Family Law

Need help negotiating or formalising a Family Law agreement or resolving a dispute?

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Nothing is more important than family and nothing is more devastating than a family breakdown. It can have a lasting effect on your life.

The Family Law system may be your first contact with the legal system. It doesn’t have to be daunting and confusing. We will support and assist you through this difficult and emotional period, working with you to achieve the best possible result in the shortest possible time.

We explain in plain English the legal process and your options to help inform your decisions. Our empathetic, caring approach combined with a client-centric ethos and unshakeable determination serves to protect your interests.

Divorce

Living separately and apart under one roof

A spouse who wishes to divorce can only file after 12 months’ separation.

A couple may be deemed to have separated when they cease living together as a couple. They are not required to live apart after separating and can continue to live separately under one roof.

In those circumstances, you may need to support your divorce application by filing an affidavit:

  1. setting out changes in the marriage showing that you and your spouse have separated; and
  2. explaining why you and your spouse nonetheless continued living together.

You must convince the court that, although you both live under the same roof, you both live and act independently and no longer like a married couple. 

If the court considers that the parties stopped acting like a husband and wife, separation will have taken place.

Resolving a dispute - what are my options?

An amicable agreement about division of property or parenting arrangements may be formalised by a combination of Family Dispute Resolution (a form of mediation), negotiation, and collaborative law.

Agreement can be formalised by preparing:-

  1. for property
    1. an application for proposed consent orders and the proposed orders filed in the Federal Circuit and Family Court of Australia or (provided both parties are legally represented) a local court exercising Family Law jurisdiction; or
    2. a financial agreement or a superannuation agreement drafted in accordance with the Family Law Act 1975 (Cth);
  2. for parenting arrangements –  either:-
    1. filing proposed consent orders in the Federal Circuit and Family Court of Australia or (if both parties are legally represented) in a local court exercising Family Law jurisdiction; or
    2. signing a parenting plan;
  3. for child support – signing a binding child support agreement then liaising with Child Support before registering it with Child Support.

An amicable settlement is faster, less costly, and less stressful than litigation. However, if despite your best efforts, negotiation reaches a stalemate or the other party commences litigation, your only options may be:-

  1. re-negotiating; or
  2. agreeing to the orders the other party seeks; or
  3. filing an initiating application and supporting documents and commencing proceedings in the Federal Circuit and Family Court of Australia.

What is Family Dispute Resolution?

In mediation, a mediator assists parties to negotiate a mutually satisfactory resolution and avoid court proceedings. In Family Law, mediation is called Family Dispute Resolution (FDR) and mediators are called Family Dispute Resolution Practitioners (FDRP). Herein we use the more familiar terms ‘mediation’ and ‘mediator’. 

What to expect

There is no fixed process although the mediator may initially meet with each party separately for an intake session.

If the parties’ lawyers are present, the mediator may invite them to summarise the background, their client’s concerns and desired outcomes. The goal is to identify the issues in dispute. The mediator may then invite a party to make an offer. Offers are exchanged until agreement is reached.

Negotiations can be in a joint session or separately, in person or by video or telephone conferencing. If the mediation is ‘by shuttle’, the mediator conveys offers between the parties.

Can I bring a support person?

If you want to bring a support person to the mediation, the mediator is likely to need advance notice to obtain the other party’s agreement to their inclusion.

Your support person must not obstruct the prospects of a settlement or inflame the dispute.

What is my lawyer’s role?

Your lawyer’s role is to work with the other lawyer and the mediator to problem solve. 

What is my role?

You decide whether to accept or reject an offer and whether to make a counter-offer.  

What if we reach agreement?

Reaching agreement generally requires both parties to compromise. If you reach agreement, the lawyers set out the terms of the agreement in writing and the parties and their lawyers sign the documents.

If the matter is in court, proposed consent orders may be emailed to the court to be made in chambers or considered at the next hearing.

Otherwise, the documents are filed electronically through the Commonwealth Courts Portal.

The agreement is final only after a final Order is made.

Arbitration in Family Law

Family law litigation is a lengthy, time-consuming and expensive process.  Alternative dispute resolution mechanisms such as family law arbitration can speed up the resolution of disputes.

The benefits of family law arbitration are that:

  1. the costs are generally less than going to a final hearing; and
  2. matters can be finalised within weeks or months.

What is the difference between family law arbitration and mediation?

In arbitration, an impartial third person assists the parties to resolve a dispute.

An arbitrator can determine a property dispute on a final basis. The arbitrator reviews evidence and submissions and gives the parties a decision called an arbitral award. 

Only property matters can be arbitrated. 

What is the process?

Both parties must consent to arbitration. The arbitrator may hold a Directions Hearing where they will make directions about documents the parties are to file in preparation for a hearing.

Arbitration usually produces a binding decision quickly and efficiently. Simple matters can be heard in one day.

The scope and the processes involved in arbitration can be determined by the parties. If the parties do not wish to present any oral submissions, then the decision can be based on written submissions only. 

The parties are given an arbitral award setting out the arbitrator’s reasons for making the award and the findings of fact in the matter. The award can then be registered with the court. Section 13H of the Family Law Act 1975 provides that the award, once registered, has the effect of a decree made by the Federal Circuit and Family Court of Australia.

What if I am not satisfied with an arbitral award?

If both parties are unsatisfied with the award, they may agree not to register it and it will not take effect.

If one party has registered the award but the other party is unhappy with it, they have 28 days to apply to the Federal Circuit and Family Court of Australia giving reasons why the award should not be registered. 

A party seeking variation or reversal of an award must generally prove there has been an error of law.

To ensure procedural fairness and the absence of bias, arbitrators avoid private meetings with parties or their solicitors and maintain the formality of proceedings. 

What is an Offer to Settle?

An offer to settle is a way to end a case without going to trial where the parties agree to settle the case with less or no court involvement. It must be in writing, is not filed in court, and may be made at any time before the court makes final orders.

It may be accepted at any time before:

  1. the other party withdraws it; or
  2. the court makes final orders.

An offer may be withdrawn:

  1. if it is not compulsory, by giving the other party written notice; or
  2. if it is compulsory, making another offer.

Making a counter-offer does not prevent the maker from accepting the original offer.

To comply with the court’s pre-action procedures, a prospective party must make an offer before going to court .

What does “Without Prejudice” mean?

The header “without prejudice” in an offer indicates that the offeror need not fear that the offer will later be used in court as evidence against them.

What is a Calderbank Offer?

A Calderbank offer (from the English case Calderbank v Calderbank) can help resolve a dispute early and potentially reduce costs. One party makes a formal offer to the other to settle a dispute which states that the offer will be disclosed to the court for the issue of costs.  

It must be ’genuine’ and be open for a reasonable time. The phrase ‘without prejudice save as to costs’ means :

  1. the offer cannot be used as evidence in court against the other party;
  2. however, if it is unreasonably rejected the court may take it into account when assessing the question of indemnity costs.

How does a Calderbank offer work?

Either side of a dispute can make a Calderbank offer before the dispute goes to trial. If the offer is rejected and the dispute goes to court, when the issue of costs arises the court may take the Calderbank offer into account.

The usual rule is that costs are paid by the unsuccessful party. However, if the Calderbank offer was unreasonably rejected, the court may make an indemnity cost order instead: the party that made the offer may be able to recover a portion of the costs. The court issues indemnity cost orders because the rejecting party had the option to settle the matter for a reasonable sum of money but instead took the matter to trial incurring further legal costs. When assessing the costs, the court considers whether the offer offer was genuine and whether rejecting the offer was unreasonable.

What are Consent Orders?

Agreement about parenting arrangements and/or property settlement can be formalised by consent orders. Proposed consent orders setting out the agreement reached are electronically filed in the Federal Circuit and Family Court of Australia. No court hearing is required. Once approved by the court, they become legally binding Court Orders.

Consent orders are a fast and inexpensive method of resolving family law disputes. 

Steps:

Negotiation

Discussions, either directly between the parties or through their lawyers, aimed at reaching agreement.

Drafting

Preparing documents to be filed with the Federal Circuit and Family Court of Australia. After giving third parties written notice, file electronically via the Commonwealth Courts Portal:

  1. an Application for Consent Orders;
  2. proposed consent orders;
  3. (for parenting matters) Annexure to proposed consent parenting orders (current case).

Why consent Orders?

Benefits of consent orders include:

  1. It is very difficult for one party to vary a Court Order;
  2. The Federal Circuit and Family Court of Australia can enforce Orders;
  3. obtaining a stamp duty exemption on transfers of real property to a party or their child.

Is there a time limit to file?

For property orders only:

  1. If married: within 1 year after divorce;
  2. if de-facto: within 2 years after separation . 

You must seek the leave (i.e. permission) of the Federal Circuit and Family Court of Australia to file an application after the time limit and must show exceptional circumstances

What are pre-action procedures?

Before commencing court proceedings, you must fulfil the “pre-action procedures”. Parties must make a “genuine effort” to resolve a dispute before going to court, including:

  1. participating in Family Dispute Resolution;
  2. meeting disclosure obligations; and
  3. giving the other party a written Notice of Intention that you intend to take the matter to court.

Family Dispute Resolution

Unless an exemption applies, for parenting matters, parties must to attend Family Dispute Resolution and obtain a Family Dispute Certificate (a section 60I Certificate) from an accredited FDR practitioner

To apply for an exemption, you must file an affidavit with the court.

Disclosure in family law matters

Parties have a duty of disclosure requiring them to exchange all relevant information and documents. 

Parties must disclose specified documents in financial matters (related to property).

For parenting matters, parties should exchange any information relevant to the issue in dispute.

Written notice of issues and future intentions

If dispute resolution is unsuccessful or unavailable, in both parenting and property matters, you must send the other party a written notice of issues and future intentions.

Family violence and child abuse

If you are experiencing family violence from the other party or there is a risk of child abuse, you may be exempt from having to comply with pre-action procedures.

Service of documents

Service of initiating documents starts court proceedings. All documents filed with a court must be served on all other parties to the proceedings. In Family Law matters there are rules about how different types of documents must be served. Initiating applications (which start the court process) must generally be served by hand but some other documents can be posted or emailed to the other parties.

The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 set out the rules for service of Family Law documents.

Personal service

Service by hand on the other party is required when:

  1. initiating family law proceedings; and
  2. issuing a subpoena requiring a person to attend court to give evidence.

The person providing someone with personal service must hand them personally to the person being served. If the other party does not accept the documents, the server can put the documents down in the person’s presence and tell them the nature of the documents. 

The requirements for personal service are set out in Division 2.6.2 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.

Can I serve the documents myself?

The person serving court documents must not be the party on whose behalf the documents are being served (Rule 2.35(3) Federal Circuit and Family Court of Australia (Family Law) Rules 2021). You cannot serve the documents yourself but a friend or family member may serve the documents on your behalf.

However, employing a process server to serve the documents is preferable. Process servers are impartial third parties, know the requirements of service and are less likely to inflame a situation. In remote areas, the police or the sheriff may serve court documents.

What is an affidavit of service?

The person who personally served the document drafts an affidavit of service setting out where and when the person was served and how they knew it was the right person. 

If the person disputes that they were effectively served or their identity is uncertain, other measures may have to be taken to establish that the correct person has been served.

Ordinary service

Family law documents that do not have to be personally served include:

  1. Notice of address for service;
  2. Response to an initiating application;
  3. Application in a proceeding;
  4. Subpoenas requiring the provision of material to the court;
  5. a further affidavit; and
  6. Response to an application in a proceeding.

If you are filing one of these documents, it must be served on the other party’s address for service nominated on their application or response. If an applicant does not have an address for service, they can be served at their last known place of business or address.

If lawyers accept service of documents by email, they will include an email address in their address for service. 

If you change lawyers or if you are representing yourself and your contact details change, you must file a Notice of Address for Service providing the updated contact details for service of documents.

Although subpoenas requesting material from other persons or organisations do not have to be served personally, you should enquire of the person being served their preferred method of service.

What if I cannot find the other party?

If, after having made reasonable attempts, you have been unable to serve a party, you can apply to the court for substituted service or for service to be dispensed with.

Court’s discretion in relation to service

If you cannot physically locate the person, you can ask the court to order service of a document in a way not provided for in the Rules (Rule 2.33 Federal Circuit and Family Court of Australia (Family Law) Rules 2021). The court may make an order allowing you to serve the person by post, Facebook, or email.

Dispensing with service

When a person cannot be found, it is also possible to ask the court for an order dispensing with service (Rule 2.34 Federal Circuit and Family Court of Australia (Family Law) Rules 2021). The requirement for the person to be served is dispensed with and the matter can proceed in their absence. 

If you are seeking an order for dispensation of service or substituted service, you must file an affidavit setting out the attempts that have been made to locate and serve the party.

What is full and frank disclosure?

“Full and frank disclosure,” means the obligation (in financial and parenting matters) that parties to a Family Law matter disclose to each other anything relevant to their position that the Federal Circuit and Family Court of Australia needs to consider . 

Disclosure is an ongoing obligation commencing when parties start negotiating until court proceedings have ended.

You should disclose any major change to your assets or parenting arrangements as soon as possible.

If your matter is in court, you will have to file an undertaking confirming that you are aware that you owe the court a duty of disclosure and have, to the best of your knowledge and ability, complied with that duty.

At any time you can ask another party:

  1. to update figures disclosed which have changed;
  2. to disclose information or documents of which you are aware relating to the proceedings; or
  3. to disclose information about an asset.

If they do not provide the necessary disclosure, you may be entitled to ask the Federal Circuit and Family Court of Australia to issue a subpoena to a person or organisation to produce documents or give evidence.

Non-disclosure of financial information can result in the Federal Circuit and Family Court of Australia setting aside an application or Court Order.

Lawyers have an obligation to the court to ensure that their client complies with their duty to disclose. If you do not provide full and frank disclosure, your lawyer may have to cease acting for you.

If you think a request is irrelevant, you can request further information as to it’s relevance and possibly object to it.

If the Federal Circuit and Family Court of Australia finds that you have not provided full and frank disclosure, it can make cost orders against you, impose fines, and even order imprisonment.

What if a party doesn't comply with Orders?

A Federal Circuit and Family Court of Australia Order is legally binding. Non compliance (also known as a contravention or a breach of Orders) is a serious offence.  

Parenting and financial (also known as property) orders are legally binding on all parties to the orders.

What are the consequences of non compliance with Orders?

If the Federal Circuit and Family Court of Australia finds that an order was contravened without a reasonable excuse, it will impose penalties.

What if my ex has breached a Court Order?

If a party has breached a court order, an aggrieved party must file a contravention application and an affidavit.

If the aggrieved party does not want the other party to be punished or penalised, but wants only the resumption of arrangements of the earlier Order, they must also file an Application – Enforcement.

Property Distribution

How does the Court distribute assets?

Separated parties can apply to the Federal Circuit and Family Court of Australia for Court Orders dividing their assets. Assessment of the couple’s financial circumstances, include the asset pool and each party’s contributions.

There is no set formula – the court decides what is ‘just and equitable’ for both parties.

Filing an application with the Court

The terms of agreement reached can be outlined in proposed consent orders, which are filed electronically with the Federal Circuit and Family Court of Australia. If the court approves the agreement as fair, the proposed orders become binding and enforceable.

Both parties must to provide full and frank disclosure of all their assets and liabilities. The duty to disclose is ongoing, and failure to disclose can result in an order being set aside.

How does the Court divide assets?

Once the asset pool has been identified, the Federal Circuit and Family Court of Australia determines how much weight to attribute to:

  1. the financial and non-financial contributions made by each party in the acquisition, maintenance and conservation of the asset pool; and
  2. both parties’ future needs.

What is the asset pool?

The asset pool includes:

  1. all earnings, everything purchased with those earnings and any debts acquired during the relationship; and
  2. assets in the name or control of one party, jointly owned assets, and assets held at separation.

Is superannuation part of the asset pool?

Yes. The superannuation fund member can choose to retain the whole benefit but receive a lesser share of other assets; or the Federal Circuit and Family Court of Australia can make a “splitting order”, dividing a member’s interest in a fund between the parties in a specified amount or percentage.

Or it can make a “flagging order”, so that when the superannuation fund matures, an agreed amount will be distributed to the other partner.

Are assets held in trust part of the asset pool?

Yes, they are usually considered shared assets unless one spouse has maintained total control over the trust. 

Are inheritances part of the asset pool?

The timing of the bequest is the most important factor in deciding whether an inheritance is a marriage asset. 

An inheritance received early in a relationship may be irrelevant in light of other contributions made over the life of the relationship. An inheritance received later in a relationship may be treated as a contribution of the party who received it.  An inheritance received after separation may be included in the asset pool if the pool is too small to assure a fair settlement for both parties.

Are windfalls part of the asset pool?

If either spouse receives money through a windfall, it is usually considered joint income and part of the asset pool.

How are assets valued?

The Federal Circuit and Family Court of Australia usually values assets as at the date of trial (not at separation). If the assets’ values have significantly changed since separation, the court may consider the change in value as a party’s contribution, changing their entitlement.

If a party disposes of an asset from the pool after separation, the Federal Circuit and Family Court of Australia may notionally “add back” the asset’s value to that party’s share.

The parties must agree on a single market (not insurance or replacement) value for assets. Following are examples of how different types of assets are valued:

Real estate

Parties may use real estate agents’ market appraisals to reach agreement on a property’s market value. If that doesn’t result in agreement, they may have to jointly engage an independent expert valuer and agree to accept the valuer’s valuation.

Business Interests

Parties should jointly instruct an independent expert such as a forensic accountant to value a business.

Motor vehicles

Websites such as Carsales or Redbook can be used to reach agreement on a market value of a vehicle. If that doesn’t result in agreement, they may have to jointly instruct an expert valuer.

Furniture and Jewellery

The second-hand value of furniture and jewellery is generally preferred to insured or replacement value. Joint expert valuers can be used for high value items.

What are Financial Resources?

The way in which the Federal Circuit and Family Court of Australia categorises assets in a separated couple’s asset pool can significantly impact the way in which they are split.

If the Federal Circuit and Family Court of Australia categorises something as property, it is included in the asset pool for division between the parties.

Unlike property, there is no definition for a financial resource in the Family Law Act 1975

Typically, a financial resource is something which is not considered to be property. Property can be divided between the parties, but a financial resource cannot. A financial resource can be used to generate future income or assets, while property can not. A financial resource is not included in the asset pool but the Federal Circuit and Family Court of Australia takes it into consideration if it offers one party future financial benefit.

What are contributions?

The Federal Circuit and Family Court of Australia evaluates different types of contributions made by parties to the asset pool. Parties’ contributions affect the percentage split of the property pool.

Contributions made to the relationship, to the acquisition, conservation or improvement of the parties’ property may be financial or non-financial.

Contributions may also be made to the welfare of the parties (including children) as a homemaker or parent.

The weight attaching to initial financial contributions can reduce over time.

If one party substantially adds to their assets between separation and the trial or settlement date, they may have to share their increase in wealth with their ex-partner.

Post-separation contributions may be financial or non-financial or parenting and homemaker contributions.

Gifts or contributions by third parties

Contributions may be made directly or indirectly by or on behalf of a party to or a child of the relationship.

Contributions made by someone who is not a party to the relationship must be attributed to one or both parties to the relationship.

The issue is often whether the contribution was intended to be a gift or a loan to be repaid.

In determining the weight given to a gift to one party the court may choose to:

  1. credit the recipient with the initial value or it’s value at the trial date; or
  2. If it has been mixed with other contributions over a long period, take it into account without giving it a particular value.

If the gift by one party’s relative is made to both parties, the court may treat it as:

  1. a contribution by the party related to the donor; or
  2. if it was clearly intended for both parties – an equal contribution.

A third party can make a non-financial contribution.

Gift or Loan?

Parents who give de facto or married partners financial support during the relationship/marriage can find themselves dragged into family law proceedings when there is a dispute as to whether monies were a repayable loan or a gift.

Parents and their children seldom consider it necessary to formalise the terms of the loan as there is an ‘understanding’ that the money will be repaid and a breakdown of the relationship is not considered. The dispute often arises because an agreement between one party and their parents regarding the advancement of monies was not documented. 

Even if the ‘loan’ is documented and secured by a mortgage, it can still be challenged in the Supreme Court of NSW or the Federal Circuit and Family Court of Australia.

If the Federal Circuit and Family Court of Australia considers the money to be a loan, it considers:-

  1. whether the loan is repayable; and
  2. if it is, the likelihood of it being repaid.

If the Federal Circuit and Family Court of Australia determines that the monies were a gift to the parties, the money is likely to be treated as a contribution made on behalf of the party whose parents gifted the money, which may increase that party’s share of the asset pool.

Special skills vs non-financial contributions

Partners to a relationship often adopt “traditional” roles: one party works and brings in income and one party stays at home to raise and care for children and to manage the household. 

If the spouse working outside of the home earns more income or accumulates more assets than “average”, how does the court weigh and consider these different types of contributions?

Previously, in high wealth cases it could be argued that, as the entrepreneurial ability and “special skills” or or “special contributions” of one spouse were largely responsible for the accumulation of assets, they should receive a higher percentage of the asset pool.

However, this line of reasoning undervalued the contributions made by the other spouse with respect to homemaking and parenting and the Federal Circuit and Family Court of Australia has rejected it.

In 2015 the Family Court determined that the Family Law Act 1975 does not impose any principle making direct financial contributions any more special or important than other contributions.

What is Severing a Joint Tenancy?

How your property is owned can impact property settlement negotiations. If you and your ex-partner own property together, a title search will reveal whether you hold the property as joint tenants or tenants in common. 

Joint tenants vs tenants in common – what’s the difference?

If you and your ex-partner hold your property as:

  1. joint tenants, there is a right of survivorship. On the death of a joint tenant, their interest in the property automatically transfers to the remaining joint tenant;
  2. tenants in common, ownership of the deceased’s share of the property passes as per their Will or, if there is no Will, in accordance with the intestacy rules in the Succession Act 2006 (NSW).

Should I sever a joint tenancy during family law proceedings?

The main reason for severing a joint tenancy after separation is to protect your interest in the property if you pass away before your property settlement is finalised, as you can include your interest in your Will. 

What is a Transfer Severing Joint Tenancy?

If you own property with your ex-partner as a joint tenant, you should consider lodging a Transfer Severing Joint Tenancy as a precaution in the event of your death before your family law property settlement is finalised.

To sever a joint tenancy, your solicitor registers with NSW Land Registry Services via an ELNO a Transfer Severing Joint Tenancy. NSW Land Registry Services advises the other party that you have done this and they have 30 days to object.

If they do not object, each party will then hold a 50% share in the property as a tenant in common. You can then direct in your Will who receives your share of the property.

Whether joint owners hold 50% of the property as tenants in common or as joint tenants has no impact on their entitlement under the Family Law Act 1975

Superannuation Splitting

Property settlements under the Family Law Act 1975 can divide superannuation along with other assets.

The Family Law Act 1975 treats superannuation as if it were property, although it differs from other types of property as it is held in trust.

One ex-partner can split an amount from their superannuation fund into a superannuation fund nominated by the other ex-partner.

A superannuation interest may be split by a financial agreement or by a court order. It can be split as a dollar amount (called a base amount) or as a percentage of total entitlements.  A base amount payment guarantees the amount that a non-member spouse receives, while the amount of a percentage split will vary depending on the interest’s value at the relevant time.

Splitting superannuation does not convert it into a cash asset. The non-member spouse can not access the superannuation they receive until retirement or on hardship grounds.

Once the superannuation interest has been split, the non-member spouse can generally opt to:

  1. create a new interest in the same fund; or
  2. transfer or rollover the interest into another fund; or
  3. if they have met the conditions of release under superannuation laws – receive the amount as a lump-sum payment.

The court applies the five step process to superannuation splits. In a long relationship, where neither party had much superannuation at the start of the relationship, a superannuation split often equalises their superannuation interests.

How can I get information about my or my ex’s superannuation? 

You can apply to the trustee of the superannuation fund for information about a member ‘s superannuation interest if you:

  1. are eligible person’ (e.g. the member or their spouse); and
  2. have a genuine reason for needing the information.

If you are a party to court proceedings you may send a request to the ATO via the Commonwealth Courts Portal.

Accumulation Funds

The value of an accumulation fund is usually determined by a recent member statement or by sending the fund a completed Superannuation Information Request form (and the fund’s application fee).

Defined Benefit funds

To value a defined benefit fund, a Superannuation Information Request Form must be sent to the fund. Defined benefit funds are difficult to precisely value. The information provided by the fund may have to be valued by an actuary.

Self Managed Super funds

Self-managed super funds (SMSFs) are private superannuation trust funds managed by the parties. A SMSF is established under a trust structure with each SMSF member also being a trustee. The sole purpose of the trust is to provide its members with retirement benefits. An expert is generally required to value a SMSF.

There may be tax implications dependent on the nature of the assets to be split. 

Splitting a SMSF usually requires the fund to be restructured to comply with superannuation regulations and laws.

How do I formalise a super splitting agreement?

A super splitting agreement can be formalised by parties:

  1. entering into a Financial Agreement; or
  2. applying to the Federal Circuit and Family Court of Australia for Consent Orders.

An Application for Consent Orders with proposed Consent Orders is filed electronically in the Federal Circuit and Family Court of Australia. Court approved Orders are legally binding and enforceable on the parties and on the superannuation fund trustee.

A Financial Agreement (FA) is not filed with the Federal Circuit and Family Court of Australia, but each party must receive independent legal advice for it to be binding and enforceable. 

Before finalising a FA or filing proposed consent orders you must provide the superannuation fund Trustee with ‘procedural fairness’ by giving them with the member’s number and date of birth, and the orders sought.

The Trustee has 28 days to object to the proposed orders. A letter from the Trustee agreeing to the proposed orders is filed with an Application for Consent Orders.

A party then serves the Orders or signed FA on the Trustee of the super fund. The Trustee arranges for a payment from the member spouse’s interest to a super fund nominated by the non-member spouse. 

Is there a time limit?

The time limit is the same as a Family Law property settlement:- if you were:

  1. married – within 12 months after divorce; or
  2. in a de facto relationship – within 2 years after you separated.

You may seek the court’s leave (permission) to apply for a superannuation splitting order after the limitation period if you can establish hardship. However, there is no guarantee that leave will be granted.

How is an inheritance treated?

An inheritance is not a protected asset. The Federal Circuit and Family Court of Australia exercises a wide discretion about how an inheritance is treated.

Will an inheritance be included in the property pool?

The mere expectation of a future inheritance is not sufficient to include it in the property pool. An inheritance will be considered only where it has already been received or where there is persuasive evidence that a party is likely to receive an inheritance in the very near future.

What will the court consider?

How an inheritance is dealt with depends on the circumstances. The Federal Circuit and Family Court of Australia will consider what weight to place on an inheritance.

If an inheritance is received about the time the parties started co-habiting, it is generally considered an initial contribution by the person who received it. Its impact on the recipient’s entitlements depends on its size and other contributions made.

Treatment of an inheritance received during the relationship depends on the deceased’s intentions regarding the inheritance and how it was applied

In certain circumstances an inheritance may be included in the asset pool to give the non-recipient a just settlement.

An inheritance received after separation is not usually treated as part of the asset pool for distribution between the parties.

Property Settlement and Business Ownership

Do business assets need to be divided if we separate?

Whether business assets need to be divided will depend on whether you can fund your ex-partner’s entitlement using other assets.

Can I lose my business in a separation?

Yes. Selling the business or its assets may be necessary to pay the other person their entitlement if there are insufficient funds to fulfil the terms of the financial agreement or court Orders

Can I sell my business before we separate?

You can sell your business at any time. However, that will not disentitle your ex-partner to any of the proceeds of the sale. 

Does my business have to be valued?

A party to a property settlement may perceive that their business has no value and think that it should be excluded from the asset pool.

However, unless your business is very small and simple, its value must be determined and it must be included in the asset pool.

How do I get a business valuation?

An impartial forensic accountant with specialised business valuation knowledge should value the business.

The valuer should be jointly instructed as to factors to be taken into account and the preparation of the report.

Can I choose my own valuer?

It can save time, money and further dispute if the parties jointly appoint an agreed valuer.

If you cannot agree on a joint valuer, you can instruct your own valuer. However, the Federal Circuit and Family Court of Australia will only generally allow separate valuers if there is a good reason.

How much does a business valuation report cost?

For a small business to be used in court – about $10,000 to $20,000.

For a preliminary report (which cannot be used in the Federal Circuit and Family Court of Australia but may assist with negotiations) – possibly under $10,000.

Who pays for a business valuation report?

Parties agreeing to appoint a joint valuer usually equally share the cost of the report.

A party instructing their own valuer pays for the report.

What are add-backs?

Traditionally, when determining what assets make up the parties’ property pool, the court has considered:

  1. the parties’ current assets and liabilities; and
  2. “add backs” or “notional assets” or “notional property”.

The general rule is that parties:

  1. should share financial losses they incur during co-habitation; and
  2. are entitled to incur reasonable living expenses after separating.

However, where after separation one party has:

  1. acted recklessly or negligently resulting in the loss of or reduction in the value of assets of the relationship; or
  2. distributed joint monies or assets to themselves to the detriment of the other party

the Federal Circuit and Family Court of Australia may decide to add back the money or value of the assets to the asset pool.

Reluctance in granting add backs

The court is increasingly reluctant to add back the value of treat dissipated funds lost assets to the pool and is increasingly likely to instead award to the other party a higher percentage of the pool.

What if one partner has lost or wasted money?

A loss must be significant in relation to the size of the asset pool before the Federal Circuit and Family Court of Australia  will make any adjustment.

One party’s waste of relationship assets may be found to be merely a recreational activity without extreme loss or diminution in the pool of property for distribution. Such behaviour must significantly reduce the value of the parties’ assets and financial resources.

How about negative contributions?

The Federal Circuit and Family Court of Australia has generally rejected concept of negative contributions with one possible exception being if one party’s negative behaviour creates a greater burden for the other party.

What are future needs?

The Federal Circuit and Family Court of Australia determines what (if any) further adjustment should be made based on your “future needs”. The Federal Circuit and Family Court of Australia looks to the future and decides whether to make an adjustment based on relevant matters in section 75(2) of the Family Law Act 1975

Relevant to future needs factors include:

  1. Parties’ age and state of health;
  2. Care and control of children of the relationship under 18 years of age; and
  3. Earning capacity.

What does "Just and Equitable" mean?

The court’s “overriding requirement” is to determine whether it is just and equitable to make AN Order at all and, IF one is made, what that Order should be. The court must alter the parties’ property rights only if justice requires it to, and only so far as the justice of the matter demands.

What is a Financial Agreement?

Also known as a cohabitation agreement, pre-nuptial agreement, post-nuptial agreement, divorce agreement or separation agreement, a Financial Agreement (FA) is is a way to contract out of the property rules of the Family Law Act 1975 and:

  1. if made before or during a relationship – a private contract to safeguard your financial interests in case your relationship breaks down; or
  2. if made after the breakdown of a de-facto relationship or marriage – a document governing your property interests.

If entered into before or during a relationship, a FA specifies how parties will divide their asset pool if their marriage or de-facto relationship breaks down. Parties can amicably separate and avoid going to court. 

What can a FA deal with?

Property, financial resources, and spousal maintenance.

When can parties enter into a FA?

A FA can be entered into before the start of a relationship, during a relationship; or after separation or divorce.

Is a FA binding on the Court?

A FA is binding if it has been correctly drafted and executed. Each party’s solicitor must sign a certificate confirming that they gave their client independent legal advice. If a FA does not meet certain requirements, it may be set aside or be declared void.

When is a FA binding?

A FA is binding only if it complies with the requirements of the Family Law Act 1975 (Cth). The Federal Circuit and Family Court of Australia can void or set aside an agreement that fails to meet the required conditions.

When can a FA be overturned, terminated or set aside?

A FA can be overturned by the parties or through a Federal Circuit and Family Court of Australia order. An existing FA can only be updated by the parties creating a new FA that explicitly overturns the previous FA.

Alternatively, the FA can be terminated by a termination agreement, which is only binding and enforceable if both parties sign the agreement after each receives independent legal advice about the impact of terminating the agreement on their rights.

Sections 90K (in the case of a marriage) and 90UM (in the case of a de-facto relationship) of the Family Law Act 1975 set out the grounds on which Federal Circuit and Family Court of Australia can set aside a FA.

What is a de facto relationship?

A de facto relationship is a relationship in which a couple (same sex or opposite sex) lives together on a genuine domestic basis.

Generally, a relationship is considered de facto after two years. However, if there are children or if one partner has made substantial contributions to joint property, the circumstances of the relationship are taken into consideration.

Factors the court considers include:-

  1. the degree of financial dependence between the partners;
  2. ownership, use and acquisition of the parties’ property;
  3. whether the parties had a sexual relationship;
  4. whether there are children of the relationship;
  5. the length of the relationship;
  6. the extent and nature of shared residence;
  7. whether the relationship is registered in an Australian state or territory;
  8. the degree of mutual commitment toward a shared life; and
  9. public aspects of the relationship.

A de facto relationship can exist even if one of the de facto partners is married to or in a de facto relationship with someone else.

Registering a de facto relationship

A de facto relationship may be registered with the NSW Registry of Births, Deaths and Marriages. The certificate issued can be used as proof of the existence and length of the de facto relationship and may create rights for property division, even if the parties have not lived together for two years.

What is Spousal maintenance?

Spousal maintenance is an agreement in a family law property settlement that one ex-spouse or ex-de facto partner will provide the other with continuing financial support after the breakdown of their relationship.

Generally, spousal maintenance is payable where:

  1. One party needs financial support; and
  2. the other party has the capacity to provide that support; and
  3. the Federal Circuit and Family Court determines that providing the support is appropriate.

Spousal maintenance can be paid:

  1. by periodic monthly monetary payments; or
  2. as a lump sum cash payment as part of a final property settlement.

An application is made by filing an Initiating Application and supporting evidence.

The time limits to file an application are the same as for a family law property settlement (marriage – within 12 months after divorce; de facto relationship – within two years after separation).

After the expiry of the time limit, you must seek the court’s leave (permission) to file an application by filing a preliminary application demonstrating hardship.

The court applies a threshold test of need versus ability to pay. One party is liable to maintain the other to the extent that they reasonably can only if the other is unable to support themselves adequately. 

Payments can be for an indefinite period or for a specified period.

You can defend a spousal maintenance application by filing a Response to an Initiating Application and supporting evidence.

Tax and property settlements

An important aspect of family law property settlements is the tax and duty consequences of parties retaining or disposing of assets.

Capital gains tax

Capital gains tax (CGT) is payable on the profit from the sale, transfer or disposal of an asset to another person or entity (Income Tax Assessment Act 1997). It applies to all assets with some exceptions.

Selling, transferring or disposing of you and your former spouse or de-facto partner’s family home is an exception. It will not attract CGT for the period during which it was your main residence.

Is CGT payable on profit from the sale of investment properties?

Yes. If the sale is part of a family law property settlement, negotiations should take into account the payment of CGT.

What is CGT rollover relief?

Where a CGT-liable asset is transferred between parties consequent to the breakdown of a relationship, then the Income Tax Assessment Act 1997 (section 126-5) provides “rollover relief” on the transfer. CGT is disregarded until the party receiving the asset sells, transfers or otherwise disposes of it. CGT is payable when the investment property is sold. The cost base or reduced cost base is that of the transferor partner on the transfer to the transferee partner.

Usually, rollover relief applies if:

  • the asset is transferred between parties to a marriage or a de facto relationship or from a company or a trust to one of the parties; and
  • the transfer is made in accordance with a court order, an arbitration award, or a financial agreement under the Family Law Act 1975.

Will CGT be included in the property pool?

The case of Rosati and Rosati sets out the circumstances in which CGT should be taken into account in valuing an asset in a family law property settlement.

In determining whether to take future CGT liabilities or losses into account, circumstances the court considers include:

  1. how the asset was acquired;
  2. the intentions of the parties at that time; and
  3. whether the asset sale is inevitable or part of a court order.

Transfer duty (a.k.a. stamp duty)

Transfer duty (also known as stamp duty) is a government tax that applies to certain transactions including the transfer of property ownership.

Is stamp duty payable on property settlement?

Generally, when one party transfers ownership of their interest in real property to their former spouse or de facto partner or to a child of the relationship pursuant to a court order or a financial agreement under the Family Law Act 1975, the party receiving the property is exempted from paying stamp duty (Duties Act 1997 (NSW)).

Income tax – deemed dividends

If a party to a family law property settlement receives an asset as a shareholder from a private company, they may be treated as having received a dividend and liable to pay tax on the dividend.

Goods and services tax (GST)

When a company owned by one party transfers a car to the other party, GST is not generally payable on the transfer. But if on the purchase of the car the company claimed the GST as a credit, it may have to pay GST on the transfer.

Bankruptcy

What is bankruptcy?

Bankruptcy occurs when a person is unable to pay their debts as and when they fall due.  A person can be declared bankrupt if:

  1. Someone to whom they owe money makes a court application; or
  2. they owe money and file a debtor’s petition.

What is the effect of bankruptcy?

When someone is declared bankrupt, they lose control and possession of assets other than excluded asset types. Their assets go into the control of (vest with) the trustee in bankruptcy.

What if my ex-spouse is declared bankrupt?

Bankruptcy does not prevent a non-bankrupt spouse from pursuing a property settlement. The Family Law Act 1975 (Cth) protects the non-bankrupt spouse’s interests in matrimonial property. The non-bankrupt spouse can also share in the bankrupt spouse’s vested assets.

The bankrupt party requires the court’s permission to make submissions to the court regarding property vested in the trustee in bankruptcy.

What are the clawback powers?

If a person who believes they are about to go bankrupt tries by transferring their property to their spouse to prevent the trustee in bankruptcy having a claim on the property, the trustee in bankruptcy can claw back into the bankrupt estate property transferred within 6 months before bankruptcy. 

Sole Occupancy Orders

Unless a sole occupancy court order is in place, separated parties are entitled to live in a jointly owned family home pending finalisation of their property and parenting arrangements. However, if living together becomes impossible, one party may seek an order for sole occupancy.

A sole occupancy court order stipulates that the other party must vacate the property within a short period. The court makes these orders only in exceptional situations.

Property Settlements and Cryptocurrency

Cryptocurrency in property settlements

Each party’s obligation to fully and frankly disclose their financial circumstances to the other is not always observed.  If one party holds but does not disclose significant assets in cryptocurrencies, it is difficult to prove its existence.

There is currently no efficient way to establish the existence of a cryptocurrency asset if the owner has taken even rudimentary measures to cover their tracks.

It may be difficult to uncover possession of cryptocurrency. The funds used to purchase the currency must be forensically traced, with high accounting and legal costs.

What is cryptocurrency?

Cryptocurrency is a virtual or digital currency that is protected by cryptography, making it less vulnerable to counterfeiting. Most cryptocurrencies are decentralised networks based on blockchain technology, enforced by a widespread computer network. Cryptocurrency is a non-government issued currency, effectively making it immune to government interference or manipulation. 

Valuing cryptocurrency for a family law property settlement

Cryptocurrency has an exchange rate and can be converted into dollars. The value of cryptocurrency fluctuates, making valuing it difficult for a property settlement.

To provide a greater degree of certainty, it may be preferable for crypto assets to be converted into cash and contributed to the asset pool in a more stable form. But this will not always be desirable or appropriate. The volatility of the value of cryptocurrency may need to be taken into account in considering the asset division.

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Parenting

Consent Orders vs. Parenting Plans: What’s the difference?

Parents wanting to formalise their care arrangements for children after separation can choose to either:

  1. enter into a parenting plan or
  2. apply to the court for consent orders.

What is a parenting plan?

It is a written and signed voluntary agreement between parents under the Family Law Act 1975 dealing with aspects of the care, welfare and development of a child.

Parenting plans allow parents to avoid entering the court system while still maintaining control over their parenting arrangement.

A parenting plan must be between two parents, but can include other persons.

Are parenting plans legally binding?

No. If one party does not uphold their side of the agreement, the complying parent has no immediate legal recourse.

If court proceedings are later initiated, the court must consider but is not bound by the terms of a parenting plan if it does not consider those terms to be in the child’s best interests.

Should I enter into a parenting plan?

Separated parents should consider entering into a parenting plan if they can freely communicate about parenting issues and want structure in their co-parenting arrangement.

Parenting plans can be changed by both parents agreeing to do so in writing.

What is a Consent Order?

An alternate option to formalising your parenting arrangement is to enter into Consent Orders.

The Federal Circuit and Family Court of Australia makes consent Orders. Parties can file an Application for Consent Orders with the court.  If a Registrar considers the proposed orders to be in the child’s best interests, they will ‘seal’ them and they will become legally enforceable Court Orders.

Consent Orders may be preferable where there is a possibility that a party may stray from the agreement.

If a court finds a parent has contravened an order without reasonable excuse, it may impose penalties ranging from “make-up” time to imprisonment.

To apply for consent orders, file electronically with the Federal Circuit and Family Court of Australia with the filing fee:-

  1. Proposed Consent Orders;
  2. Application for Consent Orders; and
  3. Notice of Child Abuse, Family Violence or Risk.

 

Interaction between ADVO s and Parenting Orders

How does an Apprehended Domestic Violence Order (ADVO) impact on Family Law parenting orders?

Inconsistency between orders

Parenting orders are made in the Federal Circuit and Family Court of Australia, which has federal jurisdiction. In New South Wales, ADVOs are made by the Local Court, which has state jurisdiction. As Commonwealth court orders override State court orders, parenting orders override any inconsistent obligations of an ADVO.

What if there are no parenting orders?

When the parties to an ADVO have children and the ADVO places a restriction on contact, the ADVO usually includes a condition that:
  1. allows for communication between the parents through a lawyer regarding parenting matters; and
  2. allows the parents to attempt to reach agreement on parenting arrangements by attending counselling, mediation or conciliation. If the parents reach a written agreement regarding parenting arrangements, contact between them pursuant to that agreement does not breach the ADVO.
Parenting plans are not court orders so are not legally enforceable and do not override an ADVO. If:
  1. a parenting plan is in place; and
  2. an ADVO allows contact between parties as agreed in writing concerning time spent with the children
then if the protected person revokes their agreement to the parenting plan, any contact between the parties thereafter will be a breach of the ADVO.

What if there is an ADVO when family law proceedings are commenced?

Federal Circuit and Family Court Orders override ADVOs. The Family Law Act 1975 requires the court to consider allegations about family violence. The penalties for breaching an ADVO are severe including imprisonment. If you are unsure about your obligations under an ADVO or court orders, you should seek legal advice.

What is Relocation?

In this context, relocation refers to you moving with the children to another town, state or country.

If you are the children’s primary carer and you want to move, you should first try to reach agreement with the other parent about the time the children spend with them.

If you cannot reach agreement, you should attend family dispute resolution. Any agreement reached should be formalised by signing a parenting plan, or by applying to the Federal Circuit and Family Court for consent orders.

If you cannot agree then the court may intervene. A relocation order sets out the conditions of relocation.

If moving is going to limit the time the children spend with the other parent, the court may make orders stopping you from moving.

If you move without a court order or the other parent’s consent, the court may order that the children be returned until final orders are made.

If you break a court order not to move, the other parent can ask the court to order that the children are located and recovered to their care.

You must persuade the court that relocation would be in the children ‘s best interests and show the court how the other parent might still have a relationship with the children.

What are location and recovery Orders?

When you are prevented from spending time with your child because the other parent has taken them and not disclosed their whereabouts, you can file a recovery order and/or a location order in the Federal Circuit and Family Court.

What is a Commonwealth Information Order?

Commonwealth Information Orders require the Secretary of a government department or authority to give the court information about a child’s location, or to disclose the other parent’s whereabouts.

What are Publication Orders?

The court can also make publication orders, which enable the media to report limited details and publish photos of missing children and the person they are thought to be with. 

How do I apply for a Recovery or Location Order?

An applicant for a recovery or location order must have:

  1. existing parenting orders;
  2. proceedings on foot in the Federal Circuit and Family Court; or
  3. filed an application for parenting orders.

If an applicant only has a parenting plan, they must also apply for parenting orders.

What if there is family violence?

Where:-

  1. family violence has been alleged, or
  2. there is a risk of family violence, or
  3. there is a current ADVO

and the applicant is

  1. alleged to have committed family violence; or
  2. is the respondent to an ADVO where the other parent and/or children are an affected family member or a protected person

the court may, instead of giving the applicant information divulged to under a location order, give it to persons such as the applicant’s lawyer, court officials, the process server, or a police officer.

If the applicant is unrepresented, the court would either:-

  1. provide the information to a marshal who can arrange for service to occur, or
  2. appoint an ICL to contact the other party.

What is a recovery order?

The court can also make a recovery order which authorises or directs another person (usually the Australian Federal Police [AFP]) to find, recover and deliver the child.

If the AFP lacks the resources to retrieve the child, they may ask the state police to become involved.

Who will execute the recovery order?

The AFP will normally execute a recovery order only if the applicant is with them at or near the place from which the child is to be recovered. If the child was taken interstate, the applicant will have to travel interstate at their own expense.

If a parent removes a child from the Commonwealth of Australia without the other parent’s consent or the court’s authorisation, then the Hague Convention on the Civil Aspects of International Child Abduction (the Hague Convention) may apply. The Hague Convention is an international treaty providing for the return of children from a member country to which they have been taken to the country of their origin. These applications are dealt with by the Attorney-General’s Department.

Do I have a right to see my grand-children?

Grandparents can apply to a court under the Family Law Act 1975 for orders that their grandchildren live with or spend time with them.

It is important for children to have a relationship with their grandparents, but grandparents do not have an automatic right to spend time with their grandchildren. It depends on what is in the best interests of the children.

A grandparent can ask separated parents to include them in a parenting plan or consent orders. If they and the parents cannot agree, they can apply to the Federal Circuit and Family Court for parenting orders. 

Child Support

Binding child support agreements - Advantages and Disadvantages

When a separated couple has children, one parent is usually required to pay the other child support. The amount can be determined by either:-

  1. a specific calculation; or
  2. a detailed formal document to which both parties agree (a child support agreement). 

How does child support work?

There are alternative child support options:

  1. pay child support as assessed by Services Australia; or
  2. Parents negotiate an informal agreement as to what their arrangements are; or
  3. parents enter into a limited child support agreement:-
    1. which is in place for up to three years; and
    2. at least the amount of child support assessed by Services Australia must be paid; or
  4. obtain child support departure orders from the court that someone should be paying more or less than the assessed amount provided:-
    1. a child support assessment is in place; and
    2. the applicant satisfies certain criteria

What are advantages of a binding child support agreement?

Having a binding child support agreement allows parents to make arrangements to suit their family circumstances.

Once the agreement is registered with Services Australia, it can be registered with and enforced by the Federal Circuit and Family Court

What are the disadvantages of a binding child support agreement?

An agreement is in place until there is a terminating event (e.g. a child turning 18 or finishing secondary school). It can be ended by the parents entering into a termination agreement.

If one parent refuses to enter into a termination agreement, the other parent must apply to the court for the agreement to be terminated. 

A child support agreement may be conditional in that it comes into effect when the property settlement is finalised.

Independent Legal Advice

For a child support agreement to be binding, each parent must get independent legal advice about the effect of the agreement on your rights and the advantages and disadvantages of entering into the agreement at the time.

What is a Child Maintenance Order?

When parents separate, child support is generally assessed and collected through the Child Support Scheme, which is part of the Commonwealth Department of Social Services.

A parent is generally obliged to financially maintain their child until the child turns 18. A child over 18 is not covered by the Child Support Assessment Act 1989. A parent seeking financial support for a child over 18 can apply to the Federal Circuit and Family Court for a child maintenance order where a child:

  1. with a significant physical or mental disability needs ongoing care; and/or
  2. needs financial support to complete their education.

What are child maintenance orders?

The court’s role in determining financial support payable for children is limited.

The Federal Circuit and Family Court can make an order requiring a parent or step-parent to pay child maintenance. 

A parent, grandparent, the child, or anyone involved with the child’s care, welfare or development can apply.

How do I apply?

Where parents agree as to the amount of child maintenance payable, they can apply together to the Federal Circuit and Family Court for an order.

If the parents cannot agree, one files an application and evidence in support in the Federal Circuit and Family Court and has it served on the other parent . The other parent then files and has served their response and evidence.

Each parent must disclose all information relevant to assessing their financial capacity and the merit of their application. 

How much child maintenance is payable?

The court has discretion as to how much is payable and whether by instalments or lump-sum payments.

To determine the amount payable, the court considers each parent’s income-earning capacity and financial position and the child’s ability to seek employment and their necessary (but not discretionary) expenses.

For applications relating to a child’s tertiary education, the court considers:

  1. the likelihood of the the child continuing and succeeding in their studies; and
  2. hardship the child would suffer if they had to abandon their studies for financial reasons.

The amount a parent is required to pay depends on their capacity to contribute.  

How are payments collected?

Once child maintenance orders have been made, the receiving parent must notify Child Support of the order. The receiving parent can choose whether to receive payments directly from the other parent, or have Child Support collect them on their behalf.

When does the obligation end?

An end date is often specified in the court order.

Where to now?

If the difficulties in your relationship have become insurmountable, contact us for free telephone legal advice and representation in your Family Law matter.

We can also assist with legal issues arising after settlement of your Family Law matter, including:

  1. all aspects of property sales and transfers; and
  2. drafting a new Will.