5. Fact 1: Not All Marriages Last!
Divorce rate – ever increasing: varies but approx 50%
Higher for second relationships/marriages
Couples have different assets/liabilities at start
Couples have different financial profiles/risk profiles
Couples divide labour without a financial roadmap of
termination in mind
But may make pragmatic choices
7. Fact 2: Many Marriages Don’t Last Long
Median duration from marriage to divorce in 2014 was 12 years (in
2004 it was 12.3)
Median duration from marriage to separation in 2014 was 8.4 years (in
2004 it was 8.7)
Number of divorced Australians compared with 10 years ago
2.0 divorces per 1,000 estimated resident population in 2014.
Since 1980, divorce rates have steadily declined from 2.7 in 1980, to 2.0 in 2014
(backlog post FLA cleared)
In 2014, 47% of all divorces involved children under 18
8. SOME STATISTICS TO NOTE:
Age period highest divorce rate in:
Men – median age – 44.8 (in 2013) – Highest period = 25-29
years (18.2 per 1,000 married population) (2013 data)
Women – median age - 42.2 (in 2013) - Highest period =
under 25 (20.8 per 1,000 married population) (2013 data)
Divorce Rate + for second relationships
Difficult to find, 2007 ABS analysis of concluded that of all
marriages entered into in 2000-2002, 33% would end in
divorce.
Sydney Morning Herald reporting as 60% for second
marriages
12. Fact 4: Significant financial consequences
We don’t assess where relationships are going –
romantically, emotionally or financially
We don’t know the risks and exposure
Separation - unilateral decision – no control
Separation -biggest single threat to personal and
business wealth base
De facto relationships do not escape financial
consequences
13. Fact 4:Cont’d
Family Law Act: Broad definition of assets
There is no “mine” or “his”
Court decides how to regard legal ownership or financial
contribution
Superannuation = Property
Court has a broad discretion- sell, divide, ignoring
preferences
Court can order maintenance: lump sum: from assets
Other party can acquire an interest for no direct financial
effort
15. Fact 5: Not all loans are loans
Due to house prices, couples rely on parents
Parents loan/gift money
Loan may be considered a gift by the Family Court
In short, Court decides how to regard parents
contributions
Court can ignore written agreements between parents and
adult children
Can have a Financial Agreement between couple and third
parties ie parents
16. Fact 6: Court delays and legal costs
Litigation is expensive
Family Courts are unpopular
If Pauline Hanson is listened to, no Courts and if
Federal Govt believes Family Courts are a hot
potato
Then even less money for Courts, longer delays,
more frustration for clients, justice denied
17. Benefits of a Financial Agreement
Can avoid Court
Can assist reduce legal costs
Can minimise dispute after separation
Can’t avoid division of the asset pool so may as
well limit fall out
Curtails the angst during relationship if it’s well
drafted as a “set and forget” agreement
Can protect “parent loans” if parties to F.A.
18. Benefits of a Financial Agreement
A Financial Agreement can close the door of Court
Financial Agreement = a fraction of the cost of
Court dispute
A Financial Agreement at the start can assist a
couple, particularly second relationship, focus
Can provide for children of first marriages- estate
planning
19. Benefits of a Financial Agreement
Will help clients assess goals,
May help highlight financial incompatibility
Can lead to getting financial planning advice
Can lead to greater financial scrutiny as a couple
20. FINANCIAL AGREEMENTS – WHEN?
Financial Agreement - quarantine
business/personal assets from the beginning
Clients can enter into before/during marriage –
after separation or after divorce
If prior must enter well before wedding day
Advisable to negotiate post separation if close to
that date
Cannot be used to defeat creditors – cannot be a
fraud on a creditor
21. FINANCIAL AGREEMENTS – WHY?
If clients have assets of any significance
Financial Agreement: excludes
property/maintenance sections of FLA
Assets acquired during marriage can be dealt with
ahead of time – eliminates angst of “what if…”
Court orders only deal with property – cannot
finalise maintenance
A Financial Agreement can shut the door of Court
22. FINANCIAL AGREEMENTS
Pre determines who gets what on separation
Can be used as part of a suite of estate planning
documents
Can agree as to what happens to inheritances and gifts
Can deal with who gets what re superannuation
Is the client better off under the Family Law Act?
Need to assess what rights the client is giving up before
entering into a Financial Agreement
23. Benefits of Financial Agreements
Court = uncertain outcomes
Financial Agreements = eliminate uncertainty
BUT how do you say “I love you…now sign here” – a whole
other discussion