Crypto currency consists of encrypted digital forms of currency not distributed by banks. It also goes by the name of ‘cryptocurrency’. A popular example of a crypto currency is Bitcoin.

As cryptocurrencies become more commonly used around the world, so too will their appearance in family law property settlements.

This article provides guidance on how you can ensure you receive a fair share in your family law property settlement.

Crypto currency included in the asset pool

Both spouses have an obligation to make full and frank disclosure of their financial circumstances. Cryptocurrencies are as asset that should be disclosed in the asset pool when it comes to family law property settlements.

Discovery of one party’s interest in cryptocurrencies is presenting a big challenge to family lawyers. Unlike bank accounts, ownership of a cryptocurrency is not as obvious. Bitcoin records cannot be subpoenaed, and any records of ownership are usually stored digitally in a person’s mobile or other device.

Cryptocurrencies don’t send out statements, are not usually stored on hard copy or easily accessed by other parties. However, as all cryptocurrency is initially acquired through the use of traditional currency, the ownership of bitcoin may be traced through bank records and transactions related to the acquisition of cryptocurrency. The only exception to this is if the party has been gifted cryptocurrency or paid in cryptocurrency for goods or services.

What type of cryptocurrency documents can be included as part of the discovery process?

• Screenshots showing the current balance of each cryptocurrency in a digital wallet, exchange or cryptocurrency account and ledgers of all transactions for each crypto wallet, exchange or account.
• Copies of bank and credit card statements reflecting transactions for each wallet, exchange or cryptocurrency account and copies of any brokerage account statements.
• Lists of purchases of goods and/or services through the use of cryptocurrency.
• Emails containing cryptocurrency transactions. These emails also will show a time and date stamped trail of the amount and conversion rate.

How to value Cryptocurrency for a family law settlement

Like other currency, cryptocurrency has an exchange rate which can be used to convert the cryptocurrency into dollars. The value of cryptocurrency is volatile and can fluctuate dramatically. Its value can drop by 20% in just a few hours or increase by 98% in one year. This can make valuing cryptocurrency a difficult task for the purposes of a family law settlement. Generally it is easier for crypto assets to be converted into cash first and then contributed to the asset pool. If this is not possible or desirable then the volatility of the asset value may need to be factored into consideration of the division of assets.

Conclusion

It is clear from this article that family law property settlements will become more complicated as cryptocurrency ownership becomes more common in Australia.  Regardless, the rules of discovery still apply to cryptocurrencies as they are accepted as part of the asset pool.

If you are concerned that your partner may be hiding their cryptocurrency details from you, we recommend you speak to an experienced lawyer who can help you access this information to ensure you receive a fair settlement.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.

The steps involved in determining how property is divided after the breakdown of a relationship generally include:

• identifying the assets, liabilities and financial resources of the parties;
• assessing the parties’ financial and non-financial contributions;
• evaluating the parties’ respective future needs;
• determining a financial settlement that is, in all circumstances, just and equitable.

This is the process a Court takes in making property orders and, although most matters are settled without Court proceedings, is the approach usually adopted when lawyers and their respective clients negotiate a financial settlement.

What happens though when one party receives a windfall? Will this be considered a contribution from that person alone, or a joint contribution, and will the benefits of the windfall form part of the asset pool available for distribution between both parties?

The answer is neither a definitive ‘yes’ or ‘no’. It depends on the nature of the windfall, when it was received, the relevant circumstances, and the Court’s discretion to alter property interests to achieve a just and equitable distribution.

What do assets and contributions include?

Assets generally include real estate, personal property, furniture, motor vehicles, investments, cash, shares and insurance policies. Superannuation is also included which may be split between the parties to give effect to property orders.

Contributions include financial contributions, such as assets brought into the relationship and the parties’ financial earnings, and non-financial contributions such as the care and welfare of the family.

Windfalls may also be considered contributions to the financial assets.

What is a windfall?

A windfall is money or a gift received, sometimes unexpectedly, but not necessarily earned. A windfall may be a win on the horses or other event through organised betting, a jackpot on the pokies, a lottery win, or an inheritance.

Is a windfall a contribution for the purposes of a family law property settlement?

Previously, a lottery win was deemed a windfall and treated distinctly from other contributions and property of the relationship. In Mackie and Mackie [1981] FamCa 34 the husband’s post-separation lottery win was not relevant in assessing an application for spousal maintenance.

More recently however, cases have determined that windfalls do form part of the asset pool and are therefore contributions when determining the alteration of property interests.

Zyk and Zyk [1995] FamCa 135 dealt specifically with lottery winnings and noted that the term ‘windfall’ was problematic and should more accurately be described as a ‘contribution’. The Court determined that the individual purchase of a lottery ticket during a marriage should be treated as any other purchase made from the joint income provided to the partnership. This would be so even in marriages where only one party contributes financially, based on the recognition of the non-financial (domestic) contributions of the other. Consequently, the treatment of the winnings as a ‘contribution’ rather than a ‘windfall’ made a significant impact to the net contributions determined by the Court.

Does timing make a difference?

The timing of a windfall may be of considerable relevance to how it is treated and the overall outcome when dividing property.

In Eufrosin and Eufrosin [2014] FamCAFC 191 the Court considered the timing of a windfall, looked at the nature of the relationship at the time it was received, as well as exercising its discretion of factors to be taken into account regarding spousal maintenance.

The parties had been married for 20 years and separated for 6 months (and living separate lives) when the wife won $6 million. Although the Court found that the husband had not contributed to the lottery winnings, and divided the non-windfall assets equally, the husband was awarded spousal maintenance of $500,000 which took account of the income, property, and financial resources of the parties and their respective capacity for gainful employment. In this case the husband was 62 years old.

In Elford and Elford [2016] FamCAFC 45 the parties, both of whom had previous relationships, led largely separate financial lives and had no joint accounts. They co-habited in 2003, married in 2007 and separated in 2012. The husband, who was 22 years older than the wife, won $622,842 about 12 months after they started living together. He added personal savings and invested a total of $650,000 in a term deposit in his name.

In this case, the Court held that the purchase of the ticket was not a joint endeavour between the parties as they had ‘clearly kept their assets quite separate’ and ‘to a very large degree’ their finances. The wife did not contribute to the purchase of the ticket, nor the selection of the winning numbers which the husband had consistently used on a weekly basis since 1995, and the ticket was in the husband’s sole name. Consequently, the winnings were treated as the sole contribution of the husband.

What about inheritances?

The treatment of an inheritance generally depends on when it was received, the duration of the relationship and the value of the inheritance compared to the overall asset pool.

Generally, an inheritance received before or during a relationship forms part of the asset pool, however its full value may not be equally proportioned between the parties.

Usually, the significance of an inheritance will diminish over the course of a long marriage or relationship, with less weight likely given to it when compared to the overall asset pool. In shorter relationships, where the beneficiary of the inheritance used it for the benefit of the partnership, then he or she may have a greater entitlement to it.

An inheritance received close to the time of separation, or afterwards, is generally (but not always) considered an entitlement of the recipient and may not form part of the asset pool available for distribution. It may however be considered a financial resource of the party receiving it which is potentially available to meet the needs of the other.

Conclusion

The above examples illustrate the discretionary role the Court plays in determining family law financial settlements generally and, more particularly, how a windfall might be treated. Each case will turn on its own unique circumstances, which could result in a range of outcomes including:

• the complete isolation of the windfall from the asset pool and the party entitled to it entitled also to a share of all other joint property;
• the isolation of the windfall from the asset pool and an adjustment made in favour of the party who is not entitled to it;
• inclusion of the windfall in the asset pool, with an adjustment made in favour of the party contributing the windfall;
• inclusion of the windfall in the asset pool without regard to its source.

This article is intended to provide general information only. You should obtain professional advice before you undertake any course of action.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.

A financial agreement is a contract that deals with the division of a couple’s assets after they separate, or in the event that they separate. They may be made before or during a marriage or de-facto relationship, or after it breaks down.

Financial agreements are also referred to as binding financial agreements, pre-nuptial or post-nuptial agreements and cohabitation agreements. They do not require court approval.

Although any couple may enter a financial agreement, they are often used when one or both parties have previously been married or in a substantial relationship, have children to a former partner, or where one party brings significant assets into the relationship. Generally, the financial agreement will attempt to protect existing assets or anticipated inheritances, ensure children from past relationships inherit from their parent, and take account of unequal contributions.

How binding are these agreements?

Some people may be cautious about entering an agreement to finalise their property affairs without approval or intervention by the court. Certainly, there are cases where such agreements have later been set aside for various reasons.

A financial agreement is a legal contract so is presumably binding provided the statutory technical requirements are met and certain circumstances did not exist during the making of the agreement that could have it set aside.

Technical requirements

Financial agreements must comply with the relevant provisions of the legislation.

Both parties must sign the agreement and before doing so, obtain independent legal advice regarding the effect of the proposed agreement on their rights, and its advantages and disadvantages.

A legal practitioner must also provide the client and other party with a signed statement to the effect that such advice was provided. Each party must receive a copy of the financial agreement signed by both parties and their respective lawyers.

The court may order an agreement binding despite non-compliance with one or more of these formalities if it would be ‘unjust and inequitable if the agreement was not binding’. For example, in Ryan and Joyce [2011] FMCAfam 225 the Court upheld the validity of an agreement that cited the wrong section of the legislation.

When will a financial agreement be set aside?

Disputes regarding financial agreements generally arise when a party fails to honour his or her obligations and the other person applies to the court to enforce the agreement. The non-complying party may argue to have the agreement set aside on one or more of the following grounds.

The agreement was obtained by fraud

The court may set aside a financial agreement that was obtained by fraud such as non-disclosure of a significant asset. Parties should be honest in their dealings and give proper disclosure of their assets, financial resources and estimated values. Being transparent will reduce the risk of having an agreement set aside.

The agreement was made to defeat the interests of creditors or another party

An agreement may be set aside if made with disregard to the interests of a party’s creditors or to defeat or defraud the interests of the other party or a person with whom one of the parties had pending property matters.

There are material changes in circumstances

A material change in circumstances that creates hardship for a party, or affects the welfare of a child of the relationship may cause the agreement to be set aside. Similarly, circumstances that make it impracticable to carry out all or part of the agreement may invalidate it, for example, a person’s bankruptcy, the disposal of a party’s assets or an illness or injury that permanently affects a party’s earning capacity.

The agreement is void, voidable or unenforceable under contract law

As with all contracts, a financial agreement may be set aside under common law and equitable principles, for example, on grounds of uncertainty, duress, undue influence, unconscionability, misrepresentation, mistake, incapacity or public policy.

Many disputes concerning financial agreements involve allegations of undue influence and / or unconscionability. The following two cases are examples.

In Thorne and Kennedy [2017] HCA 49, an eastern European woman and wealthy Australian property developer with assets worth around $24 million, met through a website offering potential brides. The woman moved to Australia and the couple married. Shortly before the wedding the woman, who had few assets, no family connections, and spoke little English, was presented a financial agreement with an ultimatum to sign it or the wedding would not proceed. She received advice stating that the agreement was ‘entirely inappropriate’ and should not be signed but felt compelled to do so.

The marriage ended, and the woman applied for the agreement to be set aside seeking a financial settlement of $1.24 million. The man died before the matter resolved and his two children as executors defended the claim against the estate. Initially, the woman was successful on the basis that the agreement was signed under duress. On appeal to the Full Court of the Family Court, however the decision was reversed. The matter was taken to the High Court which determined that the agreement should be set aside on the grounds of unconscionable conduct and duress in circumstances where the woman was at a considerable disadvantage.

Saintclaire and Saintclaire [2015] FamCAFC 245 saw a different result. The wife argued that she had been unduly influenced when signing the financial agreement on the basis that she had been diagnosed with post-natal depression, was in debt, and the husband was abusive and threatening (it was noted that these claims were general and unparticularised). The wife was initially successful in having the agreement set aside however this decision was overturned on appeal.

The court noted that negotiations concerning the financial agreement had been on foot for around seven months. The wife had credit card debts of $100,000 the extent of which had only been disclosed later in negotiations. The wife had consulted a lawyer throughout the entire process and had successfully sought amendments to the agreement including a cash payment to her of $100,000. When the agreement was signed, the wife’s post-natal depression had resolved, and she was optimistic about her financial future. There was no evidence to suggest that the wife did not want to sign the agreement. Despite her personal debt, she was an experienced financial planner whose income had been around $300,000 before having children. In the circumstances, the court considered that the negotiations surrounding the agreement were not unconscionable nor was there undue influence.

Conclusion

A financial agreement will be binding provided it complies with the provisions of the relevant legislation, the parties make full disclosure, and the agreement is not made contrary to general principles of contract law.

There is no one-fit solution when it comes to making a financial agreement and an informed decision should be made with the assistance of an experienced lawyer. Once in place, a financial agreement made before or during a relationship should be reviewed regularly to take into account changes in personal and financial circumstances.

This article is intended to provide general information only. You should obtain professional advice before you undertake any course of action.

If you or someone you know wants more information or needs help or advice, please contact us on 07 3281 6644 or email mail@powerlegal.com.au.

In certain circumstances a divorce granted overseas, even of a marriage performed in Australia, can be recognised here. In this article we look at the factors that the Court will take into account before recognising a foreign divorce.

Divorce in Australia

Briefly, in order for a married couple to get divorced in Australia they, or one of them, must prove that they have been married for at least two years, that they separated 12 months before filing the divorce application and have lived apart since then, and that there is no reasonable likelihood of the couple living together again.  In addition, at least one of them must be an Australian citizen, regard Australia as their home and intend to live here indefinitely, or ordinarily live in Australia at the time of filing the divorce application as well as for the preceding 12 months.

If the couple have minor children, the Court must be satisfied that proper arrangements have been made for the children’s care, welfare and development, taking into account things such as their maintenance, education, living arrangements and time with both parents.

Remarriage

Australian law does not permit polygamous marriage. So, if a married person wishes to remarry in Australia, he or she must first be divorced, having received a final divorce order from the Court.

Australian divorce orders become final one month and one day after the Court hears and grants the divorce.

Foreign divorce

But what if a person obtains a divorce in another country? In what circumstances will that divorce be recognised by Australian law so that those parties, or one of them, could remarry in Australia?

The first step in determining whether a foreign divorce will be recognised as valid in Australia is whether that foreign divorce was effected according to the law of that foreign country. If not, then the foreign divorce cannot be treated as valid in Australia.

Then the Court must look at whether the applicant for the foreign divorce, the respondent or both of the parties were domiciled or ordinarily resident in or nationals of that foreign country at the time the foreign divorce proceedings were commenced. The Australian Court is likely to recognise that the foreign divorce, if it is valid in the relevant overseas country and if the respondent to the divorce application was a national of or domiciled or ordinarily resident in that foreign country at the time the divorce application was started.

If those factors do not apply to the respondent, the foreign divorce could be recognised in Australia if the applicant for the foreign divorce was domiciled in the overseas country at the time he or she files for divorce, or if he or she was ordinarily resident in that country at the time of starting the divorce proceedings and had been ordinarily resident there for the previous 12 months, or was at that time a national of that country. In some circumstances it would also be relevant that the parties last lived together in that foreign

country.

Finally, in order for a foreign divorce to be recognised as valid in Australia, the Australian Court must be satisfied that both parties were afforded natural justice. That is, were each of them made aware of the application and given an appropriate opportunity to respond to it and, if appropriate in that foreign country, to appear and be heard at the hearing of the divorce application?

What about the laws of a third country?

When an Australian Court recognises a foreign divorce as valid in Australia, either of the parties to that former marriage may then remarry in Australia (so long as they are not still married to someone else at that time). That is the case even if the foreign divorce would not be legal or recognised as valid in some third country.

Summary

Australian law does not permit polygamous marriage. Therefore, someone who has been previously married (whether in Australia or elsewhere) must first obtain a divorce (or divorces if there was more than one earlier marriage) before he or she can remarry in Australia.

Australian law will recognise foreign divorces as valid in certain circumstances, taking into account factors such as whether the foreign divorce was obtained in accordance with the laws of that overseas country, of which country the parties were each citizens at the time the divorce proceedings were started and in which country the parties were each living at that time.

If you need assistance or advice on how to proceed please contact us on 07 3281 6644 or email mail@powerlegal.com.au