VIC Separation - Divorce, Business and Assets

[Newatthis]

Hi,
I have been physically separated from my wife for 7 months, emotional separation probably 2-3 years. My wife found someone else who sparked her interest after 28 years partnership. We sold the family house. We split profit 60(her) - 40(me). Three children, 12y/o lives 50-50 both houses and all costs for upbringing 50-50. 18y/o (apprentice) and 19y/o (uni) live with Mum. We have a business for 5 years which on books was not showing big profit. Has a business loan against it, we estimated a sale profit of about 60k based on this. I have superannuation and assets to balance this 60k profit, as well as her assets, so we said even. We have an outstanding tax burden over a family trust/personals and business, still negotiating with accountant which is a bit messy. Verbally agreed to no maintenance due to previous mentioned asset splits.

Now the questions.
My exwife is insisting that we formalise a divorce as she is about to take on a "very big loan" and I will be liable if it all goes wrong and we are still married. She has now said do it before Wednesday or she will file herself and I will be up for lawyer fees.

The business magically is making more money now as she often has staff working the shop not her, she bought a nearly new Porsche and goes away on holidays and long weekends nearly every time my 12y/o stays with me.

• Will the divorce alter any change I feel should be made in the financial equity and can I still insist on a different payout?
• How will divorce affect the tax burden?
• Do I have any legal obligation for any debt she has incurred over the last 7 months?

Thanks

 

[Sarah J]

Hi Newatthis,

Have you formalised an agreement on the property settlement arrangements you mentioned above? Basically, it is good that you have agreed with your wife about this, however, unless unless it is sealed with a consent order (court order), it is open to modifications and breach.

Regarding the loan:

If you wife gets a loan while you are still married to her, and if she defaults on that loan, it will not affect you except:

• To the extent it will affect her share of your “shared pool” of assets (that have not yet been divided)
• If you provide the bank with a personal guarantee
• If you agree to put your share of any assets (e.g. house) up as security for your wife getting the loan

Therefore, you do not need to divorce to be protected from your wife’s loan.

Regarding a divorce:

In Australia, you need to be separated for at least 12 months before applying to court for a divorce. It does not matter which party initiates the divorce application, each party generally pays for their own expenses. If there is a dispute as to a particular matter (i.e. one party is disputing the other) and the dispute goes to a hearing, then the losing party may need to pay the winning party’s costs, but this is separate from divorce proceedings. See the Family Law Courts' article on applying for divorce.

Regarding the property settlement agreement:

You should renegotiate with your wife and then have this agreement written down in a formal settlement agreement and then apply to court for a consent order (making it a court order). When negotiating, keep in mind that:

• Parties should make full and frank disclosure of their financial positions during the marriage and post separation
• Keep in mind the court's guidelines on dividing property (during the marriage and post separation)

You can search the threads on lawanswers if you run into any questions on property settlement anyhow to split the "shared pool" as there are many questions asked and answers provided on here on this topic.

 

[Newatthis]

Hi Newatthis,

Have you formalised an agreement on the property settlement arrangements you mentioned above? Basically, it is good that you have agreed with your wife about this, however, unless unless it is sealed with a consent order (court order), it is open to modifications and breach.

Regarding the loan:

If you wife gets a loan while you are still married to her, and if she defaults on that loan, it will not affect you except:

• To the extent it will affect her share of your “shared pool” of assets (that have not yet been divided)
• If you provide the bank with a personal guarantee
• If you agree to put your share of any assets (e.g. house) up as security for your wife getting the loan

Therefore, you do not need to divorce to be protected from your wife’s loan.

Regarding a divorce:

In Australia, you need to be separated for at least 12 months before applying to court for a divorce. It does not matter which party initiates the divorce application, each party generally pays for their own expenses. If there is a dispute as to a particular matter (i.e. one party is disputing the other) and the dispute goes to a hearing, then the losing party may need to pay the winning party’s costs, but this is separate from divorce proceedings. See the Family Law Courts' article on applying for divorce.

Regarding the property settlement agreement:

You should renegotiate with your wife and then have this agreement written down in a formal settlement agreement and then apply to court for a consent order (making it a court order). When negotiating, keep in mind that:

• Parties should make full and frank disclosure of their financial positions during the marriage and post separation
• Keep in mind the court's guidelines on dividing property (during the marriage and post separation)

You can search the threads on lawanswers if you run into any questions on property settlement anyhow to split the "shared pool" as there are many questions asked and answers provided on here on this topic.

Hi Sarah,
Thanks for the reply. Started the consent orders and just didn't get it finished. The profits from sale of the house have been distributed into each others accounts. We had agreed on everything but I guess my resentment on her new affluent lifestyle is making me a bit bitter.
I have asked to meet and have a chat about sorting things amicably.
If she forces the divorce I assume I don't have to pay court/lawyer costs if I don't go?
I am also assuming that debt(ie tax burden) before separation is to be considered as equal no matter if divorced or not?
Also if a party does not disclose correct financial position even though a divorce is completed and the property settlement agreement is completed, and it could be proven, what is the time frame to which it can be acted on?
Look I was happy enough with the agreement, but Id love to drive a convertable Porsche, work 3 days a week and go away every second weekend for three or four days.
Sound bitter?
Cheers N

 

[Sarah J]

Hi Newatthis,

I'm sure everyone on this forum would live that lifestyle. I'm glad you're recognising that it is her lifestyle that you're having difficulty coming to terms with and that you've decided to resolve this amicably.

1. "If she forces the divorce I assume I don't have to pay court/lawyer costs if I don't go?"

Unless you agree on splitting the costs privately, the general rule is whomever files a document in court will pay for the filing fee. If your wife begins the process (individually) then she will bear the application fee, if you wish to oppose the divorce application then you will bear the response fee. Each side bears their own lawyers' fees.

As for whether or not the court will grant divorce: the only point the court will consider is whether the marriage has broken down irrevocably. And to prove this you (or your wife) will need to show that you and your wife have been separated for at least 12 months and 1 day before the initial application.

See these following documents from the Family Law Courts:

• Divorce factsheet (requirements, application procedure, if you wish to oppose)
• Court fees brochure

2. "I am also assuming that debt(ie tax burden) before separation is to be considered as equal no matter if divorced or not?"

I am not sure as to what you mean by "tax burden". Tax burden regarding what? As for any loan defaults/liabilities your wife may incur after she enters into a loan agreement, whether or not you and her are married, you (nor your share) will be at risk unless you give her a personal guarantee or agree to put your property up as security.

3. "Also if a party does not disclose correct financial position even though a divorce is completed and the property settlement agreement is completed, and it could be proven, what is the time frame to which it can be acted on?"

As soon as possible. The duty of full and frank disclosure is only attached to court proceedings (i.e. a court order for property settlement). It is a duty to the court. However, it is good practice to abide by court requirements in non-contentious negotiations. If one party has not made full and frank disclosure and you later find out a material piece of information withheld that would have affected how you went about the settlement, then you may have an argument in misrepresentation. You will need to apply to the court for a declaration that the agreement is invalid and to have it set aside (see: "If you agree about property and money").