Carving up the Asset pool
When parties separate it is usual for a property adjustment to be made between the parties although it need not always be so: Stanford & Stanford.
Family lawyers are consulted to assist. It is the lawyer’s role to identify the pool and provide advice. The Family Law Act 1975 (the Act) s 79(4) and Stanford stipulate that adjustments made to the property pool are to be just and equitable.
Parties can have any number of connections to property and companies. A party may be a shareholder, director, beneficiary, member, an appointor, trustee, a guardian or a spouse without an identifiable other interest. They may be debtors to legal firms or other lenders. They may be creditors with a right to recover funds. There may also be contingent interests that have crystallised but not vested. There can still be life tenancies in real property.
While companies will be discussed later in this presentation, there can be different classes of shares and different shareholder rights just as there can be different categories of beneficiaries with different beneficiary rights. The property may also be held in structures.
The structures available to parties usually include a combination of companies, trusts, partnerships, unit trusts, interests in superannuation, intergenerational superannuation or entitlements under a will.
An example of a structure chart is set out below.
Property is defined in the Act in s4.
(a) in relation to the parties to a marriage or either of them-means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or
(b) in relation to the parties to a de facto relationship or either of them-means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
Again, it is of paramount importance that enquiry identifies and divides the property of the parties, held individually or jointly, to produce a just and equitable result.
What might be in the property pool?
- Financial Resources
- Family Loans/Debts
- Resulting and Constructive Trusts
In many cases being a spouse has a sufficient connection to property to establish a claim. Stanford & Stanford reminds us that before any adjustments are considered or made, there has to be an assessment of what a party owns at law and what equitable interests are held. It is important to enquire as to the appropriateness of resulting adjustments.
  HCA 52.