Family Court bungle hits de factos as error throws property settlements into doubt

23 February 2012 By

Thousands of Family Court orders relating to de facto couples, including property settlements and maintenance agreements, have been cast into doubt by a major federal government blunder.

Family Court and Federal Magistrates Court bungle

The government neglected in 2009 to arrange for the Governor-General to proclaim a start date for legislation that handed power to the Family Court to handle property and maintenance disputes between de facto couples. The mistake, which Attorney-General Nicola Roxon last night labelled an “unfortunate administrative error”, means all such property and maintenance orders by the Family Court and Federal Magistrates Court between March 2009 and February 11 this year are now uncertain.

Ms Roxon said the government was working to fix the issue as soon as possible, but the opposition seized on the blunder as an “astonishing act of incompetence” that reinforced the view that the government could not get anything right.

Previously, heterosexual and same-sex de facto couples had their property matters dealt with by the state courts.

In 2009, the states referred their powers to the commonwealth, for the first time enabling de facto couples to have their property disputes dealt with by the Family Court as married couples do. However, no start date for the proclamation was arranged.

It is understood this oversight occurred within the Attorney-General’s Department, when Robert McClelland was attorney-general. This meant the changes failed to begin.

The result is that since 2009 the Family Court has been making orders relating to de facto couples for which it had no jurisdiction.

Ms Roxon said she had directed her department to put its full attention to fixing the problem as quickly as possible. “This is a very unfortunate administrative error where a small mistake can have extensive consequences,” she said.

The blunder was detected only earlier this month during Family Court proceedings in Melbourne. The case was adjourned until the issues with the legislation could be resolved.

A proclamation by Governor-General Quentin Bryce was rushed through on February 9 and the changes to the laws finally took effect on February 11.

This means that any orders made from February 11 cannot be challenged.

However, any orders made between March 1, 2009, and February 11 this year are potentially invalid because the Family Court did not have jurisdiction to make them.

The chairman of the family law division of the Law Council of Australia, Geoff Sinclair, said the Family Court and Federal Magistrates Court were trying to ascertain how many cases were involved, but he believed they were in the thousands.

“We are looking to see whether there can be retrospective legislation to deal with those cases . . . I think that is certainly doable” Mr Sinclair said. “We are urging the Attorney-General to take whatever steps are necessary, as soon as possible, to make sure legislation is enacted.”

He said about 90 per cent of family orders were made by consent so he hoped they would not be challenged by the parties.

“It doesn’t matter whether parties are in a de facto relationship or a marital relationship; when the relationship breaks down there’ll often be a lot of emotion from both sides” he said.

“We certainly don’t want a position where people have to go back and revisit issues that have occurred in the past, when hopefully people have put things behind them.”

Opposition legal affairs spokesman George Brandis said: “This is an astonishing act of incompetence at the heart of government. It reinforces every impression the Australian people must already have that this government cannot get anything right.”

However, it is understood a similar oversight occurred under the Howard government in 2006 when the Family Law Act was amended to give the Family Court jurisdiction to consider appeals from family law magistrates in Western Australia.

A proclamation was made to fix this oversight. Senator Brandis said the opposition would support legislation to fix the current problem.

Former Family Court chief justice Alastair Nicholson said the oversight was serious: “If those settlements are called into question, it’s obviously very significant for the people involved.

“It seems the government has no real choice but to pass legislation retrospectively approving them.”

NSW Attorney-General Greg Smith said it was disappointing the federal government had failed to deliver the reforms properly.

(Source: Nicola Berkovic, The Australian, 22/12/2012)

About Rushmore Forensic

Andrew Firth is a director of Rushmore Group. He has conducted numerous investigations and other forensic accounting engagements in Australia, Singapore, the UK, Thailand, Hong Kong, Vanuatu, and the USA.

He specialises in assisting people going through divorce and providing other forensic accounting services for commercial disputes.  He is a member of the Institute of Chartered Accountants and has appeared as an Expert Witness in numerous jurisdictions.

Filed Under: Family law, Property Settlement Tagged With: , ,

Facebook Flirting Causes One-in-Three Divorces

4 January 2012 By

Facebook flirting and comments contribute to an increasing number of divorces, underscoring how social media is affecting privacy and family interactions.

Facebook flirting and divorce

Facebook flirting and divorce

One-third of 2011 divorce cases in England implicated Facebook as a cause, according to a survey conducted by a U.K.-based divorce website. The 5,000 people polled cited three reasons for listing Facebook in divorce petitions, including sending inappropriate messages to the opposite sex, posting negative comments about exes on the social network, and friends disclosing a spouse’s behaviour.

The survey highlights how burgeoning social media use blurs the line between public and private. The nature of Facebook, Twitter, Google+ and other social media outlets encourages free-spirited commenting, posting and sharing of information.

However, what’s posted on social networking sites may not be as private as users think.

When marital problems or other difficulties arise, social media postings are subject to closer and wider scrutiny and take on a new life, often as evidence in custody battles and divorce cases. For example, a Connecticut judge ruled one couple must share social media passwords as part of their divorce agreement, leading to speculation about how and by whom the photos, comments and personal information people share can be used.

Legal experts assert as social media sites grow in popularity, people must be vigilant about what they post and refrain from making disparaging remarks or gossiping with friends about a spouse, children or other parties in a case.

“People need to be careful what they write on their walls, as the courts are seeing these posts being used in financial disputes and children cases as evidence” said Mark Keenan, a spokesman for Divorce-Online.

Divorce cases aren’t the only personal legal matters involving social media postings. Apple recently fired an employee who ranted about his job on Facebook, and termination procedures were launched against a New Jersey teacher who called her students “future criminals” on the social network.

Incidents like these could lead users to edit what they do and say on sites out of fear of future recrimination, or even pull away from them altogether, an unwelcome trend for companies like Facebook and Google.

In response, both Facebook and Google+ strengthened privacy controls in recent months to help users feel more secure. Facebook’s “smart lists” and Google+’s “circles” features allow users to more tightly control who can see and share their posts and comments.

Site-based privacy controls can help protect users during normal, day-to-day interactions, but during a personal upheaval like a divorce, a list of trusted “friends” may suddenly turn out not to be so trustworthy, highlighting a need for increased user responsibility alongside better privacy protections.

(Source: Forbes.com, 3/01/2012)

About Rushmore Forensic

Andrew Firth is a director of Rushmore Group. He has conducted numerous investigations, business valuations and other forensic accounting engagements in Australia, Singapore, the UK, Thailand, Hong Kong, Vanuatu, and the USA.

He specialises in assisting people going through divorce and provides other forensic accounting services for commercial disputes.  He is a member of the Institute of Chartered Accountants and has appeared as an Expert Witness in numerous jurisdictions. For more information or to arrange an appointment, please contact us or call now on (02) 8019 7262.

Filed Under: Family law, Forensic Acccountant Tagged With: ,

What assets are commonly missed when a property settlement is being determined?

6 October 2011 By

When it comes to detailing the marital assets and liabilities, many people forget to include small business ventures.

You may have a home business, internet business or other venture that generates income. These businesses need to be valued and included in the joint assets and liabilities. Valuing a business of this type will always involve a degree of judgement and we recommend that a valuation be conducted. It can be surprisingly how often the value of a business can represent a large component of the net marital assets.

If you are currently separated, it’s important to try and obtain copies of as much documentation as you can in relation to these types of businesses. Examples include: bank statements, invoices, BAS Statements, Financial Statements and other correspondence. The documentation will assist in the preparation of a valuation.

If your divorce ends up in Court then the valuation can be used as evidence of the value of the business, or more commonly it will assist you and your ex partner in coming to a negotiated settlement.

If you would like more information about valuing a business as part of a property settlement then please contact us for an obligation free discussion.

Filed Under: Family law Tagged With: , , , ,

Facebook used in 90% of divorce cases

1 May 2011 By

A divorce lawyer says Facebook and social media are used in 90 percent of her divorce cases.

“You get a little bit of everything that happens on Facebook” said Carin Constantine.

“Everything from clients coming in with pictures of the opposing party doing a keg stand with high schoolers… to teenagers drinking alcohol served by a parent… to a picture of a husband at a nightclub dancing with a babysitter.”

A recent survey by the American Academy of Matrimonial Lawyers found that Facebook is cited in one in five divorces in the United States. Also, more than 80 percent of divorce lawyers reported a rising number of people are using social media to engage in affairs.

“There are times when my paralegal and I sit in this office and laugh because people are stupid. They put things out there on the internet that can last forever” Constantine said.

Divorce attorneys are becoming internet gurus. Because websites like Yahoo and Google cache images as soon as they’re put online, Constantine says she can find pictures from Facebook accounts that have been deactivated.

She simply goes to Google Images, types in the person’s name and searches through every single page of returns.

“Those pictures are still accessible by us, and we can still print them and we can still use them as evidence in your divorce case” Constantine said. And that printed piece of paper can be attached to a motion within the hour.

The best advice, aside from deactivating your Facebook account, is asking friends and family not to post any pictures of you online, even if they don’t tag you.

“The problem is, if you’ve got 400 friends, I assure you one of those friends [doesn't] have all the privacy settings correct” she explained.

And she, along with thousands of other lawyers, can find it.

(Source: WTSP News)

About Rushmore Group

Rushmore Group assists people going through divorce value businesses and maximise their property settlement. Rushmore Group operates in the US, UK and Australia.

Filed Under: Family law Tagged With: ,

Binding Financial Agreements

7 April 2011 By

In Australia, there are three ways that a property settlement can occur:

1. An informal settlement: this is where the two parties agree amongst themselves on how the property should be split. This may or may not involve any paperwork or contractual arrangements.

2. Orders under the Family Law Act (“FLA”): The FLA applies to all people who are legally married and the marriage is recognised in Australia.

3. A Binding Financial Agreement: This is a legal agreement signed by both parties, under which both parties contract out of the FLA and enable a property settlement to take place.

A binding financial agreement is a technique that you can use with your partner to divide the joint marital assets. Before you enter into such an agreement, it’s important to consult a divorce lawyer to advise you on entering into such an agreement. It is a relatively new area of the law and there have been cases where binding financial agreements have been set aside by the Court.

If you are entering into a binding financial agreement or seeking orders in relation to a property settlement, and you or your partner own a business then it’s also important to obtain expert accounting advice to value the business and ensure that the property settlement does not result in paying excessive tax that could otherwise be minimised. A valuation for a business can have a significant impact on the overall assets available for property settlement and it’s therefore critical to obtain expert financial advice. In most cases, a forensic accountant familiar with the family law / divorce process will be able to assist you with these matters. We find that the cost of the advice is outweighed by the additional benefit flowing to the client.

There is no requirement for court approval or registration of a financial agreement, however both parties must have independent legal advice prior to its execution. A certificate of independent legal advice that is required to be annexed to the financial agreement must canvass two matters in relation to the party advised. This includes “the effects of the agreement on the rights of the party” and “the advantages and disadvantages, at the time that the advice was provided”.

Spouses may enter into a “termination agreement” that ends the earlier financial agreement entered into. Both parties must have  independent legal advice prior to the execution of a termination agreement.

About the Author

Andrew Firth is a forensic accountant based in Sydney. He is a Director of Rushmore Group and specialises in financial reconstructions, money tracing, divorce, and other forensic accounting engagements.

To arrange an appointment, contact us today.

Filed Under: Family law Tagged With: , , ,

Need help with Asset Searches?

7 April 2011 By

If you are searching for the assets of an individual, company or other structure then you have come to the right place. Rushmore Forensic is comprised of specialist forensic accountants and investigators who may be able to assist you.

The exact approach employed when conducting an asset search will vary depending on the circumstances, however below is a ten step checklist which may assist you with your enquiries.

1. What information do you have to begin with? If you have an individual’s name then it will be useful to find any other information about them, such as their address. This can be done by doing a search on the online Whitepages. Alternatively you could use another online database such as an Electoral Roll search or at the other end of the spectrum; you may employ a private detective to follow the individual to a particular address. Always ensure that you use a reputable investigator and stay within the law. This will ensure that any information relating to your asset search can be admissible as evidence at a later date in Court.

2. The address. Once you have the relevant address, you can perform a property search with your state or territory’s Land Titles Office. If you have the physical address, you can perform a search and obtain the Folio Identifier of the property. Once you have the Folio Identifier you can then perform a Title Search on the property and determine the owners of the property.

3. Securities Commission Searches. Personal extract and Company extracts are commonly used when compiling information about an entity for an asset search. These types of searches can be performed online for a small fee and can provide useful investigative information for further enquiries.

4. Email records. Email can be a very valuable source of information. Provided you have accessed the email legally, it can lead directly to the relevant asset you are looking for. If you suspect that the asset is located overseas, then direct your search to emails from these types of email accounts. Scan the list of folders and see if you can identify any other useful information. Folders with the name “Personal” or similar names can often provide valuable investigative information.

5. Google. Often overlooked when conducting an asset search, a search on Google using different strings of key words can often reveal the information you are looking for. If you suspect that an individual has say purchased an overseas tourist property, you could search for “john smith bali resort”. Google regularly caches all the information on the net and it’s surprising what can be found using this free online tool.

6. Travel History. Do you have any other background information about an individual such as where they grew up and where they frequently holiday? This can lead you directly to an overseas city. Depending on how developed the country is and the legal system in that country, you may be able to perform both online searches or use a private investigator to obtain the relevant information.

7. Other Technology. Whilst it may be inappropriate (or illegal) to use in some circumstances, there are limited situations where a GPS locator can be placed on an object, such as a car that you own to monitor its movements. Typically the vehicle can then be tracked remotely on the internet and the whereabouts of the car can be tracked. This can be very useful in an asset search but is generally only used in specific circumstances. As we always advise, seek legal and other professional advice before you decide to employ such techniques.

8. Other Forensic Technology applications. In the modern technological era, there are many electronic devices that retain useful information. A Forensic computer expert can extract data from a variety of devices. This can include a printer, mobile phone, blackberry, other P.D.A device, desktop or laptop computer and memory sticks. Forensic technology professionals are even able to recover deleted files from these types of devices. The information recovered from these devices may lead to the asset you have been searching for.

9. Credit Card Statements. A review of an individual’s credit card statement can be surprisingly effective at locating assets. Once you have obtained the credit card statement it may show information that can be used to conduct other searches. For example the location of a restaurant can be found by typing in the vendors name into Google. This may indirectly assist you in your asset search.

10. Bank Statements. If you have access to bank statements of the individual or company in question may show large round numbered transfers or other suspicious transactions to other entities or to other countries. This information may directly lead to the assets in question.

As can be seen, there are numerous techniques that a forensic accountant can assist you with in relation to an asset search. The exact techniques will be dependent on the client situation and will depend upon your relationship with the individual or company concerned. Asset searches can have mixed results but in particular circumstances, they are well worth the time and cost that’s incurred. If you are concerned about assets being transferred out of your control then our experts at Rushmore Forensic will be happy to discuss your requirements in a confidential manner. Rushmore Forensic have expertise in divorce, commercial litigation and other forensic accounting engagements. Please contact us to arrange an appointment in our North Sydney or Baulkham Hills offices.

Filed Under: Family law, Investigation Tagged With: , ,

Capital Gains Tax (CGT) and Divorce

28 March 2011 By

CGT and Divorce

Where there is a breakdown in a personal relationship, and the ownership of an asset changes, there is a CGT relief measure that applies.

Q. I am in the process of a divorce settlement. Together with my former spouse we own two investment houses and a business. We have decided to split 50-50, with her taking the investment houses and I keep the business, which she has not being involved in. She is taking the CGT into account for the houses and I’m not sure of the legalities of the CGT for the business and rental houses. All were purchased after 1993.

A. It’s interesting when you do a search on capital gains tax and divorce there is very little listed as being produced by the ATO. One of the few things that the ATO does offer is a list of assets that are CGT exempt. These include:

  • an asset acquired before September 20, 1985
  • cars, motorcycles and similar vehicles
  • compensation received for personal injury
  • disposing of a main residence
  • a collectable – for example antiques or jewellery costing $500 or less
  • a personal use asset acquired for $10,000 or less – for example, items such as boats, furniture, electrical goods and household items used or kept mainly for personal use or enjoyment. Land and buildings are not personal use assets
  • disposing of an asset to which the small business 15-year exemption applies
  • the exchange of shares and units owned in a company or trust that is taken over, if certain conditions are met, and
  • shares in a company or interests in a trust where there has been a demerger and certain conditions have been met.

Although not strictly an exemption, there is capital gains tax relief that applies where the ownership of an asset changes as a result of divorce. The relief is in fact not optional and must be applied where a legally binding agreement has been entered into. This could be an agreement imposed by the family court or one mutually agreed between the parties to the divorce.

Under the rollover relief that must be applied in the case of a divorce agreement there are no capital gains tax implications for the person disposing of an asset. The person who receives the asset as a result of the divorce agreement takes over all of the CGT history related to the asset.

In relation to the divorce settlement with your wife this will mean the rental properties being transferred to her will be regarded as being purchased by her when you purchased them as a couple. There is no capital gains implication for you but she will pay CGT when she sells them if the net sale proceeds exceed the cost paid by you as a couple.

With regard to the business that you will be retaining, there is no capital gain payable by your wife. When the business is sold you may be able to take advantage of the various small business capital gains tax concessions. These include the 15 year asset exemption, the 50 per cent active asset exemption, and the retirement exemption. To be eligible for these concessions you must either have a turnover of less than $2 million or meet the other criteria.

(Source: CGT is as certain as death and taxes, Max Newnham, 28/3/11, SMH Money)

Further Information

If you would like further information about using our forensic accounting services for a divorce, litigation, asset search, or other forensic accounting matter, then please contact us for an obligation free discussion. We provide services to corporations, law firms and individuals in Sydney, Brisbane, Melbourne, Adelaide, Perth and across Australia. Call now on (02) 8019 7262.

 

Filed Under: Family law, Forensic Acccountant Tagged With: , , , ,

Looking for a Divorce Kit or Online Divorce? Take the time to obtain expert advice

26 March 2011 By

If you are looking for a divorce kit or online divorce you may be searching for a quick and simple process in which to finalise a divorce. You and your ex-partner may have reached a mutually acceptable property settlement with none or limited custody issues? You may simply need to formalise the agreement?

If you are in this situation, then the cost of divorce can be kept to a minimum and the divorce or separation process can be relatively simple. It’s advisable that any informal agreement is properly formalised with a divorce solicitor, so that it is recognised under the law and your partner can’t reneg on the agreement at a later date and obtain a greater percentage of the property settlement. Remember that the price of houses, shares and other assets in divorce can change very quickly (both increase and decrease) and an informal agreement may come unstuck if it is not formally ratified. Even if you believe that your financial affairs are straight forward, a consultation with a forensic accountant who specialises in divorce and family law valuations can ensure that you have considered all assets (and debts) in the property settlement and that there are no adverse tax consequences arising from the divorce/separation process.

If you or your ex-partner have a business (either as a sole trader, company, or trust) then it’s particularly important to obtain financial and valuation advice. One appointment with an expert forensic accountant in this area can often have a substantial effect on the net wealth of the parties following a divorce. If your ex-partner owns a business they generally have greater access and knowledge about the financial health of the business than you do.

Depending on the situation and the length of the marriage your ex-partner may want to artificially increase or decrease the value of the property. This is relatively easily performed with access to the books and records of the business.

An expert forensic accountant familiar with property settlements will be able to review the books and records of the business and provide a valuation, which can be used to negotiate a property settlement. A forensic accountant will also be able to detect whether there are any adjustments made by your former partner which do not form part of a proper valuation methodology which is acceptable to the Courts.

The use of an expert divorce solicitor and forensic accountant can ensure that your interests are best represented and that you have the best advice throughout the divorce or separation process.

To summarise, if you are looking for a divorce kit or online divorce, we strongly recommend that you take the time to obtain expert legal, and accounting advice. The cost of the advice in most cases is very easily covered with the identification of assets and debts which can change the value of the property settlement and ensuring that the proceeds from a divorce are not unnecessarily spent in increased taxes.

If you would like more information which can help you decide the best course of action following separation, then we would be happy to discuss this with you further on an obligation free basis. Please contact us to arrange a phone or in person appointment.

Filed Under: Family law

How Do I Get Divorced?

26 March 2011 By

If you are looking to obtain a divorce then you need to find a solicitor to guide you through the process. Solicitors who specialise in divorce and have obtained specialist accreditation are called Family Law Accredited Specialists. Once you have decided to engage a lawyer you will become their client and your solicitor will deal with the Family Court and your ex-partner’ solicitor.

Your solicitor will ask you to provide various documents. As most solicitors charge by the hour, it makes sense to obtain as much of this information yourself. The types of information you could be asked to obtain include financial information (such as bank statements), and other details about corporate structures, trusts and businesses that you or your ex-partner run. You will also be required to provide details of assets and debts that you or your partner own or owe. Examples of the types of assets and debts that may apply to you include:

Typical Assets In Divorce

  • Cash
  • Your home
  • Investment property
  • Superannuation accounts
  • Managed Funds
  • Shares
  • Pensions or other benefits
  • Businesses that you either own entirely or a share

Typical Debts In Divorce

  • Mortgage on your home
  • Mortgages for investment properties
  • Personal Loans
  • HECS debts
  • Credit Card Loans
  • Debts to other organisations e.g. tax debts

In many cases, it will be up to you to obtain source documentation and potential evidence about your ex-partners business or other income earning activities. If you can obtain this documentation, it could make a significant difference to the final property settlement.

If you are looking to obtain specific information relevant to your circumstances on how to go about getting a divorce, we recommend that you seek the assistance of a divorce solicitor as soon as possible.

If there are companies, trusts or you or your partner own a business then we also recommend you obtain the advice of a qualified forensic accountant to conduct a valuation. The cost of obtaining a valuation report is in most cases offset by tax and other savings that a forensic accountant can identify.

To arrange a confidential and complimentary meeting in relation to your divorce and property settlement, please don’t hesitate to contact Rushmore Forensic today.

Filed Under: Family law

Giant divorce claim could be Australia’s costliest split – but it can’t match these billionaire bust-ups

16 March 2011 By

Could this be Australia’s biggest ever divorce claim? An Adelaide woman has lodged a divorce claim worth well over $25 million against her ex-husband in what has become one of the most bitter marriage splits in history.

According to a report in The Australian, the woman, who cannot be named for legal reasons, applied to the Family Court for a $278,000 monthly support payment for herself and her only son.

While the Court rejected this claim, she is pushing ahead for a final settlement from the divorce that would see her receive more than $24 million in property (including a Swiss chalet) and other payments. Her former husband is contesting.

The bitter legal battle – the paper says the pair has been to court on 28 separate occasions – would have to be one of Australia’s biggest divorce cases.

However, even if the woman manages to win a big payout in the final settlement, she is unlikely to match Australia’s two members of the BRW Rich 200 list who have earned a big part of their fortunes from divorce settlements: Nicole Kidman and Lynette Harvey.

Kidman, valued on this year’s list with a fortune of $329 million, received a divorce settlement worth a reported $109 million when she split from actor Tom Cruise in 2001.

Lynette Harvey, the former wife of retail king Gerry Harvey, retained a large stake in Harvey Norman when the couple split in 1982. She was listed on this year’s Rich 200 with a fortune of $205 million; her stake in Harvey Norman is worth more than $170 million.

But these splits are dwarfed by what is widely seen as the biggest divorce settlement in history, finalised earlier this year – the split between US casino mogul Steve Wynn and his wife Elaine.

The pair, who have actually divorced twice (they first married in 1963, broke up in 1986 and then remarried five years later), finalised their latest settlement in January.

According to Forbes, Elaine ended up with 11,076,708 shares in Wynn Resorts as part of the settlement; based on the company’s share price, that stake is worth just over $1.06 billion.

Another billionaire bust-up that is in the process of being settled is the split between Formula One supremo Bernie Ecclestone and his ex-wife Slavica. An official cost to the split has yet to be determined, but initial estimates said the settlement could be as high as $1.7 billion.

Prior to the Wynn’s divorce settlement, the biggest divorce on record was paid by US mobile phone industry pioneer Craig McCaw, who sold a group of mobile phone assets to AT&T in 1994 for $US11.5 billion. Less than a year later, Craig and his wife Wendy split.

In the bitter divorce battle that followed, everyone from Craig’s elderly mother to Bill Gates was called to give evidence. Eventually, Wendy walked away with $US460 million in shares in telco Nextel. Unfortunately for her, those shares later tanked during the tech wreck of 2001.

(Source:  James Thomson, Smart Company, 11/06/10)

About Rushmore Forensic

Rushmore Forensic is a forensic accounting firm based in Sydney. We specialise in the investigation, and valuation of businesses subject to family law/divorce disputes.

Filed Under: Expert witness, Family law Tagged With: , ,
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