The following is sourced from the website of Craddock Murray Neumann Lawyers. While it is understood to be a correct statement of Australian law at the time of writing, no responsibility is accepted for the accuracy of the information provided and you should contact Craddock Murray Neumann for legal advice in this regard.
Same sex relationships
Same sex couples are able to enter into financial agreements in similar terms to opposite sex de facto couples, under the provisions of the Family Law Act. Similarly in the absence of a financial agreement, on the breakdown of a same sex de facto relationship, the same legal technical methodology is applied to determine a financial settlement as in marriage cases.
In 2003 the Marriage Act was amended to introduce a definition of the word “marriage”. The definition restricts “marriage” to a union between a man and woman only. In addition, a new provision was added to the Marriage Act which expressly does not recognise overseas same sex marriages. This creates a curious state of affairs for same sex couples resident in Australia who married overseas. If their marriage relationship breaks down they would not be able to obtain a divorce in Australia since the marriage is not recognised in this country in the first place.
It would seem that in such a case they would need to seek a divorce in the country where they were married in the first place, provided that divorce for same sex couples is available in the jurisdiction where they married, and that they otherwise fulfil the jurisdictional requirements before being able to obtain a divorce in that country.
Financial agreements
In de facto relationships, financial agreements can be entered into:
- prior to cohabitation;
- during cohabitation; or
- after separation.
Financial agreements in de facto cases entered into prior to the relationship or during the relationship but before separation, which may be achieved through mediation, are somewhat speculative in their nature. These types of financial agreements make provision for the financial settlement each party is to receive if they separate.
When entering into financial agreements lawyers are required to give advice to the parties on:
- the effect of the agreement;
- the parties’ rights; and
- the advantages and disadvantages of the agreement.
A financial agreement will generally take away the right of a party to apply to the Court for a financial settlement.
Advising on the advantages or disadvantages of the agreement when it is entered into either before the relationship commences or prior to separation is difficult. The advice should cover how a financial settlement would be achieved upon separation in the absence of a financial agreement – whether a party will be better or worse off because of the agreement.
Many people value the peace of mind provided by a financial agreement prior to or during a relationship – this way they have some certainty about what will happen if the relationship ends.
Many people enter into a financial agreement prior to entering into a de facto relationship in order to protect their assets. This commonly occurs in cases where people are entering into subsequent relationships.
Financial agreements entered into before a de facto relationship or prior to separation can make whatever provision the parties want. However, drafting such agreements is not a simple matter of filling in a form. In order to adequately make provision for what the parties want, and in order to make a future challenge unlikely to succeed, the parties ought to make a full and frank disclosure of their financial circumstances before entering into the financial agreement, and the agreement needs to be drafted with care.
When the parties are negotiating a financial settlement after separation, such as through mediation, in the absence of a prior financial agreement, a financial agreement is often used to formalise the final financial settlement that has been agreed upon. Financial agreements entered into after separation can include provision that neither party will seek spousal support or de facto maintenance from one another – something which is not available if Court orders by consent are obtained. In order for the “no de facto maintenance” clauses to be effective, neither party must be incapable of supporting themselves without an income tested pension or allowance, having regard to the provisions of the agreement.
Whatever type of financial agreement is entered into, there are a number of technical requirements that must be fulfilled, including that each party obtain independent legal advice. A party should not enter into a financial agreement without the advice of an experienced Family Lawyer.
Financial settlements
In the absence of a financial agreement entered into previously, upon the breakdown of a de facto relationship the parties are entitled to adjust their finances through a financial settlement. This involves a division of the net assets of the parties and dealing with the liabilities.
The end result is that the parties will no longer jointly hold any assets or liabilities together and are each allocated their share of the net assets.
To make an informed decision about any settlement proposal each party needs a clear understanding of what assets and liabilities exist and of the financial circumstances of each other.
In every financial settlement there is an obligation upon the party to make full and frank disclosure of their financial circumstances. Financial disclosure involves each party verifying their financial circumstances with the production of personal financial documents.
It is often better – cheaper and less stressful – to try to achieve a settlement without court intervention.
If a settlement can be negotiated, such as through mediation, it needs to be made legally binding. Two mechanisms are available, including court orders, which can be obtained by consent, or entering into a financial agreement.
The first issue is what is it that the party seeks to achieve by way of their new financial arrangements? Secondly, and more importantly, what financial arrangements are going to be feasible for that party? For example, a party might seek to retain a property which is subject to a mortgage as part of a new financial arrangement. The major issue will be the capacity to refinance and service the new mortgage. Parties should address these issues with their bank manager, financial adviser or accountant, so that they know what to instruct their lawyer to seek.
What are the assets worth? The next matter to consider is whether there are any issues concerning the valuation of any assets.
Prior to entering into a financial settlement, it is always advisable to seek independent legal advice on:
- the technical method the law uses to determine your entitlements;
- what is your likely legal entitlements; and
- the processes involved to achieve a financial settlement.
An experienced Family Lawyer can deal with all these aspects in a financial settlement and work out a plan to deal with a financial settlement appropriate to your case.
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