Understanding the Complexities of Financial Settlements Involving Large Property Pools in Australian Family Law

For individuals involved in a financial proceeding, due to a breakdown in a domestic relationship, it can be unclear what steps and actions you should take or even what rights you have. A flurry of emotions, stress and undue influence might cloud your judgment, resulting in an unfair decision against you for no fault of your own. If this occurs it could detrimentally affect your quality of life and wellbeing for years to come.

Many of our property law matters involve increasingly complex financial structures and entities that are not simply able to be classified as an asset or liability. There may be trust structures or other forms of benefits or a party may have access to resources which are broadly considered financial resources.

As the financial landscape of many clients becomes increasingly complex, so too do our own skills at interpreting complex financial material and classifying or investigating these financial resources. In an ever-changing landscape, it’s vital you are represented by legal professionals who not only understand these complexities but can guide you through the process step by step, giving you the assurance and confidence you deserve. This is something we do regularly at Voice Lawyers.

In the early stages of financial proceedings in the Federal Circuit and Family Court of Australia, both parties are legally required to exchange financial disclosure. Simply put, this is detailing anything that could be considered an asset or liability. This includes details of their debts, income, investments, superannuation, business interests, pensions, inheritance, bonuses and commission, as well as intellectual property.

In 1979, the Family Court of Australia defined a financial resource as being a source of financial support that a party can reasonably expect will be available to them to meet a financial need or shortfall and that understanding of the term has remained largely unchanged. A few examples of what can be considered a financial resource include accumulated frequent flyer points, the funds you could receive if you had the ability to sublet a property or parking spot you are occupying, or if you have an overseas pension available to you.

On the face of it, what may be referred to as a financial resource may appear to be clear, however they tend to be a bit more nuanced, depending on your unique circumstances.

Case Studies Relating to Financial Resources

1.       In the Marriage of Mee & Ferguson (1986), the wife commenced an appeal to increase the amount of child maintenance she would receive from her ex-husband. This was after the court made orders reducing the payable child maintenance. While the appeal was found in the wife’s favour, and the payable child maintenance was increased, it is noteworthy that the court determined that the wife’s new husband was a financial resource to the wife as well as her children from her former relationship, and this was considered when determining maintenance.

2.       Another example of a financial resource is any financial assistance and/or inheritance you can reasonably expect to receive from your parents. This was decided in the 1987 case of Campbell & Campbell when the court was determining appropriate child support payable to the wife. When making this decision the court decided that the wife’s parents were a major financial resource as she could reasonably rely on them for future financial assistance and a substantial inheritance when they ultimately passed on. In stark contrast to this, the husband’s mother was not considered a financial resource available to him as his future inheritance was considerably smaller than that of the wife and it was not reasonable to expect that he would receive financial assistance from his mother as it was more likely that he would be required to financially support her.

3.       Where bonuses and commissions are contested, the court considers the regularity and predictability of the payment. These cases are complex and the interests must be accurately valued and the future needs of both parties considered when coming to a just and equitable settlement.

These cases have helped shape the understanding and application of financial resources in family law proceedings in Australia.

Discretionary Trusts as a financial resource

Depending on the circumstances, being a beneficiary of a discretionary trust may or may not be considered a financial resource by the Court.

Broadly speaking, being a beneficiary of a Discretionary Trust is a Financial Resource when the beneficiary has actual control over the trust’s assets. When the beneficiary can compel the trustee’s discretion in their favour or where the beneficiary has a reasonable expectation of benefiting from the trust and a solid history of doing so.

However, this is not always that case. In the 1982 case of Yates & Yates, a discretionary trust that was created and controlled by the husband was not considered a financial resource available to him as his adult children held the shares that created the most rights to the trust’s income and capital, which meant he hand no control over the trust’s assets or income.

Why is this significant in family law proceedings?

There are multiple sections of the Family Law Act 1975 that require the court to consider the financial resources available to the parties when determining property settlement proceedings or when considering an application for spousal maintenance. The inclusion or exclusion of a financial resource could substantially change the Court’s decision based on the weight given to that financial resource.

In these complex financial settlements, we at Voice Lawyers work with experts to represent our clients to resolve their complex matters.

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. 

 If you are experiencing or contemplating separation, we suggest you seek legal advice as early as you can, even if you do not intend to separate for a few months or even years. We offer early separation strategy sessions Voice Lawyers — Divorce, Separation and Family Law. Every family’s situation is different, and advice tailored to your specific circumstances can assist you in achieving your best possible outcome. We can assist if you would like a second opinion.

 We help people navigate the complexities of family law with confident, practical advice. You can contact us at office@voicelawyers.com or call 02 9261 1954 to book a consultation to speak with one of our lawyers.

 By Kathryn Lewis & Enda Byrne