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Pre-nuptial financial agreements are likely to become more common following an announcement from the Federal Government that it intends to make them binding. The Government says it wants people to take more responsibility for their financial arrangements and to rely less on the Government and the courts to solve their problems for them.
The move will be popular amongst those people who bring substantial assets into a marriage, possibly from a previous marriage or a family business, and who want to exclude these assets from any property settlement in the event the marriage fails. In the past, financial agreements have not been used extensively in Australia, partly because they can be overridden by the courts. The agreements under the proposed changes will mean that couples can effectively opt out of the property provisions of the Family Law Act.
The decision is one of a number of possible changes to the divorce laws announced by Federal Attorney General, Daryl Williams, just before Easter. Apart from binding financial agreements, the Government is expected to introduce legislation shortly that will allow superannuation to be split between couples whose marriage has broken down. It is also proposing changes to the Family Law Act in relation to property settlements with the aim of making the outcome more certain and removing some of the discretionary powers of the court. These provisions would of course only apply to couples who have not made a financial agreement.
The present property laws have been criticised on a number of grounds. The biggest problem according to some critics is that the law does not require the court to presume an equality of contribution to the accumulation and maintenance of matrimonial assets. For example, home duties in some decisions has not been treated as equally important as earning the family income. These provisions have remained unchanged since the current law was introduced in 1976. In that time however there have been big changes in society including a leap in the divorce rate (40 per cent of all marriages) and greater participation by women in the workforce.
The Attorney General however intends to change all this. He has issued a discussion paper that canvasses two broad options for reform.
Option 1: Separate property regime
The first option is a modification of the property laws that are now in place but with a number of important differences. Under this option a separate property regime will remain with each party owning his or her own property regardless of whether it was acquired before or after the marriage.Upon marriage breakdown, the parties retain legal ownership of their separate property but these interests, regardless of when the property was acquired (even before the marriage) could be adjusted by the court. The big change from the current situation is that it will be assumed as a starting point, that each partner contributed equally to the marriage including the acquisition, conservation or improvement of matrimonial property. If one person objected to this they would have to prove they made a larger contribution than the other.
Contributions such as that of homemaker would be equally important as that of earning an income. In deciding on the split the court would also consider the future needs of each party so the final split may not be 50-50. If the couple wanted to exclude some property from the split, such as that brought in from a previous marriage, they would have to have a financial agreement to that effect.
Option 2: Community of property
This is a more radical departure from what we have now and is similar to the regime current in some US states such as California. It assumes an equal ownership of communal assets acquired during the course of the period of the marriage no matter whose name they are in. But property accumulated before the marriage for example will not be divided in the event of a marriage breakup although any increase in the value of these assets would be regarded as communal property.Under Option 2, the court would not be required to make judgements about who contributed the most to the financial assets of the marriage. The property would be split down the middle creating greater certainty. This 50-50 split could however be varied for example after considering the future needs of each party.
Superannuation
In both cases superannuation accumulated by either party during the course of the marriage would be regarded as an asset of the marriage and could be divided so that each party had their own super. In a further change the Government is proposing that the court be required to explain why it made the decision it did. At present this is not done and in the past has led to complaints about court bias and injustice.David Tomlinson
Finance Journalist
Discussion
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superannuation split pre-nuptial agreements Splitting Assests after Divorce |
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superannuation split bill, brsm1@bigpond.com.au Posted 25/1/2001 1:11 AM when dividing super in a divorce, should the tax component of the gross amount be deducted prior to calculating the division of super entitlements to each partner when one partners entitlement is greater than the other. |
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pre-nuptial agreements bob march, bobmarch@syd.comcen.com.au Posted 21/11/2000 6:47 AM The above paper is more than a year old. Has the law re Pre Nuptial Agreements since been strengthened? A.Clarke, clarkey_99@hotmail.com Posted 26/2/2001 11:26 PM I am interested on more latest information on the new laws about pre-nuptial agreements. thankyou J Neill, jeannetteneill@optusnet.com.au Posted 12/6/2001 11:31 AM W will be marrying shortly and wish to draw up a pre-nuptial agreement. I need the form of the agreement, considering that my house was bought and fully paid for prior to my intended marriage. My future husband has no property. |
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Splitting Assests after Divorce Adriana, sharley@camtech.net.au Posted 28/2/00 9:38 PM Very interesting. Could you please possibly answer the following question. My husband and I are prepared to agree and divide our assets without any external input, but I would like to put it in writing, just in case the tables turn. Can I do this myself legally? and what template and format do I have to use for the document? thank you Doug Johnson, www.stenterprises@home.com Posted 12/4/00 11:03 AM I am interested in the forms described in the question regarding mutual agreement to split assets. Sonia, nunu51sw@students.ballarat.edu.au Posted 27/8/2000 3:26 PM What are the positive and negative effects on children after their parents divorce? Marly Bryan, mbryan@publictrustee.tas.gov.au Posted 9/1/2001 2:41 PM I am also interested in the forms mentioned for settling assets. martin, mbonnici@one.net.au Posted 3/2/2001 8:36 AM i owned my home prior habitation. defacto relation for 15 yrs. two children, boy 14(wants to live with me) and girl 11 (may live with mum). both work. i have my own business. house value aprox. $6-700k. i borrowed all the money ($250k) to build house from my mother. no other substantial property. what is a fair offer to her? nick, nicko2010@hotmail.com Posted 17/2/2001 10:12 PM If I can prove via bank records that I have contributed most to paying the homeloan, bills and I paid the deposit on buying the home, arranged and paid for home improvements is that a factor in asset splitting associated with the sale proceeds of the home. All she contributes is $200 per week. phil, pcf4u@yahoo.com.au Posted 21/3/2001 1:52 PM sarah lloyd, sarahlloyd@hotmail.com.au Posted 23/5/2001 6:02 PM My husband an I have split our assets,(as far as I know) fairley. What if he has hidden assets and super I dont know about? Sylvia, SylviaRdg@aol.com.au Posted 10/7/2001 4:40 PM I am thinking of divorcing my husband and have 2 children aged 3 and 5. We have been together 9 years and have been married for 5 years. The property we currently own is in both our names. Although before buying this property, I had taken out a joint loan with him to pay for his exwife's share of her settlement of a previous property. Also we have a rental property in his name, but I put $40,000.00 down for the deposit. What are my rights requarding the above? Thankyou Sylvia. Sylvia, SylviaRdg@aol.com.au Posted 10/7/2001 4:39 PM I am thinking of divorcing my husband and have 2 children aged 3 and 5. We have been together 9 years and have been married for 5 years. The property we currently own is in both our names. Although before buying this property, I had taken out a joint loan with him to pay for his exwife's share of her settlement of a previous property. Also we have a rental property in his name, but I put $40,000.00 down for the deposit. What are my rights requarding the above? Rudolf Wolbers, r.wolbers@bne.catholic.edu.au Posted 30/7/2001 1:09 PM I have read your article with interest. I am also interested in knowing if there are legal proformas available to use for the financial settlement of assets. thanks |
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