A recent article by ABC News highlights the importance of asset protection where second relationships are concerned.
Millie was aware that she was in a de facto relationship but thought her home was protected because her partner, Paul never paid any bills associated with the property and was not listed on the mortgage. This was not the case.
Millie had previously been in a 10 year marriage and shared a son with her ex-husband. Mille and Paul dated on and off before they commenced a de facto relationship in 2012 when Paul moved into her home. Paul entered the de facto relationship with a tax debt. He also owned a home which he sold during the relationship and applied some of the proceeds of sale toward the family’s living expenses for the benefit of Millie and her son. He built a carport at Millie’s home. Millie maintained that his contribution toward these expenses and labour were in lieu of him paying rent or board. In 2018 Millie and Paul separated.
Millie did not realise that under Family Law, Paul’s tax debt could be considered a joint liability despite being in his name only. The first step in reaching a financial settlement in Family Law is to determine the property pool (assets and resources) available for distribution between the parties. This involves identifying all assets including superannuation and liabilities and financial resources. All assets may be taken into account including those owned jointly, individually, or by a family trust or company. What is ultimately taken into account is at the Family Court’s discretion.
Paul, a sole trader, had not been filing his tax returns. Following the separation, he filed over a decade of returns and in total owed $300,000 to the Australian Taxation Office (ATO). Prior to the commencement of the de facto relationship, Millie helped Paul write a letter to the ATO to be put on a payment plan for a $50,000 tax debt. She maintained that she never thought of it again and did not realise Paul had such a significant tax debt.
Ultimately the Family Court found that Paul’s tax debt was a joint liability which formed part of the property pool available for distribution between the parties, on the basis that Millie was aware of it or at least his reluctance to file tax returns. Millie benefited from expenses paid by Paul. His non-payment of tax enabled him to have more income to meet these expenses. Millie did however receive a 15 per cent adjustment of the net property pool in her favour in recognition of Paul accumulating an ‘unnecessary’ tax debt. Millie was ordered to pay Paul the sum of $500,000. She could not afford to do so, so her home of 27 years was sold to pay Paul out.
It is becoming more common for people in second relationships to enter into a Financial Agreement (also known as a ‘Pre-nup’ or ‘Continuing relationship’ agreements) to protect assets accumulated prior to the relationship.
A Financial Agreement is a private contract entered into by a couple that governs the financial relationship between them. They address how the parties’ property and financial resources are dealt with at separation. Importantly, Financial Agreements remove the power of the Family Court to make orders in relation to all financial matters to which the agreement applies. The common misconception that Financial Agreements ‘are not worth the paper they are written on’ is not the case when drafted correctly and carefully.
If Millie and Paul had agreed to enter into a Financial Agreement, the outcome may have been very different.
Please contact us for more detailed and tailored help.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.
In recent years, Australia has observed an increase in “grey divorce,” referring to the breakdown of marriages among couples aged 50 and older. This trend reflects broader global patterns and poses unique challenges and considerations. We explore the reasons behind the rise in grey divorces, the specific issues faced by older couples and the implications for their financial and emotional well-being.
Grey divorce has been on the rise in Australia, mirroring trends observed in other developed countries. Statistics from the Australian Bureau of Statistics (ABS) indicate a significant increase in the divorce rate among older age groups. Several factors contribute to this phenomenon:
Divorcing later in life presents distinct challenges that differ from those faced by younger couples:
The legal and financial implications of grey divorce are significant and require careful consideration and planning:
With the cost of living rising, and residential house prices soaring, it is not surprising that parents are now more frequently providing financial assistance to their adult children to help secure their children’s financial security.
Although it is understandable for parents to have a desire to provide that security for their children, when that adult child is in a relationship and separates from their spouse, that financial assistance may cause a great deal of stress for the parents who have invested significant funds, which may now be subject to a family law claim by the adult child’s spouse and a question will loom as to whether the parent can recover the funds that were provided to the adult child.
Given the complexities involved in grey divorce, seeking professional guidance is critical. Our Family Law team at Moores works closely with our Estate Planning team as well as accountants, financial advisors, counsellors and other health professionals to provide support and advice to help navigate the legal, financial and emotional challenges that older separating couples face.
If you require our assistance and would like to have a confidential conversation with an experienced family lawyer please contact our office on (03) 9843 2129.
There are a number of amendments to the Family Law Act 1975 (Cth) (the Act) that will change the approach to parenting matters. This article explores four key changes to the Act that directly impact families and children.
The amendments to the Act aim to make the family law system safer and simpler to understand for separating families to navigate, and provide the Federal Circuit and Family Court of Australia (the Court) with more discretion to determining parenting arrangements.
The changes to the Act do not apply retrospectively. This means the new law is only applicable to matters that are decided by the Court after 6 May 2024, not before.
The most important consideration in determining arrangements for a child will remain the same as it was previously – that arrangements must be made in their “best interests” and not in the interests of the parents.
Prior to the new amendments, when asked to determine what was in a child’s best interests, the Court focused on two primary considerations and 14 additional considerations. Due to the new amendments, that list is now shorter with only six “general considerations” and two “further considerations” (applicable only if a child is Aboriginal or Torres Strait Islander). The list of considerations is non-hierarchal and the Court is not required to place more weight to any one factor over the others. The six general considerations when determining the best interests of the child are:
In considering the above matters, the Court must take into account:
As has always been the case, the Court must give greater weight to the need to protect a child from physical or psychological harm or from being subjected to, exposed to abuse, neglect or family violence over the benefit of a child having a meaningful relationship with both parents.
For an Aboriginal or Torres Strait Islander child, the child’s right to enjoy their Aboriginal or Torres Strait Islander culture is given particular importance.
Before the amendments to the Act, the law required the Court to presume that “equal shared parental responsibility” was in the best interests of a child. This often meant the parents had joint responsibility for making long term decisions for a child, such as those relating to schooling, health or religion. The presumption however did not apply if there were reasonable grounds to suspect harm, neglect, abuse or family violence.
The presumption was removed due to a misconception amongst the community that “equal shared” parental responsibility accorded to a child spending equal time with parents. The Court will now tailor decisions about parental responsibility, renamed as “joint decision making” about long term issues, to the circumstances of the particular child and their parents.
As has always been the case unless other ordered by the Court, if it is safe to do so, parents of a child are to consult with each other about major long term issues in relation to the child, and when doing so, have regard to the best interests of the child as the paramount consideration.
Now, with the removal of the presumption, it is more likely that parenting orders will allow a parent to have ‘sole parental responsibility’ for all or some long term decisions for a child. As a consequence of the removal of the presumption of “equal shared parental responsibility” the Court is no longer required to consider the pathway of equal time or substantial and significant time arrangements for a child where equal shared parental responsibility applied.
The amendments aim to reduce pressure to agree to parenting arrangements in circumstances of family violence, and give the Court more discretion to decide parental responsibility and care arrangements.
There has always been an ability to apply to the Court to amend final parenting orders pursuant to the case of Rice v Asplund if:
The intention of Parliament was to codify the rule in Rice v Asplund within the Act. A recent case heard by Judge O’Shannessy suggests the Act may not have actually “codified” Rice v Asplund. Under the relevant section a, “significant change in circumstances” is not a pre-requisite or threshold to re-open the proceedings, but rather a factor to be taken into consideration.
The changes to the Act also provide that the Court may regard the following factors when considering whether to entertain a new application after final parenting orders are made:
What is still the same is the principle that continued litigation over a child is generally not in their best interests.
An Independent Children’s Lawyer (ICL) is sometimes appointed to represent a child’s best interests in a family law matter. The Court may appoint an ICL when it needs to hear an independent assessment about the child’s best interests.
Prior to 6 May 2024, an ICL was not required to meet with or speak with a child they represented. Under the new amendments an ICL is obligated to meet with and speak with the child, unless:
This requirement allows the ICL to get first-hand information and views from the child, which can be expressed to the Court on their behalf. Some commentators are concerned this requirement may lead to a greater need for the child to engage with experts and advocates in family law proceedings (which is already acknowledged not to be in a child’s best interests) and create further pressure or influence on a child to express a particular view to the ICL.
Ultimately, how the Courts will adopt these changes and, in turn, what practical effect these changes will have on families is yet to be seen. Until formal decisions are made by the Court, there will continue to be an element of uncertainty.
Our Family and Relationship Law team understands that appropriate arrangements for the care of children following separation is a priority for parents. Often parents have different views about what is in their child or children’s best interests. The recent changes to the law may cause further uncertainty. Our empathetic approach and expertise can help guide you through the process and determine the best arrangements for your child.
This article was originally published 31 July 2024. Updated 16 August 2024.
When it comes to protecting a family’s wealth in the event of separation, financial agreements under the Family Law Act 1975 (Cth) are an increasingly common and effective tool. A financial agreement is an agreement entered into between spouses (married or de facto) which address how the property and financial resources of the relationship are dealt with at separation. If drafted correctly and carefully it enables parties to mutually contract out of the right to bring a claim against each other in the Federal Circuit and Family Court of Australia (the Court). Financial agreements can be made before or during a relationship or after separation.
A party to a relationship can have a claim for property settlement once married or in the case of a de facto relationship once the parties have been living together for two or more years. There are sometimes exceptions to this rule such as the birth of a child or significant intermingling of finances.
A property settlement order from the Court can take into account inheritances received by one party, and can divide the assets inherited.
If there is no financial agreement in existence, inheritances and gifts received by a spouse directly in a relationship are considered to be property of the relationship to be divided as determined by the Court upon separation. Whilst it is certainly not the case that any inheritance is always divided on an equal basis, a Judge has a wide discretion to apportion inheritances having regard to the particular facts and circumstances of the relationship. In the absence of a financial agreement, there is no guarantee that an inheritance will be protected.
A typical financial agreement is designed to regulate and determine the impact of separation on the entirety of the parties’ financial relationship (i.e. it deals with all assets and liabilities). A common approach is to divide the assets and interests into each parties excluded assets (kept separate in the event of relationship breakdown), and “joint assets” being those assets which are agreed to be divided in the event of relationship breakdown. There can also be agreed on additional payments from one party to the other, depending on the circumstances.
Alternatively, there is nothing that prevents parties having an agreement that is more limited in scope, such as just excluding claims in relation to inherited assets only. This is known as an Inheritance Protection Agreement (IPA).
The significance and value of an IPA is that it specifically deals with possible or expected inheritances, gifts or particular assets and excludes them for the sole benefit of one of the parties. There is no requirement in the legalisation that the IPA contemplates a just and equitable division of all assets. As long as the IPA is compliant and has been carefully drafted in accordance with the requirements set out under Part VIIIA of the Family Law Act 1975 (Cth) it will be enforceable.
The Federal Circuit Court of Australia (FCCA) case of Wood v Grover [2015] illustrates the enforceability of a financial agreement which quarantines future inheritances. The Husband sought to set aside a financial agreement entered into prior to marriage. The financial agreement specifically sought to protect any inheritances that were likely to be received by either of the parties. At the time of signing the agreement, the Husband had approximately $13,500 worth of assets. The Wife had approximately $656,000 and was likely to receive significant inheritances.
The Husband argued that the financial agreement should be set aside as he had not received the requisite advice regarding the terms of the agreement. The Husband also relied upon the grounds of unconscionable conduct, duress and undue influence. Ultimately, Judge Neville found that the financial agreement was valid and took no issue with the exclusion of significant future inheritances.
A financial agreement is a contract, and the Family Law Act 1975 (Cth) requires disclosure as well as prescribing other formalities for the Agreement to be enforceable.
As the parents passing on the inheritance, a preliminary question is the level of disclosure that you are comfortable providing in order to make the agreement binding.
At Moores, we prepare financial agreements as well as IPA’s for all types of relationships. As illustrated in Wood v Grover [2015] FCCA, it is imperative the financial agreement is drafted in accordance with the requirements set out in the legislation. Each agreement needs to be carefully tailored to the circumstances of the relationship and immediate families’ requirements.
We are well versed in the approach and negotiation of financial agreements and would welcome a discussion with you or your clients at any time about the benefits of entering into a BFA.
The Family Law Act 1975 has recently been amended with effect from 6 May 2024.
The amendments place additional emphasis on safety as well as simplifying and converting to “plain English” the framework in which the court allocates parental responsibility and determines what is in a child’s best interests.
This article discusses what the key amendments mean for schools, focusing on the amendments to parental responsibility and the assessment of the “best interests” of the child.
*Whilst this article refers to “parents” for sake of simplicity, it is noted that by court order a non-parent (including grandparents and other non-parent carers) can be allocated parental responsibility and/or an order made in their favour for a child to live with, spend time with, or communicate with them.
Schools regularly have to navigate complex and separated family arrangements. This can involve the school needing to interpret court orders, parenting plans and letters from the parents’ lawyers.
Not infrequently, the court orders are ambiguous and the school may be confronted with parents arguing about what the orders mean.
All too often, each parent adopts a self-interested interpretation, and, in the absence of a further court ruling, the school is often left in the invidious position of having to make sense of the orders in the context of its legal duties to the student, its contractual arrangements with the parents, and its responsibilities under education regulations. At Moores we regularly advise schools navigating such issues.
The changes to the law resulting from the recent amendments are significant, and we expect that schools will be impacted by matters such as changes in terminology in orders, changes to the content of new orders, and parents misunderstanding the effect of the new laws.
Importantly, at the outset we note that existing court orders will not be affected by the amendments. The amendments will only apply to orders made in cases (including Application for Consent Orders) that are determined by the Court on or after 6 May 2024.
Before diving into the key amendments, we will take a moment to provide a refresher on the concept of parental responsibility.
Parental responsibility primarily relates to long-term decision making. It is a separate concept to where the child lives, who the child spends time with, and who the child communicates with.
For example, court orders can provide for a child to live in a shared care arrangement but with one parent having sole parental responsibility. Conversely, the orders can provide for the child to spend limited time with one parent yet still provide for equal shared parental responsibility.
Specifically, parental responsibility is concerned with the making of decisions about “major long-term issues”, which is defined in the Act as meaning:
“…issues about the care, welfare and development of the child of a long – term nature and includes (but is not limited to) issues of that nature about:
(a) the child’s education (both current and future); and
(b) the child’s religious and cultural upbringing; and
(c) the child’s health; and
(d) the child’s name; and
(e) changes to the child’s living arrangements that make it significantly more difficult for the child to spend time with a parent.
Examples of major long-term decisions that are relevant to schools include:
Examples of non-major long-term decisions (for simplicity, we will refer to these as “day-to-day decisions”, although that terminology is not used in the Act) include:
However, the line is not always clear-cut. For example, consider a student ordering food from the canteen, which is ordinarily a day-to-day decision. However, it is not difficult to imagine major long-term issues arising, for example, if the student suffered from allergies, or had received medical advice to adhere to a certain diet due to serious health issues, or if the student’s religion mandated certain dietary requirements.
If there is no court order in place allocating parental responsibility, the Act provides that by default each parent has parental responsibility for their child, and this can be exercised either jointly (together) or severally (individually). This has not been changed by the removal of the “presumption” of equal shared parental responsibility (explained further below) which only affects cases where a court is making parenting orders.
The family law courts have power to make orders allocating parental responsibility. Most commonly, this will be dealt with in the first order in a suite of parental orders.
Broadly speaking, there are three main ways parental responsibility can be allocated by court orders:
In line with the wording of the new amendments, we expect this will likely be referred to as “joint decision-making” in orders made after 6 May 2024**.
Parents who have equal shared parental responsibility are required to consult each other about decisions relating to major long-term issues (see further above) and make a genuine effort to come to a joint decision about such issues.
There is no obligation to consult for day-to-day decisions.
Importantly, the obligation to consult is an obligation between the parents, and any failure by a parent comply with that obligation does not make their unilateral instructions ineffective or unauthorised. This is confirmed by section 61DAA(2), which states:
“To avoid doubt, this section does not require any other person to establish, before acting on a decision about the child communicated by one of those persons, that the decision has been made jointly.”
Notwithstanding that, when parents are separated and have equal shared parental responsibility, it may still be prudent for schools to endeavour to obtain joint instructions from parents about major long-term issues, depending on the circumstances. Issues also arise when parents who both have parental responsibility give conflicting instructions.
Increasingly, schools are needing to take a more nuanced approach to such issues, particularly where there is also a Family Violence Intervention Order (FVIO) or other form of state-based protection order in place. Whilst it is beyond the scope of this article to discuss such cases, we note that there is a complex interaction between FVIOs and family law orders, and which order prevails requires a case-specific analysis. In addition, the school has an independent duty of care to it students and staff – and a duty to protect health and safety so far as is reasonably practicable under OHS laws – which also need to be taken into account in addition to considering what is provided for by the orders.
This can and does mean that schools need to exercise an independent assessment of risk and make a decision. Seeking to ignore court orders, or taking no action, may not be sufficient to discharge the duty. And taking no action because there are no court orders may also be insufficient, as the exercise of the duty of care requires independent judgment. It is also not acceptable to expect parents in the context of family violence to “sort it out”, particularly as encouraging contact might be a breach of the order and could endanger family members.
In line with the wording of the new amendments, we expect will likely be referred to as “sole decision-making” in orders made after 6 May 2024**.
When the court orders allocate sole parental responsibility to one parent, it has the effect of making that parent solely responsible for making major long-term decisions. The other parent is however still able to make day-to-day decisions for the child whilst in their care.
Some orders specify that a parent with sole parental responsibility must still inform the other parent of their decision. This is an obligation between the parents and does not create an obligation on schools to inform the other parent of the relevant decision.
A hybrid order allocates sole parental responsibility to one parent in relation to defined matters, with all other matters being subject to equal shared parental responsibility.
**Pending any emerging case law, we presume that the difference between the terminology “decision-making” and “parental responsibility” is largely semantic and in line with the policy of the new amendments to adopt a plain English approach, particular in court orders. The concept of “parental responsibility” still remains in the Act as amended, however we expect to see the terminology “decision-making” used more commonly in court orders.
Perhaps the most important change brought in by the new amendments is the removal of the presumption of equal shared parental responsibility.
The presumption meant that when making a decision about parental responsibility, the court’s default position was to order equal shared parental responsibility unless a specified reason applied. Whilst family violence, child abuse, and the best interests of the child were all reasons by which the court could not apply the presumption, in practice sole parental responsibility was the exception rather than the rule.
The new law now means that the court will make a decision about parental responsibility based on the child’s best interests alone, with no “default” position. We expect that this will have two main consequences:
Again, we note that in a situation where there are no court orders in place in relation to parental responsibility, the law remains the same that both parents have parental responsibility, which can be exercised by them either jointly or individually.
As part of the amendments, sections of the Act have been also repealed that provided that when the Court made orders for equal shared parental responsibility, that it had to consider whether an order for “equal time” or “substantial and significant time” was in the child’s best interests and reasonably practicable.
These provisions had been misunderstood by many members of the community as creating a right for parents to spend equal time with their children, which was never the intention.
It is now abundantly clear that parenting arrangements are determined by a court having regards to the “best interests” of the child as the most important consideration, and that there are not any other starting points or presumptions.
We expect that this will have the consequence that there is likely to be a greater diversity in the content of the orders made after 6 May 2024.
In particular, for the past nearly two decades, a very common type of arrangement outside of shared care arrangements was for the non-residential parent (more commonly, though not always, the father) to spend time with the child on alternate weekends with perhaps another night in the off-week, along with half of school holidays and special occasions. This reflected the concept of “substantial and significant time” in the Act.
This concept sometimes worked in favour of the “spend time” parent, for example there was often a good argument that “substantial and significant time” was the “baseline” when parents lived in proximity and there were no significant risk issues. At the same time, in many cases, the “spend time” parents found it difficult to negotiate more time once the residential parent offered the bare minimum that met the definition of “substantial and significant time”.
However, with the concept and terminology of “substantial and significant time” now completely removed from the Act, this dynamic is likely to change.
In contested proceedings, the court is required to tailor the arrangements for the children in a “bespoke” fashion, having regards to their best interests without any pre-conceived notions about what that may look like. Likewise, in negotiated matters, parents can no longer use “substantial and significant time” as a legislative “baseline”. Hopefully, this will lead to parents taking a more child-focused and case-specific approach to considering what arrangements are appropriate rather than with reference to arbitrary standards.
Schools can expect to see orders in the future taking a more nuanced and less “boilerplate” approach to parenting arrangements.
Another key change brought in by the new amendments is the simplification of how the court assesses what is in the best interest of a child.
The previous law set out in section 60CC contained two “primary” considerations and 14 “additional” considerations (many containing sub-provisions) that had to be taken into account by the court. These provisions, some of which substantially overlapped, were often criticised as being cumbersome and inconvenient to address in submissions and judgments.
The amendments have simplified the section 60CC considerations to six matters, as follows:
It is beyond the scope of this article to dive into what the considerations that were removed and whether this rewording has a substantive impact with an added focus on safety, or whether the new section is better thought of as simplifying and consolidating the previous considerations. We are aware of family lawyers with views both ways and will need to await emerging information to clarify the issue.
We do note however that “safety” is the key theme of the new amendments, and we expect to see orders following 6 May 2024, particularly those made in contested proceedings, paying even more attention to this aspect.
There are many people online and on social media making a variety of claims about the effect of the amendments.
In closing, here is a list of four claims about the amendments that are NOT correct:
The removal of the presumption is a matter only effecting the process by which the court makes a determination about parental responsibility in cases before it on or after 6 May 2024. As discussed above, when no court orders are in place, each parent still has parental responsibility by law and this can only be altered by a family law court order (and/or restrained by the effect of a Family Violence Intervention Order). When family law court orders are in place, the orders will almost always set out how parental responsibility is allocated.
The amendments will not disrupt any existing orders. They will only effect cases (including Application for Consent Orders) determined by the court on or after 6 May 2024.
There was never any presumption of shared care in the law and it was not even the starting point. However, shared care is no longer a mandatory consideration if the court orders equal shared parental responsibility. Instead, the court is simply required to consider what arrangements are in the best interests of the child, which may or may not be shared care, depending on the circumstances of the case.
On balance, we consider that the emphasis on safety in the new amendments and removal of the concept of “substantial and significant time” may result in some cases where the non-residential parent’s time is limited further than would have been under the previous law. However, the “best interests” of the child remains the test for what is appropriate, with gender not being a relevant consideration in the court’s assessment. We expect that cases where “no time”, “supervised time”, or very restricted time arrangements are ordered will remain where the child is assessed as being at an unacceptable risk in the care of the relevant parent.
Get in touch with the Education Team at Moores if you would like support with interpreting court orders or navigating complex parenting arrangements for your school.
You may also like to consider whether any upcoming staff PD days should contain a refresher and update on family law as it applies to schools.