Q & A on 2GB discussing Family Law 1 March 2016
Tuesday, 1 March 2016
L – Luke Grant– Sheridan McMahon /C1,2,3, etc – Callers
LG Now before we get into this, do not muck around. Don’t waste the opportunity. 131 873. If you need any legal advice right now. We’re talking all things – Family law today. 131 873. You know how it goes, people wait until the end and they go “couldn’t get on”….. Well ring now. 131 873. So we’re talking family law today, inheritance compensation payments, interests in the family trust, just some of the many factors that can spark heated debates between spouses. As I say, 131 873. Sheridan McMahon from Turner Freeman Lawyers is in the studio. Lovely to see you Sheridan.
SM Lovely to see you too Luke. Thank you.
LG So we’ll get to our callers in just a moment or two. Tell us about, typically, what’s included and excluded in the asset pool during a property settlement?
SM I mean the obvious things are included. The house and superannuation, debts, bank accounts. But the thing that sparks the greatest debate are contributions such as compensation payments, redundancies, inheritances or interest in family trust and one person is obviously trying to expand the pool so that they can get a bigger slice and the other person is trying to reduce the pool available for division so that they preserve some of the things that they believe they’ve brought into the asset pool that shouldn’t be up for division. So for all of them it’s a question of when did the money come into the asset pool? Why did it come in? What was it used for and how are the parties actually going to end up in the end if that money is excluded. So, there are a lot of factors that come into play but it does really span a hot debate.
LG So it’s a grey……It sounds like it’s a potentially a grey area is it? Is there……?
SM Well there’s fairly settled law about what happens in each circumstance but the reality is that every single family law case is different. You know you can’t compare an apple with an apple, because if somebody’s relying on an inheritance that came in 7 years ago, in an asset pool of a certain size and the inheritance was certain amounts, well you’ve got to find identical cases for that to apply it, exactly the same way. So you use the principles, you shuffle it around a little bit and hopefully you come up with the right answer.
LG So let me throw this one at you. What about inheritance? If you’ve been married….. you’re smiling at me, that worries me…..
SM I’m smiling because it’s such a hot potato and moralistically people get really very irate about.
LG Oh do they?
SM How dare you try and get my mother’s ……estate as part of this. So it’s a hot bed.
LG Everyone must remain cool there and no hot potatoes.
SM No one remains cool in family law.
LG So you’ve been together with 20 or 30 years ……
LG There is a potentially significant inheritance. In a year or two before that inheritance becomes available, the marriage dissolves. Bad luck?
SM Not so much. If it’s an inheritance has not yet come to fruition, it might not even be contemplated in a property settlement because the person who is due to inherit might not inherit because the person who’s will it is might change their mind. There might be a family argument, but it’s more the ones where one or two years before separation the inheritance has come in, so it’s a very very recent contribution.
SM So generally what happens, if it’s a recent contribution, it might be treated as an entirely separate asset pool. It’s put to one side. We assess what the contributions are in the general asset pool and then we look at, well if we did nothing with that inheritance, how much does to the person who inherits end up with in the greater scheme of things? Then we go back to the general asset pool and think, do we need to make an adjustment to the contributions and future or the future needs factors ……..
SM To into account that in reality they’re going to end up with a sizable inheritance on top of their slice of the pie.
LG Yeah, of course. 131 873 is the number to call. 131 873 and don’t forget I should mention, you should pick up your news local paper each week to read the Turner Freeman Legal Matters column. Their lawyers cover a range of legal topics including compensation and negligence law, family and employment law, wills and estate law, superannuation and disability claims, and thanks to Turner Freeman Lawyers and their legal matters segment we have a $100 Westfield Voucher to give away. So 131 873 the number to call, Ray is first. Ray, g’day.
Caller 1 – Ray
Ray Yes – good afternoon. How are you?
LG We’re both well mate. Go ahead.
SM Hello Ray.
Ray That’s good. That’s good. Look, we have a family split at the moment and all of the family pool as you call it, is in a family trust, based on a house. Now we have a situation where it will attract capital gains tax unfortunately. If on the other hand we can high ……….. various portions of the property, will that help us get away from capital gains tax?
SM I love answering a question with it, depends. But I’m going to do it because I’m feeling bold today. Now the complexity is that something is in a trust, so a trust would have to be joined as a party to the proceedings for it to attract any exemptions for capital gains, but I will always caveat it by saying go and talk to your tax lawyer about that. There are obviously ways to efficiently deal with your property settlement that take advantage of the tax benefits that fall under the Family Law Act for separations but when they fall under a trust, as I said, it’s a third party entity, it’s not a spouse but can,… a trust can become a party to the proceedings in some circumstances so I’d probably need to know a little bit more about the ins and outs but possibly yes there’s something you can do, talk to a family lawyer and a tax lawyer and work together.
LG There you go Ray. Thank you for the call. David, g’day.
Caller 2 – David
David Oh how are you?
LG Hi David.
SM Hi David.
LG Go ahead.
David Wrong David or wrong David?
LG Yeah – you’re the right David mate.
SM You sound like the right David to me?
David Ah, sorry yeah. I have, I suppose slightly a similar problem. I had a separation with my wife and in the process we decided to…… I gave her some things and she gave me the flat and we transferred from the flat in joint names to my name and now I have to sell the flat for various reasons and …. if the…. If the stamp duty was exempt when it was transferred, when …… you know about the capital gains, do we have to pay capital gains on …. when I sell it….Do I have to pay capital gain from the time we bought it as a couple or from the time when I …. because when you transfer it….. are capital gains exempt when you transfer it under family law?
SM No. What happens there is there is no capital gains event that occurs on the transfer. What you do is inherit your wife’s cost base so it becomes one big lump cost base where the capital gains….. the cost price of the property is at the date you and your wife purchased it…. you inherit that and then the gain is whatever you sell it for and the difference between that.
LG Right. Does that help mate?
David And one more question and which is the main question. Okay so you know how you get the capital…… after you hold assets for 1 year you get a capital gains deduction…..
SG Walking down my tax law path which I don’t do so I’m going to kind of listen but not able to give you any specific advice about that….
LG Alright, we’ll move on.. Sorry mate, we can’t help you with that but thank you for the call. Judith….
Caller 3 – Judith
Judith Um, hi. What’s the use of making a Will if that Will can be contested upon death?
SM Ah, now you’re talking about Family Provisions. Now there’s certainly evidence of your intention and not everything is contested so you know, a Will is obviously made so that hopefully your Estate gets dealt with in exactly the way you want it to but there might be people that feel aggrieved and they will maybe take some steps. So there’s always a point. You want to show….. you want to tell the world what you want it to happen…..
LG Right. But it’s a good question, isn’t it? I have to say…
SM It is.
LG A very good question.
SM I’ll hand it to our Estate lawyers.
LG Yes please do. Graham g’day.
Caller 4 – Graham
Graham Ah g’day.
Graham This is a personal question not a general one. I guess. Last May my daughter and her husband separated. They have two children – 10 and 8 roughly. That’s okay they’re going through that, but to complicate things my cousin passed away in August last year and he left his Estate to my grandchildren to be held in trust until they turn 21. He did his Will through the Public Trustee but now things are getting complicated as far as claims on the Estate as such. I was just wondering is there any clear …… I guess solution or anything what can happen?
SM The very clear solution is you ring one of our partners that deals with Estates and Family Provisions Act claims and you’ll be answered that question.
LG Okay. Alright thank you for the call Graham very much indeed. Is there a time typically that it takes for the whole process to be complete?
SM You’ve just got me on my bandwagon. As I say pretty much every time I come in here, the delays in our courts are extensive due to a lack of resourcing, lack of judges, so if the matter gets litigated we are looking at years and years and years.
LG Okay just break that down, litigated means?
SM If it goes to court. So if there is…. whether a parenting matter or whether it’s a financial matter…. if the matter goes to court and parties can’t resolve it by negotiation themselves, the time it will take before you can get in front of a judge for a final hearing is unfortunately exceptionally long.
LG Does that then force more people into settlements than would otherwise be the case?
SM Well, it sometimes forces people into compromise settlements. Their taking a bad bargain because time would otherwise cause too much stress, too much money in terms of legal fees or their own other financial hardships and they’ve just got to get something because it’s better than nothing.
LG You’ve talked to me about the legal fees aspect of that, if it comes down to Mr A and Mrs A having a conversation and being about to resolve things it would be ….. you’d have to think significantly cheaper doing that reaching an agreement than having that fight in the court system.
SM On no, it definitely is and I certainly… all the new clients that I’ve spoken to this week now my mantra is, let’s get…. for financial matters, let’s get the documents on board so that we’ve made our disclosure and then let’s try and convene a round table conference with the other solicitor and bring it to a head and discuss the issues. So very much getting people talking outside a court for them is my first step and for parenting the first step is Mediation.
LG Yeah okay. We’ll take a break. Back in a sec….. 131 873.
LG It is great to have your company this afternoon, Legal Matters that’s where we’re up to. Turner Freeman Lawyers joining us today, Sheridan McMahon and we’re talking family law. You’ve still got time to talk to you if you’re quick on 131 873 and we’ve still got our $100 Westfield voucher to give away as well. You never know who will win that. Betty g’day.
Caller 5 – Betty
Betty Good afternoon. I was wondering if you could help me on behalf of the family. There was an elderly couple. The male had owned a farm – after some years he’s sold it and built a new home. His de facto had no money into it whatsoever, she has been gone 2 years at least and now my brother has passed away and her family are trying to make a claim. Have they a claim?
SM Oooh again. This is more a Wills and Family Provisions Act claim than a ……
Betty Oh sorry.
SM No that’s alright. That’s okay. So I think it’s obviously done on its merits and based on ….. I’d be wondering why they have a claim if the de facto partner has passed away and then it’s your brother that’s passed away subsequent to that.
LG Alright Betty thank you for your call. Just on de facto, now I’m living as a normal human being and believing that de facto……
SM Whatever that means….
LG Well just you know a punter like Gavin here and Gabby out there and the other Gabby somewhere else and that’s not true. No, I thought the de facto was the same as being married now essentially no difference, is that right or …..?
SM Oh, well if the words of Beyonce “If you liked it, you would have put a ring on it”. But in terms of de facto for property settlement, there’s a ………
LG Yes. I was going to do my Beyonce today. How did you know that?
SM Oh, you seemed to be channelling…..
LG Damn, now it’s not a surprise.
SM There is –to a large extent it’s treated in a very similar manner. There are some small differences but in terms of entitlements to property, it considers a lot of the same things… the majority of the same things that are married, financial ………
LG Is there any set period of time?
SM Sure is.
LG What is it?
SM A court would not make an order if the relationship is under 2 years unless they are satisfied that there is a child of the de facto relationship and there have been substantial contributions by an applicant seeking an adjustment of property.
LG Very good line, if you like to put a ring on it.
SM Like to put a ring on it.
LG You’ve used that before haven’t you?
SM I can’t consider that it’s mine…..
LG Oh you’ve stolen it? There you are. Sofia you’re next. G’day.
Caller 6 – Sofia
Sofia Oh hi.
Sofia I would just like to ask you a question in regards to family law.
SM Go for it.
Sofia Okay, my partner’s been divorced. Separated for 9 years, divorced for over 7. Okay the ex-wife wants to make a claim on more money from him. Is there anything that can happen there?
SM She can try is the first question. So if they’ve been divorced for 7 years the Family Law Act says you’ve got 12 months from the date of divorce order is made to actually make an application to the court without the permission of the court to do so. So really, it’s got to be done on its merits. If they’ve done a property settlement she’d have to have a good reason why she gets a second bit. If she hasn’t done a property settlement, she’d need a good reason why there has been so much delay.
Sofia Okay so really she shouldn’t be able to contest it or get anything should she?
SM As I said, if they’ve already done a property settlement you would think not unless there has been a significant change so I think…. I’d probably need to know a little bit more to give you a definitive answer.
LG But I tell you what we’ll do Sofia, we will give you the $100 Westfield Voucher that is yours. So please don’t hang up… stay right there and we’ll grab some further details. Can we get to Bob quickly? Yeah – Bob – quickly what’s your question mate?
Caller 7 – Bob
Bob Yes – good afternoon. My daughter has gone through a protracted divorce settlement, dragged on and on and on and during the course of that, the Court put a caveat on the family home and a caveat on his superannuation. No contrary to the caveat he went and borrowed against the house and then he actually sold the house and when he sold the house the money that he borrowed from the lending authority, they swooped in and took their money that he he’d borrowed and he managed to salvage the money out of the superannuation, which also had a caveat on it by pleading poor man.
SM Yeah, Luke just articulated what my eyes were trying to say. Um, if I was acting for your daughter I would be storming with some form of rage that he’s been clearly in contempt of court orders and so there should have been…. . certainly if you can trace the money there’s a provision under the Family Law Act that you can wind back a transaction to make him repay back in.
LG Oh wow. What about if he’s got no money?
SM Oh well that’s the question. You’ve got to work out where has the money gone, who has got the money and what notice have they had in terms of……
LG That is red hot isn’t it?
SM Oh a lot of things have …….people selling properties for non-arms length transactions. People you know paying money out of bank accounts to third parties – specifically to defeat a claim, so yeah – there is action and I will you all the very best.
LG Okay, there you go. Good on you Bob and we appreciate the call, which was a slightly different subject. Sheridan, what a delight to spend some time with you. Thank you for coming in.
SM And remembering our Newcastle days.
LG Indeed. Indeed. And you will be back with Chris Smith some time down the road. All thanks to Turner Freeman Lawyers.