Property Settlement FAQs

After the breakdown of a marriage or de facto relationship it is necessary to resolve “who gets what”. This is known as financial property settlement. As a result of amendments to the family law over the years, when dealing with all aspects of a property settlement NSW law follows the Commonwealth law under the Family Law Act. The family lawyers at our firm have a wealth of experience in this area of law. We have prepared questions and answers to some of the common questions we receive.

How is the property split?

Depending on the length and dynamics of the relationship, as well as the way that the parties have arranged their finances, this can be relatively straight forward exercise or involve complex negotiations.

As a general rule both financial and non-financial contributions are taken into account when determining property settlement. It is important to realise that you may not be aware of some of the things that can be taken into account under the Family Law Act. These include personal injury compensation payments, both parties’ superannuation, future needs, the future earning capacity of each party, the health of the children and both parties as well as financial resources such as expected future inheritances.

Remember, even if you are negotiating a settlement yourself, in order to make an informed decision, before you sign anything, you should find out what your entitlements at law are.

Will my domestic tasks be taken into account?

Property settlements tend to be a ‘balancing’ act when it comes to weighing up the financial and non-financial contributions (such as contributions to the welfare of the family) made by each party. You should not feel at a disadvantage because your relationship was structured so that you spent time out of the paid workforce and instead contributed in a non-financial manner to the relationship.

Property division does not just take into account the financial contributions made by each party. The Family Law Act recognises that relationships are often structured so that one party takes time out of the paid workforce in order to care for children. Therefore, the Family Law Act takes into account non-financial contributions such as child-raising and domestic tasks. Generally these contributions are considered equal to the financial contributions.

Even in situations where both parties in the paid workforce, it is not uncommon for one party to undertake the majority of the domestic tasks. This too may be taken into account in property settlements.

I brought significant property into the relationship. Can my spouse claim any of it?

Remember that any claim to assets of the relationship need to be grounded in ‘contributions’, property is not simply divided by virtue of the fact that two people are married.

The effect of this is that typically in short marriages, each party will take out what they came to the relationship with. In longer relationships, the contributions made by each party throughout the relationship are typically seen to reduce the significance of financial contribution made at the beginning of the relationship by each party. This is because the property brought to the relationship is, in most cases, seen to ‘meld’ into the marital asset pool which is being contributed to both financially and non-financially by the parties.

Technically, it could be seen that after the break down of a long relationship that the other spouse may have a claim against property brought into the relationship.

My spouse has accumulated assets post separation. Can I claim any of it?

Again, an argument needs to be made that you have contributed to the asset in some way. Where the assets have been purchased using assets of the marriage, this is likely to be much easier than a situation where several years after separation one spouse accumulates property from income generated post separation.

Furthermore, where a matter ends up before the court for determination, the court looks at the financial position of the parties at the time of hearing. This can be several years after separation.

It is also important to realise that other considerations such as future needs, income earning capacity as well as maintenance considerations can all be taken into account in determining property settlement.

What else is taken into consideration for a property settlement?

Other considerations such as future needs, income earning capacity as well as maintenance considerations can all be taken into account in determining property settlement.

Is there a "No Win No Fee" option?

The law does not allow a law firm to enter into a "No Win No Fee" costs agreement with a client in proceedings under the Family Law Act. There are serious consequences for the principals of the law firm entering into a no win no fee arrangement in a family law matter under the Family Law Act and for that reason, we are not No Win No Fee Family Lawyers.

However, to assist clients in obtaining the best possible family law legal representation, Prime Lawyers has developed the "Blue Ribbon" payment option for approved Family Law clients in property settlement matters. The "Blue Ribbon" payment option to approved clients is not no-win no-fee, but a deferred payment option. where our family law legal fees are paid when the matter comes to an

To read more about "Blue Ribbon", or to apply to join many current and former family law clients we have assisted under "Blue Ribbon" visit our Blue Ribbon Payment Option page.

How can Prime Lawyers help?

We have a team of experienced family lawyers who will carefully analyse all aspects of your case. We will look at all the financial and non financial contributions made by both parties and advise you on what your entitlements are. Our Family Lawyers are also experienced in undertaking negotiations with the other side to try to resolve your family law matter without the need of going to Court. However, if Court proceedings are required, we have the expertise and experience to go the distance. With our multiple offices, we have the ability to assist clients in Court proceedings or negotiating a property settlement NSW wide.

If you require assistance with a family law property matter, our experts at Prime Lawyers - Family Law Division can help. Contact us to make an appointment with a family lawyer at your nearest Prime Lawyers office.

"No Win No Fee" in Family Law

"No Win No Fee" is an often used phrase for law firms advertising legal services, especially in the fields of compensation law and contested estates. 

Simply put, "No Win No Fee" is an arrangement between the lawyer and the client where payment of all or some of the lawyer's costs is conditional upon the successful outcome of the matter to which the legal costs relate. 

So what then for family law matters? Is it possible to enter into a no win no fee family law arrangement with your lawyer?

The answer is found in the Legal Profession Uniform Law (NSW) s.181(7) which prohibits a law firm from entering into a No Win No Fee Family Law costs agreement with a client in proceedings under the Family Law Act. There are serious consequences for the principals of the law firm entering into a "No Win No Fee" arrangement in a family law matter under the Family Law Act.

Pay at the end Family Law

Because of the prohibition on no win no fee family law many people are faced with the burden of having to fund the legal costs of their family law proceedings as the matter progresses. This can be a difficult proposition, especially if one party to the marriage is not working, or has all or most of their net wealth tied up in matrimonial assets, often the family home. 

To ensure clients in these situations have access to the best possible family law advice Prime Lawyers has developed the "Blue Ribbon" payment option for approved Family Law clients. The "Blue Ribbon" payment option to approved clients is not no-win no-fee, but a deferred payment option. 

To read more about "Blue Ribbon", or to apply to join many current and former family law clients we have assisted under "Blue Ribbon" visit our Blue Ribbon Payment Option page. 

If you wish to discuss whether we can accept your application then get in touch with your nearest Prime Lawyers office.

We have offices in Sydney, Chatswood, Parramatta, Sutherland and Wollongong.

Family Law Blue Ribbon Payment Option

What is Blue Ribbon?

At Prime Lawyers we believe that all family law clients should have access to the best possible legal representation. That’s why we have developed our Blue Ribbon payment option.

If you have separated from your de facto partner, husband or wife and need legal assistance to divide the assets of the relationship then our Blue Ribbon payment option enables you to obtain advice from one of our leading family lawyers with nothing to pay up front. Approved applicants under Blue Ribbon will be supported throughout the conduct of their matter and will receive funding of expenses such as Court filing and hearing fees, experts along with Court representation from leading family law barristers.

When do I pay?

Approved applicants under Blue Ribbon enter into our standard Family Law Costs Agreement with a notation that the client has been approved under Blue Ribbon. Payment of our invoices are usually required within 7 days of issue. Under Blue Ribbon the payment terms are extended until the conclusion of the Family Law matter, or termination of the agreement, as set out in the costs agreement. The practical effect of Blue Ribbon is that clients without funds or regular source of income are able to access our premium legal services. 

Do you do No-Win No-Fee Family Law?

No. Lawyers in New South Wales are prohibited from conducting No Win No Fee family law proceedings. The Blue Ribbon payment option to approved clients is not no-win no-fee, but a deferred payment option.

Do you charge me more if I am approved under Blue Ribbon?

No. We do not charge any interest, additional fees or premium loading for clients approved under Blue Ribbon. If approved you will be required to enter into the firm’s standard Family Law Costs Agreement with Blue Ribbon payment terms. The Costs Agreement outlines how we will charge for our work along with an estimate of total costs and expenses, but does not otherwise differ from the agreements with clients not under Blue Ribbon.

Do you accept all applicants?

Regrettably given the high demand for our services we are unable to accept all Blue Ribbon applications. We do consider and reply to each application received. 

How do I apply?

Simply complete the application form in the window below to commence the application for the Blue Ribbon payment option. Applicants under Blue Ribbon will receive notice within 7 days as to whether their application has been successful, or if further information is required at which time you may be required to attend an conference at your nearest office.

THE APPLICATION

Commence the Application now.

Obtaning Orders

If a marriage or de facto relationship has come to an end, then it is most important that parties finalise all outstanding property and financial issues. 

Under the Family Law Act 1975, “property” includes all items of value owned by parties together or separately including, but not limited to, real estate here and overseas, home contents, motor vehicles, funds in bank accounts and superannuation, as well as outstanding liabilities such as mortgages, personal loans and credit card debts. The law applies to all assets and liabilities even if they may be held in the name of only one party.

There is a common misunderstanding that parties who have decided "who gets what" between themselves are protected from any future property claim by the other party. This is not the case, and parties should be cautious not to rely on verbal or unenforceable written agreements, or allow too much time to pass between the date of separation or date of divorce, before resolving outstanding property and financial issues. This can be particularly important in circumstances where the values of jointly or solely owned assets including superannuation has increased, and either or both of the parties have acquired new assets by the time the parties’ family law property settlement is resolved.

Also, there are strict time limits in applying to the Court for property settlement Orders after a divorce is finalised. 

The law requires that in negotiating a family law property settlement, each party must make a full and frank disclosure of their financial position (Read more on the concept and requirement of "full and frank disclosure" here).

The two common ways of resolving a family law property settlement in accordance with the four-step approach to property division as required under the Family Law Act are:

(1) By agreement; or

(2) By commencing Court property proceedings in the Federal Circuit Court or Family Court of Australia.

If parties are able to reach an “in principle” agreement on how to divide all their assets and liabilities, the agreement can be legally drafted for executing and filing in the Family Law Courts of Australia to become legally enforceable Consent Orders. Consent Orders are simply Family Court Orders made by the consent of both parties. 

Fortunately, the majority of our family law matters are able to be resolved by way of Consent Orders, without the need for either party to attend Court. Once Orders are in place both parties must comply with them or risk enforcement proceedings for contravening a Court Order. Of course, where there are complex financial structures or one party fails to make full and frank disclosure of his or her financial position, it may be necessary for one party to commence Court proceedings. Finalising a family law property settlement matter by agreement is often quicker, less expensive and less stressful than asking the Court to decide.

The law encourages families in dispute to reach agreement about the division of property (and spousal maintenance, where appropriate). However, it is important that parties who reach agreement between themselves each obtain independent legal advice as to the agreement reached, to ensure that each party is going to receive what they are entitled to, in accordance with the Act. 

Also, in deciding whether or not the proposed Consent Orders should be made, the Court must be satisfied that the proposed division of assets and liabilities including superannuation is just and equitable. This is where competent advice and representation from an experienced family lawyer is important, because a family lawyer has a proper understanding of what the Court would likely accept as being just and equitable in any given circumstance. (Read more on the concept of what is "just and equitable" here.)

Importantly, only a family lawyer can provide reliable advice as to the proper entitlements of each party, based on family law principles. Furthermore, if the Consent Orders are not correctly drafted or do not meet all necessary requirements, the Court may not be prepared to grant the Orders, and the Consent Orders may not be made if the Application for Consent Orders is not filed within 90 days of the date of the first signing of the document.

If parties are unable to reach agreement, then an Application to the Court seeking property Orders is the only way to try and obtain a legal resolution to assets and finances that are in dispute. This can be an expensive and drawn out process, so it is important to instruct lawyers that have experience in family court litigation. 

It is important to remember that, despite a matter proceeding through the Courts, the parties are entitled to continue negotiating and reach a settlement at some point prior to the Court finalising the matter. In fact, the Court will continue to encourage parties to try and reach an agreement, rather than the matter proceeding to a final disputed hearing.

The family lawyers at Prime Lawyers are experienced in negotiating property settlements and drafting Consent Orders. We are aware of exactly what is required to be included and can advise you on your rights and entitlements. Where parties are unable to reach agreement, we have the experience and expertise to see our clients through the rigours of lengthy family law property proceedings.

If you require assistance in negotiating a property settlement or in proceedings dealing with a division of property, our experts at Prime Lawyers - Family Law Division can help. Contact us to make an appointment with a family lawyer at your nearest Prime Lawyers office.

We have offices in Sydney, Parramatta, Chatswood, Sutherland and Wollongong.

The Four Step Process

When a relationship comes to an end and a decision needs to be made in relation to the financial property settlement, the Family Law Court must determine a proper division of the asset pool by applying common legal principles.

Broadly, when the Court embarks upon the task of dividing property between the parties the Court will apply what is commonly known as the “Four Step Process”.

Step 1: Ascertaining the Net Property Pool

Generally, all property must be taken into account, whether acquired before or during the relationship or after separation.

Property includes assets of either or both the parties. This can include real estate, shares, cars, jewellery, savings, furniture and effects. 

The Court must also determine the net value of the property pool.

The net value of the property pool is generally ascertained by subtracting the parties’ liabilities from the gross value of the parties' assets.

Superannuation is treated differently. Depending on the type and value of fund, it may be divided between the parties at the time that a Property Order is made or an Order made for it to be split at a later date.

The Court must also consider the financial resources of the parties. These can be funds or assets over which a party has influence or control or in certain circumstances prospective entitlements.

When determining the parties' property pool, consideration must also be given to taxation liabilities including capital gains tax, stamp duties and other financial issues.

Step 2: Contributions both Financial and Non-Financial

The next step is to assess each party's contribution during the Relationship, both financial and non-financial. Non-financial contributions include contributions made as homemaker or parent.

Initial financial contributions brought into the relationship can be relevant, as are gifts and inheritances and other "out of the ordinary" moneys received.

Step 3: Future Needs

The next step is to assess the future needs of both parties, taking into account a range of factors including the parties':

- Age

- Health

- Income earning capacity

- The property of each party

- Whether the party has the care of or support for children

- The financial circumstances of any new relationship

The Court can make an appropriate adjustment depending on any of or all of the above factors.

Step 4: Practical Effect - Just and Equitable

The final step is to consider the practical effect of any proposed settlement, to achieve a result which is just and equitable in all the circumstances.

This step of the process will sometimes include a consideration of the appropriate blend of any settlement between immediately available assets, and deferred but important benefits such as superannuation. (Read more on the concept of "Just and Equitable").

Financial Disclosure

Before parties can enter into a final property settlement, both parties have a clear obligation to make full and frank financial disclosure about their respective financial circumstances. 

Each party has to provide to the other party all of their supporting financial documents.

Depending on the parties respective financial positions these documents can include but are not limited to proof of earning documents including Group Certificates, Taxation Returns, Business and Company records, Personal and Credit Card Bank Statements, Share Portfolio Valuations and Superannuation Statements.

A failure to make proper disclosure of a relevant matter can have very serious consequences. (Read more on Full and Frank Disclosure)

Time limits

It the Parties are married then they have 12 months from the date of Divorce in which to apply to the Court for Property Orders or a Spousal Maintenance Order.

When a De-facto Relationship comes to an end an application for property adjustment or maintenance must be made within two years of separation.

A party must seek leave of the Court to make an application after this time.

In exceptional circumstances the Court may grant leave for an application to be made outside of this time. 

The above is only a cursory examination of what needs to be considered by the Court in determining the division of property. Our family lawyers can assist you with a more detailed analysis of the legal principles involved and of course, provide you with advise that is specific to your circumstances.

If  you require assistance in obtaining Family Court Property Orders for the finalisation of your financial property settlement, our experts at Prime Lawyers - Family Law Division can help. Contact us to make an appointment with a family lawyer at your nearest Prime Lawyers office.

Just and Equitable Property Orders

The Court’s power to make orders altering the interests of the parties to the property of the marriage is contained in section 79(1) of the Family Law Act 1975. 

However, section 79(2) of the Family Law Act states the Court shall not make an order unless it is satisfied that in all the circumstances of the case that it is "just and equitable" to make the order. This is the fourth and final step of the four-step process adopted by the Court when determining the financial property settlement.

Section 79 2) is expressed in negative terms, (see the case of Teal & Teal [2010]), and states that the Court shall not make an order unless it satisfies itself that it is just and equitable under the circumstances of the case to do so.

In the case of Bevan, the Full Court allowed the appeal by the wife against the trial judge’s decision to award a 60/40 division of the matrimonial property in favour of the wife which meant that she would have to sell her home to pay the husband his share of the award. The parties in that case had been separated for 18 years and the husband had told the wife that she could retain the assets during which time the wife dealt with the assets without reference to the husband.   

The Full Court allowed the wife’s appeal and left the existing property interests as it was. Notably, the Full Court  did not make a costs order despite the wife succeeding in the appeal in view of the fact that the husband would have to pay for his legal costs. 

When considering this step, the Court looks to the effect of its findings made at the previous three steps and then proceeds to make an order if it just and equitable to do so.  

The Court does not just consider the percentage division but makes an assessment as to whether the effect of the order that it now proposes to make is just and equitable.

In the case of Bonnaci (2012) at paragraph 61 of the judgment, the Court stated that, “the Full Court has said on a number of occasions the so-called fourth step is not an opportunity to make a further adjustment; it is an opportunity for the judicial officer to determine finally how, in reality, a just and equitable order might be achieved based on the circumstances of the case before it.”

When undertaking this step, the Court has to “stand back” and look at the reality of the percentage division at which it has arrived (see the case of Tomasetti [2000]).

In Norman & Norman [2010] the Full Court explained that the legislation does not envisage a “substantial step” or a further significant adjustment as a final step. Rather the Full Court, by reference to the judgment of Gibbs CJ in Mallet, explained “[it] is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result”.

And in the matter of Teal, “For all its usefulness and merit as a “disciplined approach” or a “structured process of reasoning”, the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.”

Section 79(2) confers a wide discretion with each case turning entirely on the view taken by the judicial officer of the facts and merits of that case.  

This power is a discretionary power and is dependent on the facts of the case; therefore no two decisions can be the same. The Court however does not have an unfettered discretion.

In the matter of Norman & Norman [2010] the Court held that, "It is the Act which ultimately governs the process and the parameters of the s79 exercise. The legislative requirement is to “take into account” the matters enumerated in the sub-paragraphs of the section. There is no legislative requirement as to the process that should attend it (save that, ultimately, it must produce a just and equitable outcome)."

In the decision of the High Court in Mallett v Mallett [1984] Chief Justice Gibbs at paragraph 608 said:

"...[Parliament] has conferred on the court a very wide discretion to make such order as it thinks fit when it is satisfied that it is just and equitable that an order should be made (see sub-s (1) and (2) of s 79), although there are some broad principles to which the court is required to give effect, and some circumstances which it is required to take into account ... The circumstances which the court is specifically required to take into account may be regarded as falling within two main classes. First, the court must consider the extent to which either party has in the past contributed to the acquisition, conservation or improvement of the property ... Secondly, the court must consider all those circumstances which relate to the present and future needs, and to the means, resources and earning capacity, actual and potential, of the parties: see s. 79(4)(d) and s 75(2)(a)-(m) ... The Act does not indicate the relative weight that should be given to different circumstances, or how a conflict between opposing considerations should be resolved – those things are left to the court’s discretion, which must, of course, be exercised judicially.

Spousal Maintenance

Following separation, if one party is unable to support themselves financially then they may be able to claim spousal maintenance from the other party. This is a consideration relevant in a property settlement and applies to both married couples (section 72 of the Family Law Act) and de facto relationships (section 90SF of the Family Law Act). Usually, spousal maintenance is paid for a limited period only, for example, until the children start school or while the payee undertakes training for employment.

Spousal maintenance is payable only to the extent that the payer is reasonably able to do so and only if the other party is unable to support herself or himself adequately, whether:

(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or

(c) for any other adequate reason.

Once the Court has determined the entitlement of a party to spousal maintenance, it must then decide on the nature of the spousal maintenance Order i.e., the quantum (or amount); whether the Order should be periodical or for a lump sum; and for what period it should extend. In considering this, the following factors are relevant:

(a) the age and state of health of each of the parties;

(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; 

(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and 

(d) commitments of each of the parties that are necessary to enable the party to support: 

   (i) himself or herself; and 

   (ii) a child or another person that the party has a duty to maintain;  

(e) the responsibilities of either party to support any other person; 

(f) the eligibility of either party for a pension, allowance or benefit and the rate of any such pension, allowance or benefit being paid to either party;

(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; 

(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; 

(i) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; 

(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; 

(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; 

(l) the need to protect a party who wishes to continue that party's role as a parent; and 

(m) if either party is cohabiting with another person, the financial circumstances relating to the cohabitation; 

(n) the terms of any order or declaration made or proposed to be made in relation to a party to the relationship or the property of the parties; 

(o) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; 

(p) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and

(q) the terms of any financial agreement or Part VIIIAB financial agreement that is binding on the parties to the relationship.

These factors are relevant in determining both whether the applicant party is unable to support himself or herself adequately, and in determining the reasons for this inability. The factors limit the matters which the Court may take into consideration on an application for spousal maintenance, and emphasise economic considerations such as issues of "need" and "capacity", whereas questions of matrimonial conduct are not relevant.

The fact that a property Order has included a component or adjustment for section 75(2) factors known as “future needs” factors (See "The four step process" to property settlement) does not preclude the party in whose favour the property Order has been made from obtaining a spousal maintenance Order. However, where there is an application for both property alteration and spousal maintenance before the Court, it has been held that the proper approach is to deal first with the property application and then with the spousal maintenance application.

If you require assistance with a property settlement matter or to make an application for an order for spousal maintenance, our experts at Prime Lawyers - Family Law Division can help. Contact us to make an appointment with one of our family lawyers at your nearest Prime Lawyers office.

We have offices in Sydney, Parramatta, Chatswood, Sutherland and Wollongong.

Saving Costs in Family Law Matters

When Family Law matters arise, obtaining legal advice is a very important first step. However, it is a simple fact that for the vast majority of people who do not qualify for free legal services, legal advice costs money. Our Family Law Solicitors have taken the time to provide you with some tips on how to reduce your family law legal fees.

Here are our top 10 tips to help you save money on legal fees

1.  Have a plan. When you meet with your family or divorce lawyer for the first time, spend a few minutes discussing the likely steps in your matter. Agree on a plan. End each conversation with your lawyer with the question: “What is the next step in my matter?” This will ensure that both understand what is to happen next and that you remain up to date with the progress that is being made.

2.  Read the Costs Agreement. Your family lawyer will provide a Costs Agreement, which sets out the basis on which he or she is prepared to act for you. Make sure you understand what is expected from you as part of the agreement, such as being able to provide instructions in a timely way. If there are terms that set out the circumstances in which the family lawyer may not be able to act for you, familiarise yourself with these.

3.  Agree on the best way to communicate with your lawyer. If you have a busy job and can only be contacted at certain times during the day, or by email rather than a phone call, advise this upfront. There is nothing worse than receiving an itemised bill from a solicitor with a list of dates when you missed his or her urgent telephone calls.

4.  Avoid long telephone conversations. Our research indicates that if you are spending half an hour or more on the phone to your family lawyer on a regular basis, you would achieve far more in a scheduled face-to-face meeting, for the same cost.

5.  Provide instructions in a timely fashion. If you are wondering why your lawyer has not been in touch lately, it might be because the ball is in your court. Check the most recent correspondence and see whether your lawyer asked for you to provide instructions, or perhaps provide certain documents, so that the matter can proceed to the next step.

6.  Provide summaries. When you are asked to provide documents such as birth certificates, bank statements or income tax returns, always provide a covering note with a description of the items that you are enclosing. If you prefer to provide documents electronically as PDF attachments, it is a good idea to provide your covering note as a Word document so that your lawyer can cut and paste your list of documents into correspondence with the other party’s solicitor.

7.  Know your filing cabinet. Use this opportunity to get on top of any unfiled paperwork that you have lying around. Then when your lawyer asks you, for example, to provide a detailed employment history including salary information, simply locate your last job application or resume as this will probably contain the relevant information. Not having to “reinvent the wheel” will save you anxiety as well as considerable time and cost.

8.  Ask questions. If you do not understand what your lawyer is saying, ask for clarification. If necessary, ask for the advice to be given in writing. This will help you to avoid going over the same ground with your lawyer, thus increasing your legal costs. If you have the right lawyer, no question is the wrong question.

9.  Remember that your lawyer is your lawyer. Your family lawyer is passionate about their job, knowledgeable about the law and experienced in helping people who find themselves in stressful and often emotional circumstances. But at the end of the day, your lawyer’s role is to give legal advice. Take the time you need to discuss your matter but understand that your lawyer charges by the hour.

10. Pay your legal fees month by month. Ask to be provided with an account each month so that you know how much your family law matter is costing you. This should ensure that there are no nasty surprises at the end. Your lawyer should be able to provide approximate time-frames for each stage of your matter, and an estimate of fees for each stage. This will make it easier to budget when the bills arrive. Ask if there is someone within the firm that you can contact about your account from time to time on a no-charge basis.

11.  Pay your legal fees at the end of the matter. Sometimes, it is not just a matter of saving on legal fees and the real issue is the ability to pay the fees involved. Ask your lawyer if they offer a "pay at the end" payment option. No Win No Fee Family Law is not allowed so instead, Prime Lawyers has developed the "Blue Ribbon" payment option for approved Family Law clients. The "Blue Ribbon" payment option to approved clients is a deferred payment option, where Prime Lawyers' legal fees are paid once the matter has ended.

Following these tips should help you and your lawyer to save time and work more efficiently together, thus keeping your costs from increasing unnecessarily. 

Full and Frank Disclosure

Pitfalls of Binding Financial Agreements

It is not uncommon for one party to a relationship to be in a significantly stronger financial position to the other, especially prior to marriage. 

In these circumstances, the wealthier party may be concerned about securing the assets they are bringing to the marriage in the unfortunate event their pending marriage ends in divorce. After the changes to the Family Law Act that came into effect in 2009 (as per the Family Law Amendment (De facto Financial Matters and Other Measures Act) 2008) this also applies not only to those contemplating marriage, but also those entering into or already in a de facto relationship. 

It is in these circumstances that couples may consider approaching a Family Law Solicitor to seek advice on entering into a private agreement (a Binding Financial Agreement) before their marriage or commencement of a de facto relationship in order to determine how their property will be divided in the event that the marriage or relationship ends. 

When parties enter into such an Agreement, they intend the terms of the Agreement rather than the principles of the Family Law Act 1975 to determine how their property will be divided in the event that the relationship or marriage breaks down. Although they are commonly referred to as ‘pre-nuptial agreements’, they are referred to as ‘Financial Agreements’ in the Family Law Act and in order to be binding, they must meet numerous specific requirements as stipulated in the Act. 

This idea of self-determination is attractive, however there are numerous bases on which a Binding Financial Agreement can be set aside if challenged by either party, often after separation. The article below outlines some of the pitfalls and alternatives to Financial Agreements.

Who can enter into a Binding Financial Agreement?

Since the changes made to the Family Law Act 1975 which came into effect in 2009, Financial Agreements can be entered into by both de facto and married couples. As same sex relationships are now recognised by the Family Law Act 1975, both same sex and heterosexual couples are able to enter into Financial Agreements.

As a person can be legally recognised as engaging in more than one de facto relationship at the same time, or be married and engage in one or more de facto relationship/s at the same time, a person is also able to enter into multiple Financial Agreements at the same time.

When can a couple enter into a Binding Financial Agreement?

Trusts and Property Division

A trust is an entity in which certain persons are entrusted to hold assets for the benefit of certain persons or entities. Various assets can be held on trust, including, property, money and even businesses. Trusts can sometimes be taken into account in a family law property settlement. 

The main parties involved in a trust include:

The Settlor: This party is responsible for establishing the trust fund. The settlor may be a beneficiary of the trust and have an interest in that capacity. Their sole responsibility is usually to establish the trust fund. The settlor usually does not have any other form of control of the trust.

The Trustee: This party possesses the legal title to the property and has a fiduciary (complete trust) obligation to use their position to the benefit of the beneficiary. The trustee may be an individual or a company. The trustee has no other interest in the trust. 

The Appointor: This party holds the position of control over the trust. The Appointor is able to control who holds the position of trustee of the trust, and can make changes at anytime.

The Beneficiary: The beneficiary is an object of the trust. He/she is the party who is entitled to the assets held on trust.

In property settlement proceedings pursuant to section 79 of the Family Law Act 1975, a Court has to identify what the assets and liabilities of the relationship are (the property pool). The Court has to make a determination as to what assets are considered as property and what are, in fact, financial resources.

This distinction is important because a Court is limited by what it can do in relation to property that is matrimonial property and property that is considered as a financial resource.

Under section 79 the Court has the power to make Orders adjusting the interests of parties in “property”. The Court does not have the power to make an Order adjusting the interests of parties in “financial resources”. 

The Court has to be careful when making a determination to not make decisions that unduly affect the interests of third parties.

In family law property proceedings, a trust can be seen as either being property or a financial resource. Whether it is property or not depends on the type of trust and the party’s control over the trust. 

With a fixed trust, the interest held by the beneficiary can be the subject of an order under section 79. With a discretionary trust, the beneficiary has a mere expectation of receiving benefits under the trust. (For a detailed discussion on the different types of trusts, see our section on Trust Structures.)

The type of control a party can exert over a trust depends on whether they are a settlor, or a trustee, or a beneficiary or an object of a trust.

If a party treats trust property as their own then the trust property may be treated in property settlement applications as their property.

An elaborate trust structure may also be disregarded if it is clear that a party to the marriage effectively treats the trust property as his or her own and has control over the trust.

Cases have reinforced the view that trustees cannot be directed to act in a manner which is inconsistent with the trustee’s duties pursuant to the trust deed or in conflict with the due administration of the trust.

By the interrelation between section 79(4)(e) and section 75(2)(b), the Court can take into account the existence of a financial resource in the hands of one party so as to balance the share the other party is to receive to achieve a just and equitable outcome.

What if the trust was established prior to the breakdown of a marriage?

Section 106B of the Family Law Act 1975 states that: 

"In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order."

With regard to this section, "a disposition includes" a trust. This section indicates that if a trust is established to manage property in anticipation of a divorce or any other event which may threaten the assets of an individual or company, the Court can overrule the trust and the assets of the trust will be available for the other party to claim as assets in the asset pool.

Also, any changes to the structure of the trust may be reversed. For example, in the case of Kennon v Spry, the husband had all his property in trust and held himself and his wife as capital beneficiaries. A few years later, he removed the titles of beneficiary held by his wife and himself and transferred the assets into a separate trust for his children, however, he remained as trustee. Upon the breakdown of the marriage, the Court found that the wife was found to be entitled to the assets within the trust as the original dispositions were set aside by the Court. She had initially been a capital beneficiary and she relied on section 106B. Also, the husband owed a fiduciary duty as trustee to his wife. He was in the position to determine when power would be exercised as, at any point during the marriage, he could have appointed the entire trust to his wife.

If you require assistance with a property settlement or in making an application for Property Orders, our experts at Prime Lawyers - Family Law Division can help. Contact us to make an appointment with a family lawyer at your nearest Prime Lawyers office.

We have offices in Sydney, Parramatta, Chatswood, Sutherland or Wollongong.