Australasian family law cases concerning a party’s initial contributions, or separate property, brought into the relationship appear far from clear when settlement is litigated in court.
The value of each party’s initial contributions or “separate property" brought in to the relationship can be diluted by the length of the relationship or the “intangible" or non financial contributions of the other party (for example household duties, parenting, renovation/improvements).
In Australia as in New Zealand which was recently illustrated by a bitter family property dispute decided in New Zealand’s highest court. It was considered a landmark judgment that may have opened the way for wives to take a share of their husbands’ property – even though the husband owned it before the marriage.
At stake were two properties - the second one was inherited by the husband in 1995. Since the marriage, the court said, the wife’s actions allowed the husband to undertake work solely for the benefit of his separate property and that she had prevented the debt from reaching an unmanageable level. Her duties of managing the household, in addition to her earnings of over $300,000 from outside employment, had all contributed to the household.
The wife argued that, had it not been for her actions the farm would have been sold to partly satisfy debt, and neither party would have seen the spectacular increase in the value of the property and that she, as a homemaker, helped her husband focus on developing and working the farm and later a vineyard. The increase considered was $747,800, of which the wife's share was determined to be 40 per cent, or $299,120. She received a further $283,000 in relation to the second property.
This case highlights the importance of reaching a written agreement at the beginning of relationships whereby the parties specify who owns what before the relationship starts. It is wise to seek legal advice in coming to decisions which affect your assets.
Whatever happens, partners in a relationship who bring substantial assets into it and wish, in the event the relationship breaks down, that they hold on to their separate property, would be wise to obtain a written ("prenuptial" or “postnuptial) agreement.
You can make a financial agreement before, during or after a marriage or de facto relationship. These agreements can cover:
>> Your financial settlement (including superannuation entitlements) after the breakdown of a marriage or a de facto relationship
>> financial support (maintenance) of one spouse by the other after the breakdown of a marriage or a de facto relationship,
>> any incidental issues.
For a financial agreement to be legally binding each party is required to seek their own legal and financial advice before consent and signature.
Remember the moving party needs to ensure that the other party to the agreement is provided with adequate opportunity to obtain independent legal advice otherwise the agreement can be set aside by a court of competent jurisdiction. In all such cases where you are contemplating entering into a binding financial agreement call LAC Lawyers for an appointment on (02) 9904 6800 for proper professional advice and assistance.