Hi all,
A girlfriend of mine is in the process of divorce, and has been told, that although she came into the marriage with her PPOR which became the marital home, and 2 IPs, her estranged hubby is now entitled to a LARGE portion of that, as her assets have DEPRECIATED since they got together!!!! Mind you, the debts HE clocked up (gambling etc) kept appreciating, forcing her to mortgage ALL of these properties so as not to loose the roof over their heads. She had to sell off both IPs to cover his habit, and is now left with just the family home and car, plus a hefty debt still outstanding of 500K, and she has been told that the justice system will not allow him to walk away without any money????
Getting back to the depreciation thingy…..I am confused….a computer, or car depreciates in value, but a house????? What??…she came in with a house worth 500K and now is only entitled to 250K due to its drop in value???????? If this is so, maybe pre-nups are a definite MUST HAVE, but I don’t think so….as I believe they aren’t worth the paper they are written on.
Any thoughts?????
Jo
Hi Jo,
Sorry to hear about your friend.
I think this raises a wider issue about asset protection and leads to a realisation that sometimes the biggest threat comes internally rather than externally.
It’s certainly hard to reason why a property has fallen 50% in value when there has been a huge boom Australia-wide.
Perhaps the fixtures and fittings have been depreciated, but this sounds odd given that such costs on a private home would not be deductible!?!
As for the justice system… this is always a last resort. Would I’d do is recommend that both parties meet with a solicitor to draw up an agreement that HE assigns all his entitlements to assets etc. over to HER upon the termination of the marriage. Still, this is an issue that needs proper paid legal advice.
Re: pre-nups etc. This is an option, but a better idea, especially for investment assets, would have been to have them in a family trust where your friend was the Trustee.
This way she could distribute income to HIM without giving him any ownership rights.
Hindsight is a wonderful thing though.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Originally posted by SteveMcKnight:It’s certainly hard to reason why a property has fallen 50% in value when there has been a huge boom Australia-wide.
Perhaps the fixtures and fittings have been depreciated, but this sounds odd given that such costs on a private home would not be deductible!?!
Thanks for your input Steve,
I’m with you; I just cannot understand how the 50% depreciation of her assets (aside from some of the contents) could have occurred….it doesn’t seem right at all. Although, I will keep asking her about this, just to clear it up in my own mind…..it can’t be right!!!!
Nevertheless, I have recommended that she seek professional legal counsel as a matter of urgency, and not to rely on people’s opinions (myself included) or heresay. And by all means, settling disputes outside the courtroom is by far the greatest option, unfortunately it doesn’t always happen that way.
As for income protection, again I also agree that Family Trusts are far more valuable; but they too (so I am lead to believe) can be problematic in times of dispute.
Oh well, we live and learn, don’t we????
Jo
Perhaps she bought those of those city units?? Or bought very expensive property at the very top of the boom??
As you’ve said she should get legal advice, esp. with this kind of issue.
“gain I also agree that Family Trusts are far more valuable; but they too (so I am lead to believe) can be problematic in times of dispute.”
Not if they are set up properly.
Rgds.
Lucifer_auHas the equity dropped in value because she’s remortgaged to pay out his debts? So perhaps she came into the marriage with a $500K house and no mortgage, but due to his debts has a some point taken out a $250K mortgage leaving only $250K equity?
Hi Purplekiss,
I believe there is a hefty debt against the house; maybe this is what she meant!!!
Thanks, I never considered that possibility…derrrr!!! [rolleyesanim][rolleyesanim]
Jo
In a nutshell TOTAL net assets held in a marriage (super, assets in a trust, out of a trust, your name, her name, jointly held etc etc) after a reasonably long marriage are divided by 2 and that’s what would be yours in the split. Other things that can change this 50/50 split are
1) Children to the marriage and their ages.
2) Length of time out of the workforce (raising kids) and their ability to get back in
3) Health issues
4) A very short marriage
etc etc etc
Exclusions are things like recent inheritances, gifts etc they too will take at least 2 years to become the property of both of you.See a solicitor just to discuss the settlement if it did go to court and use that figure as a starting point.
You both can agree on anything as a property settlement literally anything. His solicitor/ friends/ family will advise against it but if you both agree the consent orders can be drawn up and validated by the courts. This also applies to child support. You can even do your own divorce for $250 (maybe more now) through the family law court if you want to. These are not myths because it’s exactly what I did.
PNA’s and FBA’s will only work if they are fair. For example the agreement could be that the assets bought into a marriage remain the assets of the individual. Anything acquired during the marriage goes 50/50.
Also agreements like PNA’s and FBA’s can be overturned if something changes to disadvantage the other person. For example one of you become extremely ill and spend all the money acquired during the marriage fighting this illness. Chances are the agreement will be overturned.
Oh, and just to add, even when you are divorced and things go wrong for your ex you have a duty of care to them as well (spousal maintenance)…………..
Originally posted by qwerty:Oh, and just to add, even when you are divorced and things go wrong for your ex you have a duty of care to them as well (spousal maintenance)…………..
PIGS A…!!!!![grrr][grrr][grrr]
I gave my ex husband 17 years of love, devotion, and in the end….some of MY money, and if anyone thinks I have a “duty of care” to him either in the form of spousal maintenance or otherwise, they are grossly MISTAKEN.[hmm][hmm][hmm]
Not a chance baby-cakes; I did my bit, played the loyal and dotting wife, and got no thanks for the priviledge, and no court in this world is going to make me lift a finger after the divorce papers have been stamped. If he dropped dead tomorrow….it would be TOO SOON, and I know for a fact, that the kids HE NEGLECTED would care equally as much.[lmao][lmao][lmao]Sorry qwerty, I am not angry with you. You just hit a nerve….
The divorce process is in the past for me (I re-married a wonderful man). This situation is currently that of my friend. She is seeking legal advice, and I trust that things will work out well for her.Thank you for your input…(I feel better now, thanks for asking…LOL)[blush2][blush2][blush2]
Jo
Hi Monopoly,
Tell me about it! When my solicitor told me that last bit I snapped!
No offence taken. Divorce can certainly be a pretty crappy time in ones life.
Glad to hear you’ve moved on and found someone great.
Hey qwerty,
Thanks…glad to see you didn’t take offense to my comment…it was by no means aimed AT you.
As for that “duty of care” I am not doubting your word; I just can’t bring myself to believe that any court of law could hold an ex-spouse responsible for another, especially when taking into consideration the circumstances which brought about the separation in the first place.
Oh well….I’ll cross that bridge IF I am ever forced to cross it, but I can tell you, I won’t do it willingly and/or without a fight!!! LOL
Cheers,
Jo
Here’s a plain English look at spousal maintenance. Interesting read. I had no idea it existed either until qwerty mentioned it.
http://www.liv.asn.au/public/rights/rights-Spousal.html
kay henry
Hi Monopoly,
I have’nt looked at Kay’s web link but divorce/separation gives a whole new definition to who ‘your real friends are’ considering a life partner ideally is one’s best friend as the basis of the love that it’s built on. I’ve got 2 case scenarios of 2 people I know and both scenarios suck. A very dear friend 10 years ago was living in a defacto relationship with his partner and she decided she wanted to leave and took their 2 children with her and she moved to Sydney (from Melbourne). He had access every 2 weeks, but as she took his car he had to ride a motor bike to and from Melbourne to see his 2 children every fortnight. It meant that after working full time in a factory, he was better off on the dole, as his financial commitments to his children meant he was working 50 hours a week and coming out at the end of the week with $20! Eventually the Dept of Human Services became involved as the 2 young infants were wandering outside her house naked while she was drunk off her head in the house and the 2 children weren’t seeing a cent of the father’s maintenance. Eventually he gained sole custody.
Second scenario. A dear friend of mine from work invited me to her wedding just over a year ago. You could not have met a more selfless, lovely human being. She phoned me one night to tell me that she discovered that her husband had been cheating on her with not 1 but ‘2’ women from work, not just prior to the weddding but after the marriage! She had been making all the mortgage repayments on the house they bought and he jumped ship. Now it appears he is entitled to a proportion of the value of the house if he wants to make a claim. Is life weird or what? I’ve also been told that a prenuptial can be contested, as it may be valid at the time of agreement, but down the track as things may change then the prenuptial may no longer reflect what was signed at the time (I’ve only been told this so don’t hold me to it). The law is ‘F*#$ED’! I don’t have an answer.
Regards,
Gatsby.Gatsby, I guess the changes of the No-Fault Divorce Law that came about in 1972 or 1975 or whenever it was, mean that the messiness of divorce – at least in a financial sense- isn’t judged by the courts (and let’s face it- there can be a lot of bad stuff that goes down- otherwise if it was all rosy, people would probably stay together). So I think the courts just have basic formulas to go on. It’s not like they are gonna change that formula based upon the bad behaviour of one of more of the parties (“he had an affair, so that’s minus 10k, but she neglected the children, so that’s 10k off for her too”). I imagine divorce can be stressful enough without people having to air their dirty laundry to a judge, and let him decide who gets what, based upon his sense of morality. As we know, judges get it wrong too.
The law may seem freaky as it stands, but I’m not sure how else they could do it.
Mediation for marital breakups is now much more common, and in fact, I think it’s mandatory in the Family Court for couples to mediate now (with the exceptions of not having to mediate if there has been violence in the relationship). The agreements made by the individuals in the mediation are binding, but if they can’t make an agreement that they both can live with, then it moves to a more formal situation and is taken out of their hands.
kay henry
Kay,
Thanks for that link; had a quick glance; will go back and re-read it thoroughly later. However, I especially liked the last paragraph (I think) that stated that spousal maintenance orders could be submitted after a divorce, but (as I understood it) within 12 months of divorce, and I am ASSUMING after this time; they (the ex’s) have Buckley????
Gatsby,
WOW…2 very different stories, and both very sad. Separation and divorce is never pretty. I have heard so many…..as a registered Psychologist, I ran my own practice for many years, in which time…..I heard some pretty gruelling stories that would make your hair curl !!!!
Divorce is ugly, and unfortunately not too many people escape its wrath, whether it is through financial or emotional loss. The saddest part of all, is the effect it has on the little ones, who suffer the most.
Thanks for your thoughts; there have been some very interesting points raised.
Jo
“What’s mine is mine????”
Not if you don’t have the proper structure it seems. Making sure you have the right structure seems to be paramount these days! As Gatsby said: The law is ‘F*#$ED’!….
Rgds.
Lucifer_auHi Lucifer,
Holding your assets in trusts etc wont save your butt either.
……………unless, of course, your ex doesn’t know about it…………
[biggrin]
I have heard of a story where one guy converted most of his assets to cash went to the casino and converted it all to chips (over a period of time) placed a few bets and converted it all back to a number of casino cheques and later, after the divorce, cashed them in.His solicitor claimed he had a gambling problem and lost most of the couples assets!!!
[biggrin]If you have a trust with a corporate trustee, should according to my sources, make sure your assets aren’t in the firing line. Also having an outside charity as a beneficiary helps as well. As then the trust isn’t just benefiting you (or your family) but also outside 3rd partes. Judges are very releuctant to break these u.
Rgds.
Lucifer_auHmmmm,
Real Life.
Marital assets are assets of a husband and or wife no matter when they were accrued, no matter who contributed to them and no matter whatever entity they’re held in.
Marital assets are split upon a divorce.
You will be asked by your solicitor to disclose your TOTAL assets / liabilities. If one hides the fact that they have assets squirreled away in difficult to trace entities and the other party can prove the fact that you have an interest in them then the judge can come down hard on you.
For example, the judge might decide that the assets you did declare go 70/30, which in effect, take into account the other assets you chose to “forget” declaring!
Risky business but people do it and get away with it.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
