Three Important Things You Must Know about Family Law when Dealing with Your Own Clients

Obviously, just like myself – even though I work solely in family law, I still need to know a bit about many other areas that touch upon legal issues in other areas of law, as well as accounting and business matters, so that I can recognise issues and obtain the appropriate specialist advice.

As an advisor, I think there are more than three key things to know about family law for your clients, but I believe that these are the three things that cause the most harm and damage to parties going through a separation and should always be at the forefront of your mind as advisors, when clients tell you they have separated:-

1. Time Limits

As we know, time limits are extremely important in many areas of law and it is no different in family law.  The important time limits to know are as follows:-

• A client cannot obtain a divorce until they have been separated for 12 months and the marriage has broken down irretrievably. Once a party files and obtains a divorce (which again, must be no less than 12 months after they have separated), then the clock starts ticking and there is only a further 12 months in which to formally finalise the property settlement deal or file in Court for property settlement and/or spousal maintenance.   If a client tells you they have previously been separated, but have not yet had a property settlement, you should enquire about whether they have been formally divorced and if so when the divorce was granted.
• Another important time limit relates to de facto relationships. Unlike a marriage, there is no divorce of the de facto relationship so the time limit relates to the date of separation (which can sometimes be contentious).  However, in simple terms, one cannot file for financial relief if more than two years has elapsed since the date of separation, after the breakdown of a de facto relationship.

2. Finalising the financial deal legally

In property matters, there are limited methods available to finalise the deal financially so that your client’s interests are protected and that no other party has recourse to come back at a later date.

The best way to finalise the deal legally is by way of a Consent Order where both parties negotiate and agree on terms of Orders.  These Orders are then lodged in the Court, together with an Application seeking the approval of the terms of Orders.  The Court then decides whether the Orders are just and equitable and if so, stamps the Order and then that is a Final Order for property settlement.

The other way to finalise a deal post-separation financially is to enter into a Binding Financial Agreement post-separation where both parties would need their own independent legal advice and ensure that the deed strictly complies with the terms of the Family Law Act to be a final and binding agreement.

The final and less desirable method is for the parties to fight it out in Court and for a Judge to make a Final Order for property settlement.

It is extremely important to remember, that unless your client finalises a financial deal by way of one of the above methods, then anything else that they have done, will simply not be binding legally and does not preclude the Court making a different type of Order.

We see many matters where clients have sold assets and divided up property themselves but have not obtained a Divorce and then many years a later one party files an Application for property settlement.  The previous actions and conduct in dividing up assets and reaching agreement, if not properly formalised in a way that ended the deal legally, is of little relevance and could cause substantial loss to your client.

Also, even if your client does not have much property to divide, it is always recommended they still do a final deal legally, because circumstances may change that means they accumulate wealth after separation and this could be relevant for division at a later date.  The certainty of a deal being done, and peace of mind for your client is always important in financial matters.

3. There is no “line in the sand” at the date of separation

One of the more dangerous assumptions that I see regularly is that advisors and clients alike, think that the date of identifying and valuing assets in a family law property division is from the date of separation.  Nothing could be further from the truth.  The family law system operates on the basis that whenever a matter is determined (whether it be by consent or at Trial), then what is relevant is the assets that exist at that time and their valuation at that current time, rather than just what existed at separation.

This is a common misunderstanding.  We often see clients who had separated some time ago and accumulated substantial wealth post separation from their own efforts.  They are often shocked to hear us tell them that it is all of the current assets and the value at that time that must be considered by the Law, rather than just the modest assets that they may have had at the date of separation.

In summary, if you are aware that any of your clients have separated recently, then it is prudent to inform them to act quickly and obtain specialist legal advice to try to resolve matters amicably, but in a way that protects their financial interests for the future.