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Will Expected Inheritance Be Included in My Family Property Settlement Agreement?

An expected or future inheritance is an inheritance that one party is expecting to receive once the testator passes away. Will the Family Court take into consideration a future or expected inheritance in your divorce settlement? If you or your ex-spouse are anticipating an inheritance, say from an elderly parent, you may want to get some advice regarding how this may impact your property settlement agreement.

In the 1995 case of White & Tulloch the Court noted that the expectancy of inheritance will generally not amount to a financial resource to be considered in your property settlement agreement. The term financial resource involves some degree of “entitlement to, control over, or relative certainty of receipt of property”. On the other hand, a will has been described as a mere expression of intention at the time it was made. They may be revoked or altered and only have legal effect upon the death or the testator. In this case, the expected inheritance of an elderly parent was not included in the divorce settlement.
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The Bank of Mum and Dad – Gifts from your Parents and Property Settlement Agreements

The Australian housing market is difficult to break into for most first home buyers and many couples have looked to their parents for some assistance to get their foot in the door. For many, parents may provide assistance to their children by allowing them to live at home rent-free or contributing to their deposit in the form of a gift or loan.  In many cases, “the bank of mum and dad” is crucial to helping relatives to be able to buy their own home.

As it becomes more common for parents to provide financial support to the parties during a de-facto relationship or marriage, there is an increasing likelihood that these “third parties” may become involved in a dispute concerning a property settlement agreement between the parties if the relationship was to break down.  For example, where there is an argument as to whether money received by the parties (or either of them) was a gift or a loan to be repaid.
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The Basics of What Your Exs Company is Worth: The Balance Sheet

One way to determine what you or your former spouse’s company is worth is to instruct your divorce lawyer to engage a single expert valuer to put a dollar figure to the value of the business. Your divorce lawyer will then instruct the valuer to analyse the company’s financial statements among other things to determine the value for the purpose of your family property proceedings.

A company’s financial statements are made up of the following:

  1. Balance Sheet
  2. Profit and Loss Statements (Or Income Statement)
  3. Cash Flow Statement

 

The Balance Sheet

The balance sheet is a snap shot of a company’s accounts. It provides at a glance what the company owns and is owed. It can give an indication of the financial position of the company at a single point in time.

The balance sheet depicts a company’s assets, liabilities and owner’s equity (net worth). Assets include cash, office equipment eg chairs and desks, all inventory and accounts receivable which refers to people who have bought from the company but have not yet paid.  Non-current assets are also listed under assets which include the building and land, goodwill, patents and copyright.

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Time Limits For Family Property Settlements

Certain time limits apply for bringing a property dispute to the Family Court. The deadline for bringing a property application by your divorce lawyer is either:

  1. If you were married, 12 months after a divorce order has taken effect,
  2. If you were not married, 2 years after your separation as a de facto couple.

Accordingly, it can be a good idea to keep a record of the date of your divorce or separation and set a reminder a few weeks before the deadline.

If you want to make an application for property after the deadline has passed, your divorce lawyer may be able to seek permission from the Court for an extension of time. The Court will not be able to grant you permission, unless it is satisfied that hardship would be caused to you or a child if the Court did not step in. Your divorce lawyer will also have to demonstrate a reason for the delay in bringing proceedings after the deadline. The Court will also consider the length of your delay in making you claim.

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Reaching a Property Settlement Agreement through Family Law Arbitration

There are numerous methods aside from traditional Court determinations which parties can utilise when seeking to reach a property settlement agreement. Section 10L of the Family Law Act 1975 defines arbitration as “a process (other than the judicial process) in which parties to a dispute present arguments and evidence to an arbitrator, who makes a determination to resolve the dispute.”

How do Arbitrations operate?

Arbitrations are available for property and financial matters and are voluntary. A matter may also be referred by a court order. They can take place before, during or after proceedings have commenced.

Arbitrations may either determine entire financial or property disputes, or alternatively they can focus on specific aspects of the dispute.

The parties have flexibility in preparing a written arbitration agreement before the arbitration commences to determine the constraints and process of the arbitration.

Are Arbitral determinations final?

Once arbitration has finalised, the arbitrator will make an arbitral award. An arbitral award is final and upon registration, it has the same impact and enforceability as an order of the Court.

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Collectables and your property settlement agreement

Whether you collect postage stamps, designer handbags, books, art or cars, don’t underestimate the value of your little hobby when it comes to a property settlement agreement.

In the recent case of Isaacson [2019], Judge Wilson considered a property settlement agreement dispute between a former husband and wife, as to the value of the husband’s book collection. The husband alleged the book collection to be worth $183,905.00 and the Wife believed it to be worth $384,421.00.

Both parties sought to rely on their own “expert” evidence as to the apparent value of the book collection.  This is where the case highlighted the importance of seeking legal advice when intending to use expert evidence to ascertain the value of collectables in a property settlement agreement.

The Husband’s “expert” provided the Court with a 97 page affidavit pertaining to his opinion as to the value of the book collection. The affidavit of the Husbands “expert” failed to address the elements of his training, study or experience which are required to be satisfied in order to deem a witness to be qualified as an expert. The Court consequently found the Husbands alleged expert evidence to be deemed inadmissible.

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Property Settlement Agreement – Can the Court Split Employment Bonuses?

What is Property?

When negotiating a property settlement agreement, one of the first steps to be considered is what property you and your former spouse have or own. This step is important as only property can be subject to a property settlement agreement. The Family Law Act defines property as “any property in the possession of either party, either vested or in remainder.”  Property of the relationship generally includes:

  • All assets that are owned, g. the family home, motor vehicles, personal items
  • All assets under your control, e.g. a business, superannuation, shares and funds at bank
  • All liabilities, e.g. mortgages, credit cards, hire purchase agreements

Are Employment Bonuses Property?

In the case of Ilannello & Ilannello (No 3) [2018] FCCA 3752 (19 December 2018) the Court considered the question of whether the wife’s future employment bonus payments could be the subject of a property order.

Facts of the Case

In this case, the husband had suffered a workplace accident and had been unemployed since 2013. The husband was living on a permanent disability payment from his super fund. While he owned about $78,000 in shares, he claimed that his legal fees were equally as much. On the other hand, his wife had a base salary of $190,000 per year plus employment bonuses. In the previous year, the wife received $54,000 in bonuses.

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Quick Questions Answered: Property Settlement Agreement

  1. What is a Property Settlement Agreement?

A Property Settlement Agreement contains the agreed terms to divide property between you and your former partner following separation. This includes assets, liabilities and superannuation.

  1. When Can I Get A Property Settlement Agreement?

You can finalise a property settlement agreement as soon as you and your former partner have decided to separate i.e. end your relationship.

  1. What if we are still living under the same roof?

You can be living under the same roof but still be considered ‘legally separated’. You do not need to be living in separate households; however, your relationship does need to have ended.

  1. What are the deadlines for obtaining a Property Settlement Agreement?

The Family Law Act 1975 (Cth) provides some “deadline dates” depending on whether you were married or in a de facto relationship. There are some exceptions however, the general rule is:

For married couples: You have 12 months from the date your divorce* comes into effect to make an application for a Property Settlement.

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