the case could still proceed in a different jurisdiction, e.g. the Victorian Civil Administrative Tribunal, where different legislation will apply.

If the Family Court accepts the case, then it can proceed through the system as per other cases. However, allowing a claim to proceed, doesn’t necessarily mean a claim will succeed.

A Hypothetical – Are you Sam or Alex?

Shortly after starting a relationship, Alex moves into Sam’s place. Sam and Alex share expenses and mortgage payments initially. Then, Sam’s family law property settlement requires her to re-finance her home (formerly her marital home) so she can buy-out her ex-husbands. Unfortunately, Sam is unable to obtain finance, so Alex kindly offers to obtain the loan.

Alex then begins making all the repayments, and they both share household expenses. After 21 months, sadly, the relationship comes to an end. The house is in Sam’s name, however, the mortgage is in Alex’s name.

Alex wants the money back that he paid towards the mortgage.

Sam doesn’t think he’s owed anything, after all, he had to live somewhere.

Are you Sam or Alex?

This is just one of many examples which we can help you with.

How do I avoid this legal nightmare?

Nobody wants to think about breaking up when they’re giddy on dopamine. But if you’re currently in a new relationship where s.90SB of the Family Law Act could apply, then consider sitting down with David Dudderidge to discuss how to best protect your assets and/or simplify any future split.

On the flipside, contact David if you’re parting ways with a short-term domestic partner and want to clarify what your options are.

Nevile & Co.’s David Dudderidge practices in all areas of Family Law, including cases such as these. With years of experience to draw from, he’s helped clients to preserve property and receive their proper entitlements.

For assistance with your family law matters, whether it be property, parenting or divorce, please contact David on:
03 9664 4700
david.dudderidge@nevile.com.au
0412 621 075 (SMS)