Even if you are separated, if you win the lottery or receive an inheritance you may find your ex-partner sharing your good fortune; seriously!
What’s more – leave matters too late and you may have no claim at all.
Imagine this, except it is a real case:
- Nearly two years after separation a husband won $5 million in a lottery.
- His wife had supported him financially and emotionally through a heroin addiction and while he studied, including improving his literacy skills. Her efforts helped him secure full-time employment.
- On separation the parties had lived together for 12 years, had one child and no property of any value. Thereafter the child lived with the husband for two years but otherwise lived with the wife without regular contact from the husband.
- He denied he had won the lottery (claiming his mother did). However, he had bought the ticket, filled out the claim form, drawn the cheque in his name and purchased assets in his name from the winnings. He also applied for a Gold Card credit card with a $20,000 per month credit limit.
- He arranged his financial affairs to reduce his child support liability to nil and gambled over $100,000.
The Court held the wife was entitled to $750,000 – that is, 15% of the winnings.
She was entitled to share in the husband’s very significant windfall despite the parties having separated and moved on with their lives. The wife had remarried, and the husband had entered into a new relationship and had a new child.
If their property settlement had been finalised first, the wife would have had no claim on the husband’s lazy $5 million lottery winnings.
In another example:
- The parties had a long relationship having lived together for 17 years. They had two children.
- At separation the property pool was valued at only $373,000.
- Three and half years later the husband inherited a property worth $715,000. He had lived with and cared for his brother who had had terminal bowel cancer.
- The wife argued she had contributed to the care of the husband’s brother. He was very fond of the family dog and she had agreed that rather than live with her and the children, the dog could live with him. The dog had required surgery which cost $6,000 to enable this to happen.
The Trial Judge excluded the inherited property from the property pool and instead treated it as a financial resource (which was not available for division between the parties).
The wife was not happy. She appealed.
The Full Court of the Family Court found the inherited property ought to have been included in the property pool available for division between the parties.
That meant the property division related to assets valued at more than $1 million rather than assets of $373,000 with the husband walking away with the inherited property worth $715,000.
The matter was remitted for rehearing to a judge of the Federal Circuit Court to hear further evidence. It was not even the end of the matter.
And then there is the issue of death.
If Court proceedings are on foot and then a party dies, the proceedings can continue. If a party dies before proceedings are commenced, the Court has no jurisdiction to hear a claim.
- A de facto wife (wife) commenced Court proceedings.
- Two months later her de facto husband (husband) died.
- His executor filed a response alleging the relationship had ended more than two years before the wife had issued proceedings and she was out of time to pursue a claim. The wife subsequently amended her claim seeking leave to commence proceeding out of time.
- Although the Trial Judge found the relationship ended at a time which meant the wife’s claim was out of time, leave was granted for her to nonetheless commence proceedings.
- The husband’s executor appealed saying the Trial Judge had no jurisdiction to entertain the wife’s amended claim.
- The Full Court agreed; when the husband died the wife’s only application was for property settlement proceedings and that claim was out of time. At that date there was no valid proceedings on foot because the necessary leave had not been given.
- The wife’s claim was dismissed.
The sombre lesson: if all the property is in your ex-partner’s name and he or she dies before matters are resolved, the deceased estate may obtain that property and not you.
Need we say more: if you have separated it may be best to finalise your property matters.
If property proceedings need to be issued in Court they must be commenced within:
- One year from divorce for a married couple; or
- Within two years from the date of separation for a de facto relationship.
Some married couples do not divorce for many years.
Bear in mind that the property to be divided between parties is assessed at the date of Trial (or, practically, at settlement) – not at the date of separation.
As the examples above show, a lot can change between separation and finalisation of property matters (ie lottery winnings, inheritances and death). Conversely, of course, assets can reduce in value for any number of reasons.
And even if those examples feel too random, until finalisation your ex-partner is sharing every dollar you earn.
The finalisation of property matters between separated couples must be documented in either:
- Consent Minutes of Order issued by the Family Court. The parties are able to attend to this option themselves (click here).; or
- A financial agreement compliant with the requirements of the Family Law Act 1975 (Cth).
Be aware that, unlike commercial agreements, the finalisation of property matters will not be binding if it is only recorded in an agreement signed and dated by the parties.
If you would like to have a chat, feel free to give us a call.
 Farmer & Bramley (2000) FLC 93-060
 Holland v Holland  FamCAFC 166
 Simonds (deceased) & Coyle  Fam CAFC 47