Dividing up your assets- no equality of proceeds
1.
Why
are you so fat ? Because every time I f***your wife, she gives me a biscuit-
The equal sharing of family property is not the legal given that most people
assume. The starting point is an analysis of martial contribution (in most middle
class cases with kids, married mid to late 20s, actively involved with your
kids, this effectively means 50/50 as a starting point). However that initial
analysis is then drastically impacted by a variation regime that takes into account things
like:
·
age & health of kids and each partner;
·
future income, employment and financial
resources;
·
Prior standards of living;
·
Assets vended into the marriage , sort of subtracted
out of the pool (ish)
·
duration of the marriage;
·
A partridge in a pear tree, or whatever the
lawyers issue de jour, may be
2.
Searching the deli section at Aldi-The
list is called Section 75 (2) of the Family Law Act and there are at least 18
such issues in play- and the lawyers “add bits” by case law “interpretation”
about “just outcomes” over time-see: http://www.austlii.edu.au/au/legis/cth/consol_act/fla1975114/s75.html
You will know this bit of the lore off
by heart by the time you “finish” your divorce.
Fault
is relevant also: Kennon & Kennon [1997] FamCA 27; (1997) FLC 92-757 if violence exits. And,
for example, the transmission of genital herpes is also relevant if it can be
proved: X v X (2000) FLC 93-017.
3.
If you're not at the fair, you can't win a coconut- The social policy problem with
long lists like 75(2) is that while they try to address multiple circumstances,
they are an excuse to dither and to argue in each case. About everything. There
are few real rules. The hope was that guidelines would evolve, but in reality
they haven’t or at least very few truly comprehend them, and the courts just don’t
realistically discipline lawyers or folks who just muddle about. And separation
is a time at which people squabble because they really want a screaming match
about the separation itself, but have no outlet for that anger. The lawyers make considerable money out of
exploiting this uncertainty; and it takes time.
There are some guidelines and "feelings" that the 90 percent
cases are really about 65 year old Maureen’s with no employment prospects, or
the terminally ill, but short of that everyone has a lotto ticket. Now, the
lawyers take great care to say each case is fact specific (i.e. micro managed),
and the Family Court goes out of its way to emphasise that there are no
mathematical formulae (largely, I suspect, because lawyers themselves are often quite innumerate). What effect each factor has is
all “circumstantial”. Surprise, surprise, surprise, that means angst, delay, confusion
and anger. Sure the lawyers “have a
feel” as to that will happen but they make money out of “the game”, so people
collapse under the weight of the delay arbitrages that are inevitable. Thus we
have weird actual outcomes because of the queues- and hence “NFDINO” - no fault divorce in name only.
4.
Clowns to the left of me, jokers to the
right ,here I am, stuck in the middle with you- Ok. So here’s the
bad news. Because of the requirement to micro
manage outcomes under S 75 (2), and the problems with parenting set out below,
and the interaction of those 2 regimes, you
may well spend 18-24 months of your life sorting out how this awful mess
applies in your particular case. We live in one of the wealthiest countries in
the world, we have iron ore tax receipts up the whazoo, and yet the queues
outside, and angst arising from, the Family Court are getting worse, not
better. Now if you want to litigate you will pay $ 50,000 for an over whelmed
suburban lawyer to tell you that, frankly, you need to hire a junior barrister
at $ 4K a day (yes you have to sit around all day, its an inefficient mess),
and well, they know a range but it pretty much depends on which judge you get
on the day. As a result of this uncollabarative mess you will get mercilessly
played as the court not only tolerates
fraud, it encourages it by making no penalties for the time value of money. Despite
no fault you need lots of evidence, all sworn in the right form, fees, the
works.
5.
Buy
a Zegna suit and smile a lot- If you don’t litigate be aware that the
settlement that you make will be impacted by the uncertainty inherent in your
former spouse threatening to argue the toss. Anyway from 1975 to 2013, that is some 38
years after the Family Law Act was enacted, property allocation plays out rather
like a trashy episode of” Judge Judy” (absent the incisive Jewish humour). And The Family
Law Act governs the most important part of the lives of one of every three Australian
families. Weird; or what? See the chart below for a sample of litigated
outcomes-there’s a very diverse spread. Unsurprisingly everyone dreams that
their case deserves to be a 90/10 split. Small skewed sample but:
6.
Fair shake of the sauce bottle: a rolled
gold disaster. It’s likely in our life time this discretionary
property regime will be dumped. The current regime is very costly in terms of
justice delayed , innumerate, and in large part a litigation lottery. Lawyers,
charging by the hour, freaking love it of course. And it costs taxpayers a bomb keeping the courts
running around in circles. No one settles property issues because there are
real concerns, each way, that the kids are being bartered at the same time for
cash (technically this is “not allowed” but it’s the elephant in the mediation
room). Other places (like “Nu Zulun” and “Kalifornia”) have a “community
property” regime, which pretty much means 50-50 for the vast bulk of long term marriages, forget arguing lists and waiting in
queues- “just do it”; with exceptions for limited special regimes such as large
farms (its complex to separate a kiwi from their beloved sheep), adjustments
for marked future income disparity, and the handicapped. In some cases determined
after the basic split is done, quickly, and when everyone has calmed the fark down.
In effect a default pre nup but everyone knows what the rules basically are. Community
property can result in some unfairness at the margins, but that’s the price of
reducing bickering. Eventually the current Australian model of “tinkering with
ever expanding lists as determined by litigators, nuanced per family, over 2
years” will be abandoned, having been tried, proved costly, and failed. But
not for your divorce it won’t.
Parkinson P. (1999) Reforming the Law of Family Property’, 13
Australian Journal of Family Law 117. We need mass manufacturing solutions but
the lawyers just love bespoke tailoring, bugger the cost. The contrary view , justifying our current approach is best
articulated by former Chief Justice of the Family Court Alistair Nicholson
: http://www.familycourt.gov.au/wps/wcm/resources/file/eba9f049dee1269/anglo.pdf
The simple math on housing is the best way to explain the issue, given
it’s the main asset. Couples argue over a median house in Sydney at $650 to $
1,800,000. Net of say a 30% mortgage at the top end. So say that’s equity of $ 1.26m house. Arguing the
difference between 50 v 65% of that is a $190 K in dispute. The lawyers will
take $35-75 K of that amount in dispute.
Each. So pay $ 15OK to “make” $ 190 K in
2 years’ time- can you work out why no lawyer wants to settle ? If there was no
“property wedge” a lot (not all) of the bitterness over children may well also recede.
Certainly the optimisation exercise would be easier. Bespoke is, frankly, intellectually
hard to fault, but is also economically hard to fund.
One of the other reasons to move to a community property model is simply quality of the evidence. You
don’t have to be a fan of House MD to work out why- this is someone’s last
shot and the stakes are very high. People destroy records of prior financial contributions,
school the kids, its just awful. The
lawyers who give practical effect to the 18 item list are also not especially
great at operating the system, so at a micro level its just means “take a pot
shot while you tell a judge the outlook is bleak” .
A second reason is for reform is
that it would also deal directly with the lawyers incentives, driving the
sharks out of the play, enabling some sort of healing to occur. And at present
the Family Court still fixates on fault
based divorce issues (the Kennon
case set out above) although they say its “only fault “in relation to family
violence. Whatever your view on its social merits the judgement is deeply
intellectually dishonest, politics by any other name. Domestic violence should
be dealt with directly, not co mingled into property allocation. For lawyers
just find issues to haggle over. Enough already.
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