Overseas Pensions: Asset or Financial Resource in Family Law
Financial resources are a significant aspect of property law matters in the Federal Circuit and Family Court of Australia. We have touched on financial resources in broader detail in our previous article on Understanding the Complexities of Financial Settlements Involving Large Property Pools in Australian Family Law. Continuing on from that article, we wanted to take a look at the recent Family Law case of Trivedi & Awasthi (No. 3). Trivedi & Awasthi is particularly interesting as the Court decided that an overseas pension, which tends to be considered a financial resource, was determined to be an asset and as such could be distributed as part of financial settlement.
Trivedi & Awasthi (No. 3)
Trivedi & Awasthi (No. 3) is a recent case that was heard earlier this year. The matter involved Mr Awasthi (currently 66) and Ms Trivedi (currently 62) who had married in 1994, relocated from the UK to Australia with their two children in 2003 after Mr Awasthi was made redundant and separated in 2008.
Despite separating in 2008 and the level of mistrust and angst that existed between them, the parties did not commence legal proceedings for a financial settlement until years later, with Ms Trivedi applying for leave to bring property proceedings despite being well and truly out of time in November 2015, seven years after the parties had separated. In June 2017, Ms Trivedi was granted leave and the application she had filed in November 2015 was allowed to proceed in the Federal Circuit and Family Court of Australia. The matter would then run until 2024, by which point the Court had managed to separate the parties’ assets and other entitlements into three distinct pools, collectively valued at $2.4 million.
The $2.4 million was divided between the three pools as follows:
Pool 1 was made up of all of the non-superannuation interests, valued at roughly $1.15 million;
Pool 2 was made up of all of the superannuation and like interests valued at roughly $400,000; and
Pool 3 consisted of Mr Awasthi’s UK pension which the parties had agreed to value at roughly $850,000 [The UK Pension was only accessible after Mr Awasthi turned 65].
Regarding Pools 1 & 2, the court ordered that the parties would each retain all of the real property, personal property, motor vehicles, Australian superannuation entitlements, furniture and bank accounts that they solely owned and that they were solely liable for any liabilities, credit card balances or other loans and debts in their name, which roughly equated to Mr Awasthi retaining roughly $1.01 million and Ms Trivedi retaining roughly $520,000
Pool 3, was where the matter became particularly complicated due to the pension fund being based in the UK and as Mr Awasthi, complying with previous orders, had withdrawn a lump sum of £113,000 from the pension. Mr Awasthi, was able to withdraw this lump sum as he was over the age of 65 and as such his UK pension entered into its payment phase. However, Mr Awasthi had withdrawn a substantial portion of his UK pension, his future pension payments were capped at £17,000 per annum, a significant reduction from the £21,613 he would have received prior to the withdrawal.
Mr Awasthi proposed that he should pay half of the £113,000 to Ms Trivedi via a UK bank transfer and then pay her 50% of the pension payments as and when received. Ms Trivedi was agreeable to receiving half of the £113,000 as lump sum and argued that, as she did not want to be tied indefinitely to Mr Awasthi, she was prepared to accept a compromised lump sum of $50,000 in lieu of the ongoing pension payments Mr Awasthi had proposed.
Ultimately, the Orders the Court made aligned with the Orders sought by Mr Awasthi, ordering that Ms Trivedi receive half of the £113,000 and that she receive payments from Mr Awasthi’s UK pension fund on a bi-annual basis equal to half of his , as it would not be just and equitable for Mr Awasthi to pay $50,000 in lieu of ongoing pension payments based on an estimated value of the future income stream and then have his share paid over many years.
Key takeaway
There are two key takeaways from this case. The first is that, while traditionally a financial resource, an overseas pension can be considered an asset in property settlement proceedings. Depending on the circumstances of the matter this could drastically shift the distribution of a property pool, as a financial resource would see an adjustment made in favour of the other party, where as the value of an asset will be available to be carved up for financial settlement. In this case, Mr Awasthi’s UK pension qualified as an asset rather than as a financial resource as he was only a few years out from the pension’s payment phase when proceedings commenced and eligible to receive pension payments when the Orders were made.
The second is that it shows a clear shift in the Court’s decision-making process, as historically the Court’s Orders have operated to sever the financial relationship and to afford the parties the finality of proceedings.
Voice Lawyers: Your Guide in Family Law Matters
This article is general in nature and is not legal advice. If you need help dealing with a parenting dispute or require assistance with a family law matter, Voice Lawyers hear you.
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By Enda Byrne