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The top 5 visa application mistakes

To be granted a visa, an applicant must meet the prescribed eligibility criteria for the relevant subclass and submit a valid visa application in accordance with Australia’s immigration laws. An invalid application cannot be considered and will be returned by the Department of Home Affairs to the applicant (or representative), even if that person might otherwise meet the required criteria.

Submitting an invalid visa application can waste thousands in preparation costs, extend wait times by months, and cause great inconvenience as the applicant remains in a state of limbo. An invalid application is particularly detrimental when timing is a critical element in the application process.

While it’s true that some applicants do not meet the criteria required for the grant of a certain visa type, many applications are unsuccessful because of procedural errors rather than actual ineligibility.

Navigating a complex immigration system and being familiar with the Department’s policies and procedures is essential for submitting a valid application. This article looks at some common pitfalls which can lead to costly visa application mistakes. The article is intended to provide general information only. You should obtain professional advice before you undertake any course of action.

Applying for the wrong visa type

Australia’s immigration system provides pathways for temporary and permanent residency. With around 100 visa subclasses available, each prescribing very specific eligibility criteria, making the right choice from the outset is essential to avoid wasting time and money and to increase the prospects of being granted residency.

Applying for the wrong type of visa can also be detrimental to a successful grant down the track. For example, if a person who proposes staying in Australia long term applies for, and is granted a tourist visa, then the visa holder’s real intention (to stay longer) may be seen as a breach of a condition attached to that visa and jeopardise the grant of a further long-term visa.

Assessing the most appropriate pathway based on an applicant’s skills, qualifications, personal circumstances and visa history requires a considered approach, usually with the assistance of an immigration lawyer.

Lack of supporting documents

The Department assesses thousands of visa applications and must be satisfied that an applicant meets the required eligibility for the class of visa sought.

In addition to verifying an applicant’s personal identity through birth certificates, passports, etc, various visa types require proof of other matters such as:

  • Relationship status – documents to prove a genuine de facto relationship exists such as joint bank account statements, and testimonials from friends and family regarding the nature and length of the relationship.
  • Business activities – evidence of company trading history such as financial reports and accounting records, which may need to be audited and verified.
  • Personal assets and resources – complex personal wealth, company and trust structures need to be analysed and presented in a manner consistent with Departmental requirements.
  • Qualifications, trades and skills – credentials gained overseas need to be matched with the relevant Australian standards and validated through skills assessments.
  • Employment records and experience – tax returns, payslips and work references.

Immigration lawyers understand the documentation required to authenticate this information and often draw on experience in other areas such as corporate law and trusts to ensure an application is properly supported.

Mistakes in the application

The correct and most recent visa application form must be completed in accordance with the instructions. Common mistakes include failing to complete separate applications for additional applicants (such as a dependent child over 18 years), application forms not being signed by all applicants, and using a post office box rather than a residential address. These simple mistakes can be avoided by carefully reading and checking forms and instructions.

Inconsistencies

Information provided to the Department is scrutinised for inconsistencies. Details may be checked against a range of sources including previous visa applications, supporting documents, government records and even social media profiles. Information provided to the Department that is contradicted through Facebook posts can be a problem.

It is important to triple check everything before lodging the application, paying particular attention to inconsistent dates which can raise legitimate questions. Transparency is essential and copies of all information submitted should be retained by a visa applicant.

Innocent irregularities can usually be explained, however identifying issues before they are queried at Department level is preferable. Working with an immigration lawyer to understand and address any matters that could raise concern is wise.

Bad timing

Delays in meeting eligibility criteria and obtaining documents within prescribed timelines can impact significantly on the application outcome. Generally, little flexibility is permitted when it comes to non-compliance, even if a deadline is only marginally missed.

The validity of some visa applications can be affected by the applicant’s location at the time the application is made. Attention to timing requirements for submission with respect to whether an applicant must be on-shore or off-shore when an application is lodged is critical.

Processing times for applications vary, and it is important to plan strategically to ensure that eligibility criteria can be met and supporting documents provided as prescribed.

Conclusion

Many visa refusals are based on procedural issues rather than an applicant’s inability to meet the required criteria. In many cases, an application will not even be considered and be returned to the applicant as invalid. In some cases, an invalid visa application may be relodged, and a visa refusal reviewed. Of course, it is preferable to avoid this situation in the first place by submitting a valid and supported visa application.

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 duty of disclosure and family law property proceedings

The division of assets after couples have separated can be finalised by financial agreement, consent orders or proceedings in the Family Court.

The Family Law Act 1975 (Cth) requires parties to make genuine efforts to resolve disputes. Generally, parties must participate in dispute resolution, explore options for settlement and comply, as far as practicable, with the duty of full and frank disclosure.

These ‘pre-action procedures’ must be followed before commencing proceedings in the Family Court, the objectives being:

  • to encourage early disclosure through the exchange of information;
  • to minimise the potential for legal action by reaching an early settlement;
  • to construct a process to resolve a matter quickly and to limit costs; and
  • if proceedings are necessary, to assist in their efficient management by identifying the real issues in dispute.

What is the duty of disclosure?

Broadly, the duty of disclosure requires that the parties exchange information and documents (whether or not these are known to both parties) that are relevant to an issue in the case.

The disclosure obligations exist from the beginning of the matter and continue until the case is resolved. This means that a party must disclose when certain circumstances change or new information or documents come to that person’s attention.

Full financial disclosure is essential to enable a lawyer to properly advise a party on his or her rights and disclosure obligations must be followed even if the parties settle their financial affairs without going to Court.

Disclosure in property matters

The information and types of documents required to be disclosed in property matters will depend on the asset pool and the business or financial interests of the parties.

The Rules set out an exhaustive list of disclosure requirements. Compliance may be met by providing a statement of financial circumstances, producing certain documents and / or answering specific questions.

Generally, the types of disclosure documents required include:

  • all sources of earnings including income from paid employment and business interests, rental income and interest on shares and investments;
  • other financial resources;
  • financial interests whether existing or contingent, in property, including real estate and other assets;
  • details of property disposals (whether by sale, transfer, assignment or gift) made within 12 months before separating;
  • taxation returns and assessments;
  • superannuation details;
  • market valuations for certain assets, particularly if values are not agreed;
  • liabilities and contingent liabilities.

More exhaustive information is required if the parties have interests in a company, trust or partnership. The parties will need to provide balance sheets, profit and loss statements, business activity statements, recent annual returns, deeds and agreements.

Additionally, where there are matters in dispute, such as an assertion by one party of having made significantly greater financial contributions, then evidence to support those claims is required.

A practical approach

The duty of disclosure refers to ‘relevant’ matters and for compliance ‘as far as it is practicable’. Whilst this is not a mechanism for avoiding the disclosure obligations, it does foster a sensible and practical approach.

Disclosure is required so that an understanding of the parties’ asset pool can be ascertained. It need not extend to disclosure of information from third parties unless that person’s financial circumstances are relevant to the issues in dispute.

Matters that are common knowledge between the respective parties do not need exhaustive documentation. For example, a bank balance of say $200 need simply be noted without providing the past three years’ bank statements.

Locating, identifying and collating the necessary disclosure information can be onerous. Your lawyer will explain the extent of your obligations and provide guidance to assist you in meeting your obligations.

Risks of non-disclosure

Lack of disclosure and ongoing disputes regarding the parties’ financial circumstances will exacerbate settlement, add unnecessary legal and other costs, and risk depleting valuable resources.

Importantly, there are significant penalties that may be imposed by the Court for failing to disclose relevant information or attempting to mislead the other party.

A person failing to disclose a relevant document as required or providing a false or misleading document may result in that person:

  • being unable to rely on the document as evidence in proceedings;
  • having his or her matter dismissed or postponed;
  • having the Court attribute a value to an undisclosed asset (which is generally not in that party’s favour);
  • being found guilty of contempt, leading to fines or imprisonment;
  • being ordered to pay legal costs.

Conclusion

The parties to a family law property settlement have an obligation and ongoing requirement to be transparent with respect to their financial affairs.

The duty of disclosure ensures that the Court is fully informed of the parties’ financial position and is relevant whether or not a matter proceeds to Court.

This article is intended to provide general information only. You should obtain professional advice that is relevant to your circumstances 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.

Varying the terms of a Will after death

In Australia, a person is ‘technically’ free to choose who should benefit from his or her estate. Testamentary freedom is a well-founded principle. This principle however may be subject to community expectations of moral obligations. Consequently, in some circumstances a Court may order that the terms of a Will be varied to satisfy a claim by an eligible person. These claims are commonly known as family provision claims.

Alternatively, there may be a mutual agreement between the beneficiaries of an estate to vary the terms of a Will for any number of reasons.

Variations to a Will can be legally effective by the parties entering a deed of variation or deed of family arrangement.

Varying a Will in the face of a family provision claim

An eligible person may claim against the estate of a deceased person if he or she can demonstrate that the testator failed to give adequate provision for his or her proper maintenance, education and advancement in life. The definition of an eligible person differs between various jurisdictions in Australia, however eligible persons generally include:

  • the spouse or de facto partner of the deceased at the time of his or her death;
  • a former spouse of the deceased person;
  • a child of the deceased person;
  • certain persons who were dependent on the deceased.

When facing such a claim, an executor or administrator of an estate must make a judgment on whether it is likely the claim will succeed. Some claims will be morally justified by persons who may not have been adequately provided for.

Whilst an executor has a duty to uphold the provisions of the Will, he or she also has a duty to preserve estate assets. This duty includes considering the merits of a justifiable claim and making efforts to resolve it rather than defending it in Court.

In this regard, a negotiated settlement is almost always possible and will avoid costly litigation that may deplete estate assets. A further consideration is that often the legal costs of a successful claim must be met from the estate.

Other reasons to vary a Will

An agreement to vary the terms of a Will need not eventuate in the face of adversity. It may be obvious that the testator’s Will does not reflect what the testator would have intended had he or she been aware of the full circumstances of the claimant. For instance, there may have been a significant material change in a family member’s circumstances rendering the terms of the Will inappropriate and the remaining beneficiaries are on board with adjusting the Will’s provisions.

Another reason for varying the Will is to allow a beneficiary to ‘buy-out’ another beneficiary’s share in real estate.

Alternatively, a reluctant beneficiary may not wish to accept an inheritance due to the financial implications of doing so (such as the loss of a pension) or a falling out with the deceased.

The process of varying a Will

A negotiated settlement, whether the result of mediation or otherwise, is documented in a legally enforceable deed of variation or deed of family arrangement. The deed should be signed by all beneficiaries and the executor (or administrator) to evidence the mutual consent of all parties who have an interest in the deceased’s estate.

The deed makes reference to the deceased and the Will and sets out the agreed variation of its terms. The deed should provide for the beneficiaries to indemnify and release the executor and estate from any future claims.

Depending on the circumstances, it may be advisable for each party concerned to obtain independent financial and legal advice. Beneficiaries should ensure they are fully aware of the legal and financial consequences of the proposed variation. Financial implications include stamp duty and taxation issues such as capital gains tax and any effects on Centrelink payments.

Adverse capital gains tax can be avoided if the deed eventuates from a potential family provision claim and the necessary requirements under the income tax law are met. Court proceedings need not have commenced to evidence a potential family provision claim.

Conclusion

The terms of a Will can be varied to settle a family provision claim that is likely to succeed or to reflect an agreement between the beneficiaries of an estate.

Variations may have significant tax and stamp duty consequences and parties should seek appropriate advice.

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.

What happens when your ex-partner squanders your assets

Unfortunately, many separations end in hostile disputes over money. A common situation when trying to resolve property matters is when one partner makes a considerable dent in the family finances by squandering assets or racking up additional debt.

A bitter ex-partner may go on a spending spree, ignorant of the consequences. Alternatively, he or she may have been reckless during the relationship either through risky business ventures, gambling or other addictions.

Whether the wastage has occurred before or after the relationship ends, the potential for a fair split of the assets after separation may seem flawed. Fortunately, the Family Court is empowered to use discretion to achieve a just outcome. These discretionary processes have traditionally included the concept of ‘add-backs’.

This article explains how a family law financial settlement may be dealt with when one party independently deals with property to the detriment of the other.

Dealing with property matters generally

It is first useful to outline the steps a Court takes to determine how property should be divided. The process involves:

  1. identifying the assets, liabilities and financial resources of the parties;
  2. assessing the parties’ respective financial and non-financial contributions;
  3. evaluating the parties’ future needs taking into account their relative earning capacities, state of health and the need of the primary carer of children to provide a suitable home;
  4. in all of the circumstances, making orders that are ‘just and equitable’.

The starting point is usually an equal distribution of assets before consideration of several other factors.

Notional property and add-backs

The Court’s approach to a financial settlement is discretionary, allowing it to consider the parties’ circumstances with the objective of providing an outcome that is fair and just.

Adding back property means including into the pool of assets a notional value for property or funds that have been wasted, exhausted or prematurely disposed of for the benefit of one party or a third party.

The ‘notional’ property will form part of the asset pool from which a division of property is made. The purpose is to bring back the value of assets that would otherwise have been available to both parties, had the other party not caused the asset to be depleted.

When will an add-back be appropriate?

The starting point is that assets accrued or losses sustained (whether jointly or individually) during the course of the marriage or relationship should be shared between the parties, although not necessarily, equally. However, in exceptional circumstances it is appropriate for the Court to deviate from this principle. Generally, add-backs will arise in the following circumstances:

  • losses incurred as a result of a party’s deliberate efforts to diminish or deplete the value of assets, such as a premature distribution of assets;
  • losses sustained by a party’s reckless, negligent or wanton conduct;
  • where a party has used joint funds to pay for his or her own legal costs.

Premature disposition of assets

Occasionally, a party deliberately sets out to diminish the matrimonial assets, making them unavailable for distribution. This may occur by selling or transferring property to a third party or making extravagant or lavish gifts.

To justify an add-back, the Court will need to assess the reasonableness of the expenditure in light of the surrounding circumstances, including an assessment of the overall asset pool and the amount spent. For example, in one case, the wife assisted her adult daughter by gifting $15,000 as a deposit to purchase a property. The Court considered that it was not unusual for parents to assist their children and, given the magnitude of the asset pool, it was unreasonable for that amount to be added back.

In another case the husband sold his taxi licence and vehicle, which had been used to operate a business throughout the course of the marriage. He benefited from the proceeds and the Court determined that the value of the funds received should form part of the asset pool for distribution between the parties on the basis that the wife had a legitimate interest in the taxi business.

Reckless conduct and waste

Money wasted on individual pursuits or gambling addictions during or after the relationship may be added back to the asset pool. The conduct of the spendthrift party will be relevant in determining such cases and the Court plays a discretionary role in deciding whether or not the losses should be borne individually or jointly. Considerations may include whether the person has an underlying illness, and his or her attempts to obtain help.

Adding back legal costs

Parties are required to fund their own legal costs and outstanding legal fees do not constitute a liability forming part of the asset pool.

Money taken from a joint account by one party to pay his or her legal fees may be subject to an add-back. This however is a matter for discretion and will depend on the particular circumstances – if the funds existed at the time of separation and both parties have an interest in them, then it is likely they would be added back. Conversely, if funds used to pay legal costs were sourced from a party’s own efforts or provided as a gift or loan post-separation, then it is unlikely these will be added back to the pool of assets.

Key points

  • Separating couples should share financial losses incurred during the relationship unless those losses result from one party’s negligence, recklessness or intentional conduct to reduce or deplete matrimonial assets.
  • Each case will turn on its merits and the entire circumstances of the expenditure is considered when assessing its reasonableness.
  • Funds existing at the time of separation and subsequently used for reasonably necessary living expenses are not added back to the asset pool.
  • Clear evidence is required of assets and expenditure before and after separation and separating parties should take care to record assets and liabilities at the time of separation and thereafter.

Conclusion

High Court cases such as Stanford v Stanford [2012] HCA 52 and Bevan v Bevan (2013) FLC 93-545 suggest that concepts of add-backs and notional property may have become outmoded and their application more the exception than the rule.

There is no guarantee that a dissipated asset will be notionally ‘returned’ to the asset pool on a dollar for dollar basis. However, and as confirmed in subsequent cases, the Family Court has discretion to adjust property interests by considering a myriad of factors and on a just and equitable basis. Such factors include circumstances where assets are purposely, negligently or recklessly depleted.

It is important to obtain good legal advice before or soon after you separate from your spouse or de facto partner. An experienced family lawyer can assist in preserving hard-earned assets, preventing wastage and maximising your chances of a fair property 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.

What happens if your house is damaged before settlement?

You’ve walked the streets, negotiated with agents and vendors, signed contracts and loan documents and finally await the settlement date with great anticipation.

With just a week to go before the big day your lawyer calls to advise you that last night’s big stormfront hit your dream home. The roof of your house is no more and there is extensive water damage to most of the internal fixtures.

Can you get out of the contract? Is the vendor obliged to fix the damage before settlement? What if you still want to proceed with the purchase but the vendor does not?

This article explores the legal position of a purchaser and vendor when the subject of the sale is damaged after exchange of contracts but before settlement – the information is relevant to both parties involved in a residential conveyancing transaction.

The passing of risk

In Queensland, standard contract terms generally provide that the risk of loss or damage to a property passes from the vendor to the purchaser at 5.00 pm on the first business day after the date of the contract. It is therefore essential that a purchaser takes out insurance to protect the property and for public risk, from this time.

Although the risk passes to the purchaser, the vendor has an obligation to take reasonable care of the property until settlement and not do anything that would significantly alter the property to the detriment of the purchaser. In other words, if a vendor is reckless or negligent in caring for the property, the purchaser would likely have rights to claim damages.

Can the purchaser terminate the contract if the property is damaged?

The right for a purchaser to terminate a contract due to damage depends on the significance of the damage.

The Property Law Act 1974 (Qld) entitles a purchaser to rescind the contract if, prior to possession or completion (whichever is the earlier), a dwelling house (including a unit in a strata complex) is ‘so destroyed or damaged as to be unfit for occupation as a dwelling house’. This is a statutory right of termination and cannot be omitted or altered by a contrary provision in the contract.

If the purchaser wishes to rescind, he or she must give written notice to the vendor or vendor’s solicitor before possession or completion. The purchaser is entitled to recover the full deposit.

Whether or not a house or unit is unfit for occupation will be a matter of fact and degree in each case. Generally, if the property is unsafe or where it would be impossible to live in the dwelling without a reasonable level of comfort, then the purchaser will have the right to terminate.

Minor damage / fair wear and tear

A purchaser has no statutory right to terminate a contract or be compensated for damage that does not make the dwelling unfit for occupation. The purchaser must therefore settle on the completion date relying on his / her own insurance to recover any loss.

In some circumstances, purchasers who fail to take out insurance at the contract date, may be able to claim under an insurance policy held by the vendor but it is unwise to rely on the vendor’s insurance and always prudent for purchasers to obtain their own.

Summary

The extent of damage sustained to a property will affect the termination rights of the parties to a contract after exchange and prior to completion.

Vendors and purchasers should be aware of their respective rights and ensure adequate insurance is maintained to cover the risk of loss.

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.

Top five things to consider when moving into a Retirement Village

A retirement village is a community-style residential development offering accommodation, facilities and services to people from retirement age onwards.

There are many types of arrangements which should be carefully explored before making your move to retirement-village living.

You will need to ensure that the village you choose meets your specific needs and that you understand your legal rights and responsibilities under the retirement village contract.

Following is a brief overview of the different legal arrangements for retirement village living and our top five tips when considering your move.

Retirement village arrangements

Buying into a retirement village does not necessarily result in outright ownership of the property. Whilst many strata or community developments facilitate this, most retirement village arrangements are either loan-licence or leasing arrangements.

In a loan-licence arrangement the resident pays an up-front contribution (interest-free loan) to the retirement village operator. Ongoing contributions follow and the resident occupies but does not own the premises. When leaving, the resident may need to pay an exit fee and may or may not share in any capital growth from the property.

A leasehold arrangement requires the resident to pay regular fees set at a market rate. The payment of other contributions and outgoings will vary between villages depending on the level of accommodation and services provided. Again, the resident may be required to pay a departure fee when leaving.

Following are our top five tips when considering your retirement village move.

What do you want to achieve?

When planning your move, consider your goals and objectives in light of your personal circumstances such as your age, health, family arrangements (who and how close they are) and your personality (whether you are social or prefer solitude).

If you are recently retired, independent and in good health, you might be looking towards accommodation that is spacious, includes a garden, and is set in a village offering various facilities and activities. If you are more sedate, you won’t want to be paying for the upkeep of golf courses, tennis courts and a swimming pool if these activities do not interest you.

Consider also whether the care services offered will be sufficient to support you for the years to come. Although you cannot predict the future, it is sensible to assume that you will require more care and assistance as we age. The availability of health and nursing services, meal preparation and assistance with cleaning and other domestic duties are important factors.

Remember, entry into a retirement village does not result in an automatic subsequent entitlement to aged care services. This assessment is made at the Commonwealth level.

Once you have a clear idea of what you are trying to achieve, consider the retirement village’s location, the proximity of entertainment, shopping and health services, the quality of buildings, care services and available facilities. Obviously, the more lavish the village and extensive facilities offered, the more you will pay.

What will ‘village life’ be like?

Your day-to-day retirement living will be influenced by the managing body and rules setting out the rights and obligations of residents.

The rules include matters concerning the keeping of pets, whether friends and family can stay over, car parking arrangements, maintenance of buildings, common areas and gardens, whether social activities are arranged and use of recreational facilities such as libraries, communal dining areas, etc.

Some retirement villages are operated by private enterprises whilst some are run by the community, churches or charitable organisations. This may impact upon the daily ‘vibe’ of the village and the types of activities arranged.

Accommodation and services and the associated village rules can vary significantly between villages – it is important to get the right fit for your lifestyle.

Understand your legal rights and obligations

It is important to understand the type of arrangement you are entering, whether it be an outright purchase, loan-licence or leasehold arrangement. The legal relationship between the resident and village operator and contractual provisions from village to village can vary significantly.

Always have your documents reviewed and explained by an experienced lawyer. It may be helpful to take a family member or friend with you when meeting your lawyer to discuss issues raised during the meeting, and help to recall matters afterwards for follow up.

Village operators and agents should be transparent when giving information and provide detailed disclosure regarding the fees, amenities and services. Contracts should set out the terms and conditions pertaining to the resident’s right to occupy the premises, the permitted use of common facilities and types of services available which may include assisted living or aged care.

Consider the financial implications

Fees and charges comprise waiting list fees, holding deposits, ingoing contribution fees (purchase fee) and ongoing payments and service fees. Potential residents should ask whether maintenance costs are covered in regular payments or if these are additional and check under what circumstances deposits are refundable.

Often under-estimated when entering the contract, is when and how exit or departure fees are calculated when leaving the village – in some instances residents may be shocked to learn that they receive significantly less than anticipated. Exit provisions should be set out clearly – if in doubt ask for an explanation and example.

Meeting with your financial advisor is recommended if you need to plan or restructure your financial affairs. You will need to ensure your obligations can be met and determine the most effective financial strategy for your circumstances.

Regulation and reputation

Retirement villages are regulated by legislation in each state and territory. The governing laws require retirement villages to be registered or accredited with a specific government department charged with administering these rules. Village registration and accreditation can be verified with these organisations.

Village operators must give adequate disclosure and information regarding the retirement village before a person signs a contract. Proposed residents can request information about the services offered and details regarding financial arrangements and fees, budgets, sample contracts, site layout and plans.

Potential residents should enquire about the retirement village’s reputation and ask questions about how it is managed. Speaking to other residents is a good starting point.

Retirement village legislation provides important protection for people considering retirement village living – being aware of your rights and seeking good advice will help you to make a careful and well-informed choice.

Summary

Retirement villages provide an opportunity for older residents to live in maintenance-free accommodation in a secure community with access to services and facilities. Villages vary in style, quality, availability of services, legal arrangements and cost.

Potential residents should shop around, gather as much information as possible and not be pressured into signing a contract.

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 importance of financial advice in a family law property settlement

Most property settlements are reached through negotiation, without the need to attend Court. Negotiations can be formally documented through a binding financial agreement or consent orders. As a last resort, the parties may need to initiate Court proceedings whereby orders will be made regarding the division of the parties’ property.

No matter how a property settlement is reached, it is important to be aware of the financial impact of the proposed agreement before finalising it. Family lawyers often recommend working with a financial advisor to ensure a property settlement delivers an optimum financial outcome for the client. We explain below some of the benefits in working collaboratively with a financial advisor and lawyer.

Identifying and classifying assets and liabilities

A financial advisor can help to properly identify, classify and evaluate the parties’ assets and liabilities, whether these are held jointly or individually. Assets can be held in various ways, whether through a trust, company or shares and it is important that a full portfolio of the asset pool is obtained. Only by presenting a complete picture of the parties’ financial position, might a fair and reasonable property settlement be negotiated.

In some circumstances, a financial advisor or lawyer will recommend that certain assets, such as business interests and company shares, be formally valued.

Recommending tax effective strategies

Understanding the tax implications of a proposed property settlement can have a significant impact on the net result for each party.

The retention, transfer or division of different types of assets can have different stamp duty and tax consequences.

A financial advisor can recommend strategies and structures for the division of assets to take advantage of duty concessions and tax exemptions or deferrals that are unique to family law property settlements. This may include recommending that a certain asset be retained or transferred. Depending on the stamp duty and tax consequences applicable to that class of asset, it may be more advantageous to retain one type of asset over another.

A financial advisor can also flag and calculate potential future CGT liabilities which is an important consideration when negotiating the division of property. Advice on transactions concerning companies and trusts may also play a significant part of the advisor’s role.

Advising on superannuation

If a superannuation split forms part of the proposed property division then you will either end up with more, or less in your superannuation account. This may require a reassessment and restructure of your retirement plans. A financial advisor can evaluate the net effect of a proposed superannuation split and assess future needs and contributions towards superannuation.

Assessing future needs and planning ahead

Most financial advisors have sound knowledge of family tax payments and child support and can assist in determining entitlements and / or obligations.

Your financial adviser can help implement strategies on how to get back on your feet, financially, after separation. This may include budgeting advice and money management strategies, recommending appropriate insurance to protect your income, managing and protecting assets, and developing plans to work towards your financial goals.

Estate planning and death benefits

Once a property settlement has been reached and finalised, a financial advisor and lawyer can work together to implement an effective estate plan in consideration of your new personal and financial circumstances.

They will identify the most tax-effective beneficiary for superannuation entitlements and death benefits and help structure your assets to ensure maximum protection against future family provision claims.

Conclusion

Separating couples are often anxious about their immediate and future financial needs and may seek assistance to achieve a fair and reasonable property settlement. In doing so, it is important to remember that lawyers provide legal advice and not financial advice. Including a financial advisor in your professional team can provide significant benefits when negotiating a property 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.

A widow contesting a Will

All jurisdictions in Australia provide statutory rights for eligible persons to contest a Will on the basis that they have not been left adequate provision by the testator for their proper maintenance, education and advancement in life.

In Queensland, an eligible person includes:

  • a spouse of the deceased;
  • a de facto partner (whether same or opposite sex) who had been in a continuous relationship with the deceased for at least two years at the time of death;
  • a former spouse who was maintained by the deceased and not remarried, or is the parent of a minor child of the deceased and dependent at the date of death;
  • a child, stepchild or adopted child of the deceased;
  • a parent who was dependent on the deceased or the parent of a surviving child under the age of 18 years of the deceased, or other person under the age of 18 years who was wholly or substantially dependent on the deceased.

If a family provision claim is successful, the Court can order an appropriate adjustment to the terms of the Will to satisfy the claim. A range of factors are considered including the relationship the applicant had with the deceased, the obligations or responsibilities the deceased had to the applicant, and the nature and size of the estate.

The expectation that spouses should provide for each other generally places a widow’s needs ahead of other interested parties in a family provision claim. However, all cases will be individually assessed and balanced with the needs of the applicant and the competing needs of other entitled recipients.

The moral duty to provide for a spouse

There is a general expectancy that testators have a moral duty to provide for the proper maintenance of their spouse or de facto partner. The Court has explained this as providing what is necessary for the spouse to enjoy accommodation to the standard to which he or she is accustomed and, to the extent possible and having regard to the size of the estate, a fund to meet unforeseen contingencies. This is particularly so where the marriage or relationship has been lengthy.

Competing claims

Family provision claims by widows usually involve a contest between the applicant and a child or children from the deceased’s former relationship.

The applicant will generally apply for greater provision than what has already been provided in the Will based on his or her personal and financial circumstances, current financial position and future needs.

Generally, the widow and children of the current relationship (if any) will stand favourably against the children of a former relationship. This is because the testator’s primary duty is perceived as being owed to his current family and the likelihood that the children of the former relationship may have already been provided for through child support payments. This of course is not always the case and each matter will turn on its own circumstances in consideration of a range of factors.

Determining the sufficiency of proper maintenance

The Courts have explained the difficulties of determining the meaning of ‘proper maintenance’. In Re Harris [1936] SASR 497 it was considered to be ‘…more than a provision to keep the wolf from the door – it should at least be sufficient to keep the wolf from pattering round the house or lurking in some outhouse in the back yard – it should be sufficient to free the mind from any reasonable fear of any insufficiency as age increases and health and strength gradually fail’.

Sometimes, widows are left a ‘right of residency’ in the testator’s property. This allows the widow to occupy the family home or other property of the deceased for his or her lifetime with the intention that the property will pass to a residuary beneficiary, such as the testator’s child or children from a former marriage, after the widow’s death.

A right of residency however is not always practical and may be considered insufficient to meet the moral duty expected of the testator. The widow may, due to age or health, need to vacate the residence, being left vulnerable and without security of a home.

The alternative approach to leaving the home to the widow may also be inappropriate – if the widow passes soon after the deceased, then the result may be a significant capital asset being inherited by the widow’s relatives, contrary to the wishes of the testator.

As can be seen there needs to be a balance between a tokenistic provision and the risk that a testator’s significant assets might inadvertently be inherited by an unintended beneficiary.

In Luciano v Rosenblum (1985) 2NSWLR 65 the Court gave some guidance as to the expectation of a widow after the death of a spouse:

‘Where the marriage of a deceased and his widow has been long and harmonious, where the widow has loyally supported her husband and assisted him to build up and maintain his estate, the duty which a deceased owes to his widow can be no less than to the extent to which his assets permit him to achieve that result…’

Conclusion

A testator owes a moral duty to provide for his or her spouse and, as a general rule, a spouse will have priority over other entitled beneficiaries in a Will contest. Having said that, every case is different and will turn on its own unique circumstances.

There are a range of factors a Court must consider when assessing the merits of a family provision claim. Your family circumstances should be assessed in light of these factors when preparing your Will to minimise the potential of a Will contest when you die.

Strict time limits apply with respect to making a claim for family provision. If you feel you have not been given adequate provision from the Will of a family member or 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.

What a Will Kit doesn’t do

There are various ‘Will Kits’ available on-line – most are cheap or ‘free’ and all you need to do is download them and fill in the blanks. Many websites boast that you can prepare your Will ‘without spending hundreds of dollars on legal fees’.

Simple, right? Not really.

Generating an on-line Will may seem easy, but the ‘hundreds of dollars’ that you might save will never make up for some of the possible pitfalls in preparing a Will without sound legal advice.

When you generate your own on-line Will, you don’t meet personally with the writer of the Will. This is the most significant issue with self-generated legal documents. You don’t have the opportunity to discuss your family and your circumstances, and a lawyer does not have the opportunity to identify issues unique to you, that could otherwise be addressed with careful planning.

A lawyer with an understanding of succession law will guide you through this process and create not just a Will, but an effective estate plan.

The following are some of the important considerations that an experienced lawyer will address, that a Will-Kit may not.

Your lawyer will prepare an estate plan, not just a Will

A lawyer will take a holistic approach and will consider all aspects relevant to your estate plan. Not only is it important to plan how your assets are distributed when you die, but you need to provide for contingencies such as appointing guardians and attorneys if you become incapacitated and are unable to manage your financial and personal affairs.

A lawyer will also consider how your assets are held – whether that is jointly or individually – as this can determine how and to whom those assets may be left. For example, when assets are held jointly with another person, the surviving person will automatically inherit the deceased person’s share when he or she dies. A contrary direction in a Will to leave that share to somebody other than the joint tenant will not override this legal principle. A lawyer will advise whether it is in your interests to sever the tenancy which will then enable you to leave your share to whomever you wish.

Your lawyer will also discuss your superannuation and death benefits which do not automatically form part of your estate. In most cases, your benefits will be paid directly to a superannuation dependant either at the discretion of the trustee or in accordance with a death benefit nomination.

Different categories of beneficiaries are taxed differently under taxation law and your lawyer can advise on these tax implications so you can make an informed decision.

Preventing a gift from failing

A common problem with do-it-yourself Wills is the risk that a gift to a beneficiary may fail. ‘Ademption’ occurs when specifically named property in a Will no longer exists at the time the Will-maker dies. Consequently, the intended beneficiary of that gift may lose out altogether. The ademption of a gift, can have a significant impact on the value of assets received by a beneficiary, particularly where the asset is significant such as real estate or a prestige motor vehicle.

Fortunately, the law has developed certain exceptions to the rules of ademption and a beneficiary may be saved from missing out on his or her inheritance. Having said that, a properly drafted Will can prevent the issue arising in the first place and is likely to avoid the potential for unwanted estate disputes.

Protecting your assets and tax planning

Your lawyer will advise on how to best structure your Will to protect your assets against distribution to an unintended beneficiary (such as a child’s estranged partner or the creditors of a bankrupt beneficiary).

A testamentary discretionary trust may be recommended. This is a trust created in your Will that comes into effect after you die. The trust is administered by a pre-appointed trustee who determines how and when estate assets are managed and distributed.

If properly managed, the flexibility of a discretionary trust allows beneficiaries to access favourable taxation treatment with respect to their inheritance and provides protection for vulnerable beneficiaries. With careful planning, the timing of transferring estate assets may also postpone or minimise capital gains tax liabilities.

An on-line Will Kit is unlikely to consider these matters and, in any event, cannot provide the legal advice necessary to decide whether this type of Will is appropriate in your circumstances.

Guarding against family provision claims

A successful family provision claim may result in the terms of your Will (despite your intentions) being amended to provide for an ‘eligible person’.

Family provision rules vary between jurisdictions however an eligible person generally includes a current or former spouse or de facto partner, a biological, adopted or step-child of any age, and certain dependent members of the deceased’s household.

An eligible person may make a claim against the estate of a deceased person if he or she believes they have been unfairly treated under the Will or the proposed distribution is unfair. Whilst warranted in some circumstances, such claims are usually an unwelcome interruption and will result in additional time, delay and cost in finalising the estate.

Your lawyer can identify potential claimants under the family provision rules relevant in your jurisdiction and, if necessary, advise on how to reduce the likelihood of such a claim.

Conclusion

Planning your estate and having your Will prepared by a lawyer is a smart move. Your lawyer will ensure your Will is valid, correctly signed and protects your assets and your beneficiaries. He or she will advise how future changes may affect your estate plan and will usually provide a friendly reminder to review your Will when your circumstances change.

Yes, you can prepare a valid Will on-line however, there is considerable risk that it will not be tailored to your unique circumstances, may not achieve exactly what you want, and may not take advantage of structures to protect assets and save tax.

Meeting with a lawyer to discuss your estate plans and finalise a well-considered Will that caters to your circumstances is money well spent.

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.

Faster Court processes for small family law property cases

Dividing property after separation can be challenging and, while avoiding court is the preferred approach to finalise a property settlement, this is not always possible. Court proceedings can exhaust time and money. When the pool of assets is quite modest, the impact of excessive legal and court costs can put a significant dent in the value of the property a couple has worked hard to obtain.

To target these issues, the Government has introduced a Small Claims Property Pilot program to help parties with small asset pools reach a fair division of assets with minimal cost and without extensive delay, as is often the case for family law matters. Known as the Discrete Property List, the program has been implemented by the Federal Court registries in Brisbane, Parramatta, Adelaide and Melbourne.

The program commenced in January 2020 and will run for two years. Afterwards, its success will be assessed with the possibility of expansion into other regions and on a more permanent basis.

If you are separated with a net joint asset pool of $500,000 or less, you may be eligible to access the program and have your matter dealt with more efficiently and cost effectively by the Federal Court.

The Discrete Property List

The program forms part of the $98.4 million Women’s Economic Security Package (WESP) to fund services and initiatives aimed at supporting victims of family violence and resolving family law disputes.

Traditionally, apart from urgent matters, family law property cases progress through the court in the same manner and within the same timeframe irrespective of the size of the asset pool or complexity of issues involved. This approach has contributed to an excessive backlog of cases which could potentially be lifted by fast tracking some of the smaller, simpler matters.

The program deals with property related matters only, which are referred to as Priority Property Pools under $500,000 (PPP500) cases. A PPP500 case is one where:

  • the parties’ net property (including superannuation) is $500,000 or less; and
  • there are no entities owned or controlled by either party that will require valuation or expert investigation (for example, a family trust, company or self-managed superannuation fund); and
  • neither party is seeking orders for parenting or child support.

The objectives of the program are to:

  • fast-track and finalise simple property matters involving small asset pools at minimal expense for the parties involved;
  • reduce the current backlog of cases within the family law system and the waiting time for other matters;
  • assign a Magistrate to deal with smaller, less-complex matters while freeing up Judges to deal with more complex matters and children’s matters.

Processes and timeframes

The Federal Circuit Court has issued practice directions for parties involved in a PPP500 case. Rather than waiting to be heard by a Judge, matters in the Discrete Property List will, in the first instance be assigned to and case-managed by a Registrar.

In most cases, the matter will be dealt with exclusively by the assigned Registrar with an outcome anticipated within 90 days or the matter referred to a Judge for case management or listed for hearing.

The program fosters early dispute resolution and features intensive monitoring for compliance and exchange of documentation between the parties. To improve the potential outcome using these processes, there is close involvement to ensure cases are properly prepared before alternative dispute resolution takes place.

A PPP500 case will typically take the following path:

  • Proceedings are commenced by the parties filing an Initiating Application and a Financial Summary. Prior to the first court date, the case will be confirmed as a PPP500 and preliminary directions made by the Registrar in chambers for financial disclosure and the exchange of relevant documents, such as valuations and expert reports, between the parties.
  • On the first court date before the Registrar, and assuming the parties have exchanged the required financial information, a ‘balance sheet’ is settled and the parties may be referred to private mediation, a conciliation conference or Legal Aid conference.
  • Alternative Dispute Resolution may take place with a Registrar, external mediator or at a Legal Aid conference. Following, the parties may be in a position to settle the matter by consent, and in such cases, legally binding orders can be made.
  • If the matter does not settle, a second court date is arranged – factual issues are identified, the balance sheet is re-checked and settled, and the Registrar’s involvement comes to an end. The case is then referred to a Judge.
  • A procedural hearing is convened where issues are identified, and directions made for a final hearing. Parties may have the option to consent to a less adversarial hearing on the papers. If a traditional hearing is preferred, the parties should identify the issues in dispute and relevant evidence in support of their respective positions.
  • Final hearing takes place.

Conclusion

Legal and other costs for small property cases can be grossly disproportionate to the actual value of the asset pool. With cases taking up to two years to reach a final hearing, parties endure expenses in addition to legal and court costs such as maintaining and insuring assets pending their potential sale, storage fees and short-term accommodation costs. The parties must also contend with the emotional impact of court proceedings and the feeling of being ‘in limbo’ until a property division is finalised.

It is anticipated that PPP500 cases will proceed more expeditiously through to settlement, alleviating some of the emotional and financial stress to those with modest asset pools and freeing up the Court to deal with more complex family law matters.

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.