How is estate divided and prior agreements honoured in separation, divorce, or death of a spouse? What are the individual rights of a party when the other party wants a divorce? Read on to learn about the legal rights and responsibilities of a spouse undergoing separation/divorce or during the death of their partner.
Issues of estate and property division usually arise when a couple decides to separate. Aside from real estate, the spouse can also claim a share of superannuation, employment entitlements, business interests, and other shares if the husband/wife wants a divorce.
The following must be considered when determining one’s divorce rights:
Title of property
When a married couple decides to file for a divorce,it must be understood that property division issues may arise from this decision.
Conflicts may arise particularly on properties which was purchased by both parties as a couple, such as their family home.It isn’t uncommon for couples to purchase a matrimonial property and for some reason, only one of the couple’s names goes on the title.
Both parties can still claim a share to the property or properties, even without their name on the title(s) and/or deed(s). Since these are regarded as matrimonial property/ies, this means that whatever is acquired during the marriage requires division when the couple decides to end their marriage.
Properties owned by each party prior to the marriage may also be subject to division, depending on the agreement.
After understanding the claim proportion rights to matrimonial properties, the next question to answer is how much can be claimed by both parties.
Property division and claim proportions are generally evaluated and subjected to assessment on the bases of contributions to the marriage and on the need to take care of the interests of the children involved if there are any.
Generally, the person who was with the children most of the time after the separation is entitled to a much larger share of the property, with around 60 to 75 per cent of the estate and properties to be divided.
The assessment will also include non-financial contributions to the marriage, such as looking after the household and caring for the children involved. These may also include improvements on matrimonial properties, such as renovations, decorating, gardening, and maintenance activities both parties have undertaken.
Extreme conduct during the marriage may also be a factor in determining the proportions one can claim: if either or both parties were involved in gambling, chronic drug and alcohol abuse, continual violence, and similar behaviour, their actions may be treated as negative contributions and will affect the proportion of their property claims.
The Family Court and property claims
Australia’s Family Court encourages all separating/separated parties to resolve their differences and disagreements outside the courtroom, but when it must, the Family Court can and will decide on matrimonial property disputes.
Again, separating parties may also look into other alternatives when settling property claims dispute with their former spouse. Separated parties can engage the services of a lawyer or legal mediator to work out a satisfactory property division plan.
Take note that lawyers who have proven expertise and years of experience in marital property disputes know, consider, and employ various options to avoid escalating the dispute to the courts.
Superannuation and divorce
Do parties need to transfer their share of superannuation (super) to another super fund after a divorce? Or can they withdraw it as cash?
The general answer to these questions is that the super benefits will remain in the super system unless the person entitled to the said benefit satisfies a condition of release. This means that parties will not be able to access the Super if they have not met said conditions of release.
The common conditions of release include parties retiring after reaching the preservation age (the age at which they are able to access their superannuation benefits assuming that they have already retired from employment), turning 65 years old, or when they are commencing the transition to their retirement pension.
Another acceptable condition for release—though still subject to the specific rules of the specific super fund—is requesting access to said funds due to severe financial hardship.
Superannuation benefits after divorce
An interest in superannuation, called a super payment, is to be divided by court order or agreement in the event that a couple decides to break down their marriage/legal relationship, as mandated by the Superannuation Industry (Supervision) Act of 1993 (SISA) and the Family Act of 1975.
In the dissolution of a marriage or de facto relationship (regardless whether the partners are opposite-sex or same-sex), the separating parties have three options on what to do with their superannuation benefit:
- Split the superannuation interest,
- Defer the decision until an agreed upon time, and flag the benefit, or
- Take the super into account but leave it untouched.
The first option involves utilising an interest split, with both parties receiving a super interest. The former spouse receiving the new benefit is allowed to either leave the super interest in the same fund or transfer it into another super fund.
The second option allows separating/separated couples to protect each of their own interests by flagging the super benefit and waiting for a key event to occur which may/will require the funds, such as impending retirement.
The exact value of the benefit becomes known upon the said key event, and the fund’s trustee will then be able to deal with the super account—subject to the later agreement you made as a couple.
Another option treats the super fund as a financial resource rather than a matrimonial asset. Separated parties may continue to do so as separated individuals instead of splitting the super benefit.
Again, the above options are available to both parties. However, it is best to consult with a lawyer or legal mediator so parties can both arrive at a mutually satisfactory agreement.
Why a caveat is needed
Separating parties should consider lodging a caveat to protect their share of the property especially when their names are not on the title of the matrimonial property.
A legal warning or notice, a caveat can be placed on a title to someone’s property informing anyone who takes interest in the purchase or lease of the said property which names both parties who have a claim on the share of the said property. This is to ensure both parties will get paid out of their share when the property gets sold/leased.
Complete a caveat form and lodge it at the Titles Office. Parties may engage the services of their solicitor to facilitate lodging the caveat.
Separating parties should always consult and speak with a trusted lawyer with proven expertise on the subject matter before deciding on lodging a caveat. This is important because filing a caveat without any legal basis may place both parties in a costly legal proceeding being brought by the property’s owner.
Claim for matrimonial property division and its time limit
The Family Court dictates a one-year filing limit from the date of divorce for matrimonial property claims.
Parties need not be divorced to file a property application in the court and this can even be done immediately the day after the separation. If either of the two parties believe that they have rightful property claim whether within or beyond this one-year time limit, it is important to have a discussion with a solicitor and/or lawyer right away and determine what legal action to take.
Rights on property after spouse’s death
While it is already emotionally taxing undergoing separation and divorce, an added complication to the entire situation might arise if a spouse passes away in the midst of all the legal proceedings.
If the surviving party has not been sufficiently provided for by the deceased spouse’s will, they may still bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975. The court will then consider the claim via the following factors:
- Financial resources and needs of the applicant
- The financial resources and needs of other applicants
- The beneficiaries’ financial resources and needs
- The deceased spouse’s obligations and responsibilities towards any applicant and/or beneficiary
- The deceased spouse’s estate—its size and nature
- Any applicant’s or beneficiary’s physical and/or mental disability, and
- Any other considerable factor, including conduct that the court may consider vital and relevant to the decision.
Understanding and accounting for all the above considerations will help bring surviving spouses a little ease while undergoing the entire divorce/legal separation and property rights claim process.
Given this article provides background information only, and does not constitute advice, it is always recommended to consult and engage the services of a solicitor and/or lawyer with proven expertise on the subject matter.
Analysis: The misnomer of bank regulation and loan costs
By Adam Zuchetti
Analysis: Bank ‘misconduct’ a woeful understatement
By Adam Zuchetti
Analysis: Banks wrongly targeted as business custodians
By Adam Zuchetti