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Can an ex-spouse claim against an inheritance received by the other spouse after separation? Naturally, you may think that an inheritance received after separation should be excluded from the rest of the parties’ pooled assets. However, the Court has to consider all of the parties’ assets which were acquired before the commencement of the relationship, during the relationship and after separation as well as the parties’ contributions (both financial and non-financial). Having considered all of the assets and the contributions, the Court has the discretion to do one of the following: Treat certain assets received after separation differently in the above determination; or Include assets acquired after separation in the asset pool for division between the parties. These issues were recently considered by the High Court and the Full Court of the Family Court of Australia. Singerson & Joans  The Husband inherited about $3,000,000.00 shortly after separation. The wife made significantly more financial and non-financial contributions as a homemaker, child-carer and breadwinner. The Family Court noted that not only the 4 years of contributions between separation and trial but also across the entire 15-year relationship should be considered. It also acknowledged the initial contributions made by the husband and his post-separation inheritance. The Court determined that the wife is entitled to 47.5% of all the property including the inheritance. The High Court declined to provide guidelines for Family Law Courts in respect of post-separation “windfalls” and supported that family court judges’ discretion be exercised in every individual set of circumstances. Holland & Holland  This case involved a 17-year marriage with two teenage children. The parties separated in 2007 and were divorced in 2012. Three and a half years after separation, the husband received an inheritance from his deceased brother worth approximately $715,000.00. The inheritance was excluded from the asset pool available for division and was regarded as a “financial resource”. On appeal, the Full Court of the Family Court of Australia held that as a matter of principle, an asset should not be excluded from being considered altogether in the overall property settlement. However, the Court stated that it may, in some cases, be appropriate to treat certain assets separately depending on the parties’ differing interests to such assets or the degree of contributions made by the parties to such assets. Calvin v McTier  This case involved an eight-year marriage with one child. Four years after separation, the Husband received an inheritance of $430,000 from his late father. The inheritance was equated to about 32% of the total asset pool which was about $1,340,000. The Husband argued that the inheritance should be excluded from the asset pool available for division as it has no connection to the parties’ marriage. However, the Court held that the inheritance be included and that the Husband made substantial financial contribution after separation because of the inheritance which was assessed to be 75% and the Wife’s as being 25%. The Court then made an adjustment of 10% in favour of the Wife, taking into account the disparity of the parties’ income earning capacities. The final division was 65% to the Husband and 35% to the Wife. The above cases demonstrate that all of the parties’ assets must be identified before the Court can make orders for property settlement and that the Court retains discretion as to how each asset is to be treated in each case. If assets are received after separation, the Court has the discretion to place them separately from the rest of the asset pool depending on the facts of each individual case.
29 Nov 2018
When buying a home after marriage, there are many cases in which the purchase is made with the support of parents. If the marriage breaks down in such a situation, how does the court treat the funds received from the parents in the distribution of property? If there is any evidence such as a loan agreement that states that a fund is required to be repaid under certain conditions, a security deed or a record of a discussion between the parties that identifies the loan, the fund received from the parent is considered as a loan. If the money received is a gift from the parent, there is no obligation to repay it, and therefore, it is very likely that the money given to a couple in the long-term marriage will be regarded as a part of the common property. Considering whether the parent's funding was a loan or a gift, when calculating the total value of the parties' shared assets and determining their respective share, the court takes into account various factors stipulated in the Family Law Act. In many cases, it is not clear whether the parent's funding was a loan or a gift, and it often gives rise to a major problem during a divorce proceeding. For example, if a couple purchased a house for $800,000 with $400,000 in funding paid by their parents and has already paid out the loan, whether $400,000 was a loan or a gift is an important point in determining the total amount of common property. This becomes a more important issue if the amount of funding received by their parents accounts for a larger proportion in the total value. Accordingly, when considering funding a child, it is necessary to hire a lawyer in advance and to make the intent of the funding clear. Otherwise, the parents may be called upon their child’s divorce proceeding as a witness or required to submit an affidavit, which causes severe stress over a long period of time. Further, such proceedings will give rise to significant legal costs. In order not to spend too much money on legal fees during a divorce proceeding, it is recommended that parties start appropriate negotiations at an early stage for the settlement, so that things do not progress to the court due to property distribution issues.
15 Oct 2018
There have been many reports of defects in new apartments in the Sydney region. To address these issues, the Strata Schemes Management Act 2015 Part 11 provides new obligations that property developers must follow. Under the new law, property developers are required to pay NSW Fair Trading a deposit, equal to 2% of the value of the contract exchanged with the Construction Company. Until the deposit is paid, the developer will not be able to obtain the Occupation Certificate for the apartment which is required during settlement with the purchaser. Additionally, 15-18 months after completing the construction of the building, there is a mandatory obligation to inspect the building by an independent building inspector who has no affiliation with the developer. Should a defect be found, the Construction Company that built the building must repair any damages and the cost of such repair is covered by the bond. The new scheme will only apply in the following circumstances: Apartments with four floors or more; Residential or mixed residential/commercial buildings; and Construction contracts signed on or after 1 January 2018. (Apartments with fewer than four floors are covered by the Home Building Composition Fund.) The obligations imposed on property developers under this new scheme aims to detect and repair any defects early on, and to avoid situations whereby buyers and owners are forced to repair long-term defects which may be costly.
03 Oct 2018
Under family law, an initial step for parties in a divorce or separation who are seeking a distribution of matrimonial property must clarify the assets owned by the parties and obtain a valuation of each asset. In the event that the parties cannot come to a mutual agreement on the division of property, a party may apply to the court for a decision. In such a case, the court will base its decision on the value of the asset at the time of the trial rather than the value at the time of separation. This is because a considerable number of years may have passed from the date on which the separation began to the date of the trial, and a decision made based on the value of the asset at the time of separation may not be a valid (or fair) decision. There are many cases in which one party continues to live in a house that is a shared property even after separation and either one continues to pay the loan. The value of real estate is usually on an upward trend, and the amount of net assets will increase according to the repayment of the loan. The court will issue a judgment taking into consideration what each party contributed to improve the value, such as maintenance of the marriage property, renovation, etc. after the separation. In this regard, in order to obtain a judgment that properly reflects each party’s contribution in the final judgment of property distribution, a party who continues to pay the loan after separation and strives to improve the value of the property should clearly record the details of his/her contribution which can be submitted as evidence at trial. Also, if one party contributes to the improvement of the value of matrimonial property after separation, he/she should also obtain an historical valuation so that the court can take into consideration the degree and importance of such a contribution.
20 Sep 2018
Divorce is one of the most onerous and traumatic procedures in our lives. As a result, it is common to see cases in which a party to a divorce proceeding jumps on social media and talks about their disappointment or anger, which ultimately gives rise to regret about the posting. There is a significant increase in the number of cases in which posts on social media such as Instagram, Facebook and Twitter are used as evidence, especially for determining eligibility or entitlements as a parent in divorce or parenting proceedings. With this in mind, circumstances parties to the proceeding need to take into account are set out below. Prevent derogatory comments or messages (including email or SMS) - it may give the court a negative impression that a party lacks responsibilities as a parent. Be cautious about posting or posting by third party any photo which may deteriorate their reputation – it may trigger a suspicion as to eligibility as a parent. Bear in mind that the other party or third party may use your post on social media as evidence. Do not post any comment on social media when you are emotional. Consider any impact on your children when they read your post. Do not publish your private information. Do not publish any account of any proceedings on social media – it is an offence under section 121 of the Family Law Act 1975 (Cth). The example below illustrates how a post on social media can be used in court proceedings. Husband A sent a message to his 10 year-old son stating, “I want to separate you from my incompetent wife B” after taking his child from Wife B without her consent. A few years later, as the proceeding was commenced, Husband A posted the comment ‘What a **** joke!’ and published contents relevant to the proceeding on his Facebook page. Such posts were used as evidence to support his incapability of taking care of children. Mr C posted several defamatory statements about the court on his Facebook account such as “Worst family law court system - who imprisons a person due to meeting with his daughter?” As a result, such posts were presented before the court as evidence proving lack of responsibility as a parent. A Facebook post that was posted by D who took a picture of a prisoner during a supervised visit was used to prove that she is a thoughtless mother in her proceeding.
08 Aug 2018
When a foreign resident sells Australian property over $750,000.00, the purchaser is now required to withhold 12.5% of the purchase price (or cost base) and pay that amount to the Australian Taxation Office (ATO) prior to completion, unless a clearance certificate has been obtained by the vendor from the ATO. On 22 June 2017, the Treasury Laws Amendments (Foreign Residents Capital Gains Withholding Payments) Bill 2017 came into effect which reduced the threshold and increased the rate of the foreign residents capital gains tax withholding. The effect of the legislation is that for any contracts entered into after 1 July 2017: The threshold to withhold has been reduced from $2M to $750,000 The withholding rate has been increased from 10% to 12.5% EXAMPLE: If you entered into a contract to buy a property from a foreign resident for $850,000 and you are not provided with a clearance certificate from the ATO by the vendor before settlement, you will now be required to withhold $106,250 from the purchase and remit that sum to the ATO.
01 Jul 2017