Tips to Protect Assets in Family Law

Have you just entered into a new relationship where you are in a position of financial security and have more assets than your new spouse?

Asset protection is a critical consideration for individuals entering a new relationship or particularly in the context of separation or divorce.  Protecting assets in a family law matter requires careful planning, timely action, and adherence to legal obligations. Engaging qualified legal and financial professionals is recommended to ensure compliance with the law and to achieve a fair and equitable outcome.

Some practical tips and legal strategies to assist in safeguarding assets are as follows:-

1. Maintain Accurate and Up-to-Date Records. Comprehensive documentation of all assets, liabilities, income, and financial transactions is essential. This includes:

– Bank statements
– Property titles
– Superannuation statements
– Business records
– Loan agreements

Accurate records facilitate transparency and can assist in resolving disputes regarding asset ownership and value.

2. Consider Binding Financial Agreements (BFA). A BFA, commonly known as a prenuptial or postnuptial agreement, can be entered into before, during, or after a relationship. A valid BFA can:

– Specify how assets and liabilities will be divided
– Provide certainty and reduce the risk of litigation
– Protect pre-existing assets or inheritances

It is essential that both parties obtain independent legal advice for a BFA to be enforceable.

3. Avoid Disposing of Assets Without Legal Advice. Transferring, selling, or otherwise disposing of assets during a family law dispute may be scrutinised by the Court. Such actions can be set aside if deemed to be undertaken with the intention of defeating a claim. Always seek legal advice before making significant changes to asset ownership.

4. Monitor Joint Accounts and Credit Facilities. Joint bank accounts and credit cards can be vulnerable to misuse. Consider:

– Placing limits on withdrawals
– Requiring dual signatures for transactions
– Notifying financial institutions of the separation

Prompt action can prevent unauthorised depletion of funds.

5. Protect Business Interests. If one or both parties have an interest in a business, it is important to:

– Review company constitutions and shareholder agreements
– Ensure proper documentation of ownership and directorship
– Consider restructuring or ring-fencing business assets where appropriate

Professional advice from accountants and lawyers is recommended to minimise disruption to business operations.

6. Seek Interim Orders Where Necessary. The Federal Circuit and Family Court of Australia have the power to make interim orders to preserve assets pending final determination. These may include:

– Injunctions restraining the disposal of property
– Orders for the preservation of specific assets
– Orders for the disclosure of financial information

Prompt application for interim relief can be critical in urgent situations.

7. Full and Frank Disclosure. Both parties are required to provide full and frank disclosure of their financial circumstances. Failure to do so can result in adverse findings, including the setting aside of property settlements. Proactive disclosure demonstrates good faith and can expedite resolution.

8. Consider Superannuation Splitting. Superannuation is treated as property under the Family Law Act. Parties may agree to split superannuation interests, or the Court may make orders to this effect. Understanding the value and structure of superannuation entitlements is essential for effective asset protection.

For more information or to speak with one of our team, please contact us on 8525 2700, or click here to request an appointment with one of our experenced Family Law team

Article by Nikita Ward
Image created in Canva