Costs including barristers and experts start to climb above $50,000. From there, the equation ‘how long is a piece of string’ can come into effect. Those who do decide to let a judge make the final call wait typically 90 weeks for their day in the Family Court of Australia.
The desire to protect a business (and all manner of other assets such as inheritance, wealth before marriage, etc) from divorce is common practice. In order to safeguard a business from divorce, the single most important thing to do, according to Mitchell, is to have a written Financial Agreement between the spouses that has been drafted in accordance with the Family Law Act.
“For instance, it could be specified in the agreement that the business owner is to retain the business, free of any claim by his or her spouse,” says Mitchell.
If agreed by both parties, a Prenuptial Agreement before marriage, or a Financial Agreement under section 90C of the Family Law Act during the marriage can see the business “quarantined from division between the parties”, says Taussig.
Another legal strategy is to establish trusts and corporate trustees, however this approach is not watertight.
“The Family Court now has power over companies and trusts in many circumstances,” says Mitchell. “If the spouse seeking to protect the business is deemed to have effective control of the trust and therefore the business, then it is likely that the business will form part of the assets of the marriage to be divided between the spouses.”
Michael Taussig says it is “unusual” for hardworking entrepreneurs to feel cheated in a divorce settlement. “They are usually realistic enough to understand that they must share their wealth.”
Divorce FYIs:
* Assets are valued at the date of settlement or the court hearing, NOT the date of separation.
* Even if a business is found to have no value, it will be taken into account as a financial resource available to the relevant spouse if it provides a good income stream.
* Spouses that have given up work to care for children may in fact have to work again after divorce if that spouse’s share of the assets upon settlement are not sufficient to support him or her. The other spouse may not be forced to provide additional periodic support (aside from child support) if the non-working spouse has the capacity to obtain appropriate gainful employment.
Source: Septimus Jones & Lee www.SJL.com .au
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