Family Law Slideshow
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Transcript of Family Law Slideshow
Brett HartleyAccredited Family Law Specialist & PrincipalHartley Family Law Services
Financial Consequences of Marital Separation & an Introduction to the New Super Splitting Laws
Important Facts About Separation
• Divorce obtained 12 months after separation• Property Settlement 1 year after divorce• File for property settlement upon separation• Spousal & Child Maintenance • Resolve property settlement properly• Capital Gains Tax and Stamp Duty Exemptions• Prepare a new Will• Examine your Superannuation Policies
Spousal Maintenance
• No automatic right• What the Family Law Act provides• Factors the Court looks at • …Reasonably able to do so• Lump sum or periodic maintenance• Urgent and interim orders
Property Settlement
• Either party may make application• No compulsion• Extremely important to resolve after separation• 12 month time limit after divorce• The notion of fault is irrelevant
How Property Settlement is Determined by the Court• The Family Court has a wide discretion• There are three steps:
• Determine the net value of all property• ascertain & value property
• Contributions• financial, non-financial, welfare of family
• Examining Other Circumstances • age, health, income, children, duration…
How Property Settlement is Determined by the Court• Finalising the Financial Agreement
• By Consent Orders or Binding Financial Agreements
• Binding Financial Agreements• Overview of Legislation • Entered into: before marriage, during the
marriage or after the dissolution of the marriage
Binding Financial Agreements
• Why should your clients enter into such Agreements• Provide certainty• Protect ownership of assets brought in• Protect ownership of inheritances• Protect ownership of business interest• Prevent costly, lengthy litigation• Peace of mind & binding on the estate
Binding Financial Agreements
• Who needs an agreement most• People entering into second marriage, to
provide for pre-existing children• People entering into second or subsequent
relationships/ marriage• Couples employing asset protection• People with substantial assets
• Stamp Duty and Capital Gains Tax relief
Super Splitting – Treatment of Superannuation as Property • New laws encapsulated in:
•Amendments to the Family Law Act•The Family Law Superannuation Regs•Amendments to the SIS Regs
• Operational from 28 December 2002• Radically alter the way super is treated upon
the breakdown of a marital relationship• Define superannuation as property
Super Splitting – Treatment of Superannuation as Property• New laws allow super interests to be split• Far reaching impact:
• Approx 43% of all marriages end in divorce• Most separate between 10-30 years • Average age people marrying increasing • The vast majority have superannuation• Super represents 20-60% of total wealth• 24Mil a/c, av bal $54,000, double by 2020
•
Super Splitting – Treatment of Superannuation as Property• What to do before 28 December 2002
• Enter into Orders and leave super• Delay property settlement until after 28/12• Interim property orders
• Splitting & Flagging Orders • New laws apply to most fund, including:
• Defined Benefit Funds & • Accumulation Funds
Super Splitting – Treatment of Superannuation as Property• Super Splitting Orders• Depends on type of fund and type of benefit
• Defined benefit or accumulation• Growth phase or payment phase
• Payment splitting regime• Base Amount • Create a new superannuation interest – with
or without a super splitting order
Super Splitting – Treatment of Superannuation as Property• Defined Benefit Scheme
• Can’t create new interest for non-member• Can’t roll out interest for non-member • Base amount gives rise to creation of a new
account within the members account, preserved & grows at an inflation factor
• Non-member spouse paid first when member spouse entitled to payment
• Piggy Back Order
Super Splitting – Treatment of Superannuation as Property• Defined Benefit Scheme• Non-member has no control over when payment received – solely dependant upon the member deciding to retire
• Flagging orders will be used when it is likely that the member will soon satisfy a condition of release – e.g. retire or redundancy• Placed on the Trustee preventing payment to member until flag is lifted
Super Splitting - Superannuation Agreements• Binding financial agreement can contain an agreement concerning superannuation interests
• Referred to as Superannuation Agreements• Valuation Requirements
• If there is a dispute between the parties, Family Court must value the super interest according to the Family Law Regulations
• If parties reach agreement – not bound by Valuation methods
Super Splitting - Valuation Requirements• Accumulation Funds relatively easy to value
• Contributions & interest less admin charges• Difficulty in valuing at any given point in time• Use linear interpolation techniques• Deduct amounts payable under an earlier
payment spit from a previous marriage• Deduct surcharge debt
Super Splitting - Valuation Requirements• Defined Benefit Fund is a lot more complex
• Specific regulations in Family Law Regs• Involves complex actuarial calculations
Super Splitting - Obligations Upon Trustees• SIS regulations impose new obligations• Payment Splitting Regime Orders• Non-member spouse requesting information
from a Trustee• Provision of information is mandatory by
Trustee• Trustee has obligations upon receipt of the
Super Splitting Orders• Follow two separate paths re base amount
Super Splitting – Effect of Death
• Important to consider the effect of death when looking at Super Splitting Orders & Agreements•Death of non-member spouse• Accumulation Funds• Defined Benefit Scheme
• Death of a member spouse• Accumulation Funds• Defined Benefit Scheme
• Exception relates to payment re children
Super Splitting – Specific Financial Planning Issues• New ETP for non-member spouse• Essentially, Super Splitting creates two ETP’s• Both member & non-member spouse will have
separate RBL’s• Depends on whether the interest is split under the regs or a Payment Splitting Order
• Different considerations for pension payments
• ESP set to zero for non-member
Brett HartleyAccredited Family Law Specialist & PrincipalHartley Family Law ServicesA Legal Firm Practicing Exclusively in Family Law & Defacto Law
Level 15, Brisbane Club Tower, 241 Adelaide St, Brisbane 4000Ph: 07 3220 1299, Fax: 07 3220 1277, Mobile: 0417 569 299
email: [email protected]
home page: www.hartleyfamilylaw.com.au
Financial Consequences of Marital Separation & an Introduction to the New Super Splitting Laws