asset protection divorce

Hi all,

i'm not married or in a long time relationship. but i wanted to know is there anything you can do to protect your self from asset split when you get divorced? i'm under the basic assumption that once you get married/ are in a de facto relationship all assets (as in the equity made from that point) is considered 50% the spouses. apart from a prenup what can you do?

my friend atm has 160k in the bank (inheritance) but he doesn't want to invest it as he's worried his gf of 4 years will take it when they split. and considers it safer in the bank. i told him the 160k was safe as it was a inheritance. but going further is there anything you can do?

 

Bury it in the back yard and don't tell anybody about it. Then the only folks you have to worry about are the thieves.

Family court rulz apply if there are children.

Have a squiz at legal tips 16 - asset protection.

 

Yes, enter into a binding financial agreement prior to getting married or entering into a de facto relationship. (To be cautious, I'd say "before living together".)

It's not that simple, no, and you should read the thread on asset protection by Terry, recommended by Pistonbroke.

After 4 years, he's probably already in a de facto relationship (particularly if they're living together) and it's too late to start worrying about the impact of family law on his existing assets (unless she'll agree to enter into a binding financial agreement now, that deals retrospectively with the inheritance). Whether it's in the bank or invested makes no difference; no idea what misapprehension your friend is labouring under there.

Nowhere near as simple as this; they certainly apply plenty of times even when there aren't children.

 

There is a lot that can be done:
binding financial agreements
loan agreements with related party lenders
limiting contributions of the spouse
keeping finances separate
careful set up trusts
making sure you don't inherit
encourage parents etc to set up testamentary discretionary trusts
gifting
Not having sex
changing lovers every few months

 

An asset of the relationship - doesn't sound safe to me.

 

1. Will a TT provide any level of protection?
2. Plenty of couples have hallway sex - as they pass in the hallway they say '@#$/ off'
3. I second that - open relationship only adds to the uncertainty.

 

A testamentary trust can offer some degree of asset protection as the assets of the trust may not be classed as assets of the marriage/relationship. The assets of the TT come from the parents and will be held separately from the other assets of those inheriting. There are cases where the TT was not attacked, but also cases where it was attacked.

Probably would be a financial resource of a party to the marriage/relationship though.

 

am i safe in believing if i acquire the wealth before entering a de facto relationship that wealth would be safe at least? this is so unfair.

 

No you are not safe because the courts have power to readjust ownership of such property. s79 family law act for marriages, can't remember the section for de factos

 

It's really not; the courts take into account a whole bunch of factors, see s 79(4). It's not as simple as one day you own 100% and the next day your spouse owns 50%.

s 90SM. (90SM(4) is effectively the same as 79(4), just for de facto rather than de jure marriages.)

 

It meant nothing - it was purely for asset protection purposes, I swear!

 

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They can also get their mitts on your super too.

 

I think you meant to say "superannuation accounts are an asset that falls within the scope of the Family Law Act 1975".

 

Che sera sera Perp.

 

Just be aware that binding financial agreements are easily overturned from what I have researched and been told. My understanding is they are not risk proof like what you imagine they could or should be. It also requires complete disclosure of all assets upfront - so if your mate wants to keep part of his $160K private, the binding financial agreement will be void. Everything changes when kids are added to the equation.

Family law is very powerful and there is no guarantee when it comes to these matters. Your best bet is to keep your investment activities separate - whatever investment you own before, you and only you do anything to it.

The only way to truly completely protect your assets is to be single.
My understanding is that De facto happens after 6 months of shared life and I am not even sure it requires living together.
I am no lawyer obviously, this is just from research I have conducted.

Perhaps you can also consider not revealing too much too early to a new girlfriend if you have reasons to believe she might want to grab some and go ? Keeping some of these things to yourself might be the easiest way to protect some of what you have. Of course doesn't really apply to an IP as this is pretty visible.

 

Don't forget asset protection death. Another way your assets can be attacked, even assets held in trust, super, joint tenant assets and assets you have disposed of 3 years prior to dying could all be attacked by a spouse.

It is also possible to have multiple spouses under the succession act nsw. If you are happily married and have a boyfriend and a girlfriend on the side all 3 of them could be spouses at the same time. They can then share your estate.

 

There are different definitions with different legislation. The family law act definition is
at s4AA
http://www.austlii.edu.au/au/legis/cth/consol_act/fla1975114/s4aa.html

 

so if the average spouse (1) had wealth and was in a 5 year relationship and decided to end the relationship spouse (2) would be entitled to spouse (1) wealth? as in the capital gains over the 5 years but also the wealth acquired before starting the relationship? the capital gain while together i can understand. but it just seems wrong that there aloud to take wealth that spouse (1) has acquired prior to dating. whats the reasoning behind this? and i am talking about the average couple not some abusive relationship.

 

There could be any number of reasons why its equitable for pre-relationship wealth to be distributed to the other spouse.

In your scenario, what if spouse (2) is now the primary caregiver for their child? He or she isn't exactly going to be working a whole lot or advancing their career for some years compared to spouse (1).

The rules are flexible for a reason. Because there's lots of scenarios that most people don't even think of, and the courts need to adjust for.

 

I can think of lots of reasons.

Say a couple start dating, Spouse 1 had $200K in the bank, Spouse 2 had nothing. Spouse 2 says "no, we'd better not go on holiday overseas, we really need to save for a house deposit", Spouse 1 replies "I have $200K; what's mine is yours! We can go overseas and still buy a house". It wouldn't be fair if, over a period of time, the couple organised their finances such that they weren't saving - in reliance on having this joint $200K deposit - and then they split up, and Spouse 1 says "yay, I can still buy a house!" and Spouse 2 would be left with nothing.

Also, what thatbum said about raising children. It's frequently the case that one partner agrees to forgo workforce participation for a time, and the other partner finances it.

Basically, when you marry, you become a single financial unit, and you make decisions based upon your joint asset and income base. It's not reasonable, if the marriage breaks down, to then pretend that decisions were made based on individual assets and incomes, and to penalise - for example - the partner who performed the non-monetary roles.