Relocation: other side of town or the other side of the world

One parent moving with the children to another town, state or country after the breakdown of a marriage or relationship is known as ‘relocation’.

Whether it is something that you are thinking about at the time you separate – perhaps for financial reasons or emotional ones (such as a support network) – or months or years after separation relocation can be a difficult issue to resolve.

If your children primarily live with you and you need to relocate you should first try to talk to the other party. You may be able to reach agreement that the move is in the children’s best interest – perhaps the children have longer periods of time in school holidays with their other parent and/or longer visits during the year. Or the other parent may be able to move to where you are hoping to relocate.

If you reach agreement with the other party it is best to enter into a written parenting plan* or apply for consent orders* before you move.

If you cannot reach agreement with the other parent, you can apply to the Court for a relocation order to allow you to move. It is important to remember that a relocation order is not automatic and that the Court may not grant permission for the children to relocate. As with all matters about the care and welfare of children, the Court must consider the best interests of the child.

If you move without a Court Order or without the consent of the other parent, the other parent may apply for a Court oOder requiring you and/or the children to return until the Court has considered the parenting arrangements. If there is a Court Order already in place allowing the other parent to spend time with the children and you relocate anyway, you will be breaking the existing Order and the other parent can apply to enforce the current Order requiring the return of the children.

Further, if there is a possibility or threat that the children may be removed from Australia, the other parent can apply to the Court for an Order restraining the removal of the children from Australia.

 

* Note: a Parenting Plan is a non-enforceable written agreement that sets out parenting arrangements for the children as agreed to by both parents without the need to apply to the Court. A Consent Order is a legally binding written agreement between you both that is approved by the Court. If you already have Consent Orders in place you can vary them with a Parenting Plan, the terms of which are then binding.

Till death us do part?

According to research by the Australian Institute of Family Studies there has been a sharp increase in the number of couples separating after 20+ years together:

• The number of divorces after 20 years of marriage rose from 13% in 1990 to 28% in 2011
• The median age for divorce had increased from 38 years for men and 34 for women in 1971 to 45 years for men and 42 years for women in 2011.

The director of the Australian Institute of Family Studies, Alan Hayes, believes that there are a number of reasons for this change:

 

1. Women, who are more likely to initiate divorce, have an increasing economic independence – and hence a greater capacity to make a choice to leave an unsatisfying relationship;
2. Increased longevity: people are aware of the length of time a relationship can go on for and are evaluating whether they want to spend another 30-40 years tolerating their spouse; and
3. Those with children under 18 years of age seem to be less likely to divorce but once children are leaving home people re-prioritise – something of an “empty nest” syndrome.

The author of the Institute’s report on their research, Ruth Weston, believed that another reason is that divorce no longer carries the stigma that it once did:

“We found a lot of change in attitudes towards divorce. Younger people are more prone to agree with the idea of divorce than older people but right across the board we’re not seeing strong disapproval for divorce.”

But while “death do us part” may no longer be the norm, there is some good news for romantics:

• The number of divorces for shorter marriages fell from 1990 to 2011;
• Around 50% of people in all age groups believe that marriage is not an out-dated institution; and
• The overall number of divorces is decreasing – 48,935 in 2011 down from 55,330 in 2001.

The impact of separation on superannuation

I recently read a report titled “Untying the Knot’ by Suncorp Superannuation which claimed that 86% of divorcees did not consider superannuation in their divorce settlement.

 

I was a little surprised that the figure was that high but not surprised by the sentiment. A lot of the people who come to see me don’t realise that superannuation is included in calculating the assets and liabilities to be divided between the parties and that even though the superannuation interest may have been accumulated by one party going to work the other party has contributed to that fund by being the home-maker or raising the children – activities that allowed the first person to have a family and home but also log long hours at work.

And superannuation can be a very important asset – statistically it is usually the second biggest asset other than the family home, and depending on the size of the mortgage and age of the parties it can sometimes be the biggest asset.

The statistics in the “Untying the Knot” report show how failing to appreciate the impact of separation and divorce on superannuation can have a drastic effect on your retirement age and superannuation savings.

Firstly, let’s look at what the report showed about the impact of divorce on retirement age.

According to the people surveyed the highest percentage of people not separated or divorced nominated 65-69 (29.4%) as their ideal realistic retirement age, while the majority of those who are divorced selected 75 or older (29.9%) – that’s a ten year difference in likely retirement age for those who are divorced or separated.

So, turning to the impact of divorce on superannuation savings, why is there such a difference in estimated retirement ages?

The report referenced figures relating to the average age of divorce to demonstrate the very different financial positions of male and female divorcees, and came up with this disquieting statistic:

The average age of a man at divorce is 45 and he has about $128,000 in superannuation

The average age of a woman at divorce is 42 and she has about $42,000 in superannuation

If that woman is one of the 86% of divorcees who do not consider superannuation in their property division (firstly, that it is an asset and secondly that she may have made an indirect contribution to the fund) than she is likely to be at a significant financial disadvantage come retirement age; if she had considered superannuation during her property settlement negotiations she is far more likely to be in a financial position to retire earlier rather than having to work into her 70s and beyond.

While the report did not focus on this perspective, to my mind there is another reason why those surveyed may have a different view on what their superannuation savings needs are post separation, and that is, that a payment to a spouse or former partner of part of your superannuation fund obviously reduces the amount of superannuation you have to retire with – hence the need to work later in life to rebuild that nest egg.

While these statistics may be true, and you may have no choice when it comes to going through separation or divorce, there are some options available to help you get back on track financially. Firstly, for my part it is about negotiating the property division that will best enable you to get on with your life, and secondly, I can refer you to expert financial planners who can help you with the next stage of your financial future.

Tax and family law

Despite all the lawyer jokes out there - and trust me I've heard them all ... “It was about as even a divorce settlement as you could hope for. Each lawyer got $50,000” – my experience is that nobody benefits from a long Court battle.

However, I can also tell you that an informal property division (for example, where one person keeps living in the house and the other person gets the investment property - without a legal agreement or Court Order) is one of the quickest and simplest ways to ensure that you may each end up paying a lot of money to the government.

You see, the law grants exemptions for stamp duty and rollover relief for capital gains tax on property transfers in circumstances of family law property division. This means that no stamp duty will be payable on the transfer of property between spouses (including de facto spouses) and any CGT applicable to investment property can be paid only when the party receiving the property disposes of it in the future - IF formal arrangements are made about that property division.

 

However, it is not necessary to go to Court for Orders regarding your property division because these savings are available to parties finalising their property division by Consent or Agreement. This means that you can have an amicable and cost effective resolution of your property division and save money on tax.

 

So what kind of savings are we talking about?  One of the most common examples is:

 

A couple transfer their home into the wife’s name and she pays stamp duty of $13,500.   Some years down the track they sell the investment property and they co-sign the contract for sale as they never transferred title of that property to the husband – in an attempt to avoid paying stamp duty. June 30 rolls around and they now each owe $10,000 in capital gains tax.

 

If the parties had entered into a formal agreement the wife could have saved $13,500 in stamp duty and $10,000 in CGT and the husband could have had CGT roll-over relief of $23,500 rather than having to pay $10,000 in CGT.

 

The rules, bring rules, are not always straight forward (and I always recommend that you get expert tax advice as well) but to avoid gifting all that money away contact us to discuss your property division - I might just be able to save you thousands.

Parenting after separation. Aka could you go on holidays with your ex?

There’s a lot of literature out there on the effect of divorce or relationship breakdown on kids. And a lot of that mentions that kids benefit from continuing to enjoy the knowledge that they still have two parents who love them very much.

But there is a big leap between knowing that “shared parenting” is best for your kids and actually living it. And that is easily illustrated in the concept of going on holiday with the kids and your ex.

Who else has seen those photos of Bruce Willis and Demi Moore – or some other famously divorced Hollywood couple – reuniting in some fabulous exotic location, with their new spouses, and all playing poolside with the kids? As a family law practitioner it always catches my attention. Initially I usually think how the kids must, despite their parents separation, be feeling that they are still part of one big family – influenced by all the conferences I attend where experts tell me that this is the case (although without the pop culture references). But then I tend to think about ‘how’; how do the Bruce’s and Demi’s of the world do it? How do you actually go on holiday with your ex?

At first you might be wondering if this is a common practice (amongst non-celebrities) – it is. The overwhelming majority of parents who separate reach agreement about their ongoing parenting arrangements and they then work hard at creating opportunities for the kids to see that the family unit can still operate as one. And a trip away together may provide priceless memories for the kids – and you – to look back on one day. But that doesn’t mean it is easy.

First there is the emotional toll to consider. While the moments caught on paparazzi camera’s make it appear that Hollywood couples are genuinely having a wonderful time on their blended family holidays back in the real world you need to decide – honestly – if you can handle it. If there’s too much bitterness or resentment before you leave, chances are it won’t get better no matter how lovely the holiday spot. If you decide that the benefit to the kids is worth it think about ways you can lessen the emotional toll – perhaps bring a friend along or research holiday activities you can do solo for some time out.

But it is often not family squabbles or too much togetherness that can cause problems – it’s money. Even if you agree that you will split all of the expenses for the kids beforehand it’s important to consider exactly what you mean by that. What if one you thinks that the kids should be able to do every (expensive) activity on offer at a resort or theme park while the other was planning a holiday of digging sand castles and playing Marco Polo in the pool? What if your ex offers to pay for everyone to head out to an expensive restaurant for dinner because it’s their idea – are you going to feel resentful? The last thing anyone wants is for the holiday to degenerate into the old days when the two of you disagreed on how much to spend and when. So before heading away together, sit down and put in place a plan to resolve disputes should they arise.

Because at the end of the holiday it should have been an opportunity for the kids to experience a special trip with both of their parents as a family.

Businesses, misconceptions and family law

The financial implications for the parties to a property division can be just as significant as the emotional ones. This is because we might be dealing with the sale of the family home or a significant decrease in weekly income. But the financial implications can be particularly so when there are ‘complications’ to a property division like an interest in a business.

There are a number of misconceptions out there about these issues which can make negotiating a resolution for property division even more difficult. 

Misconception #1 – does a business count?

Often people think of the family home, the car and the bank account. But ‘property’ in relation to family law also includes businesses. Businesses can be included as an asset for family law property division in a number ways but most commonly: 1) Where there are shares in a company; or 2) where there is a small business, most often a ‘family business’, including a sole trader, partnership or Pty Ltd, which has its own value (i.e. “goodwill”) or that owns realisable assets such as real property or motor vehicles or tools etc.  

Misconception #2 – what if a trust “owns” the business?

It does not necessarily matter who owns the business – or interest in the business. If a trust owns the business or your share in the business then the trust – or your interest in the trust – may form part of the asset pool.

Misconception #3 – “but I own it with other people”

Again, it does not necessarily matter who owns the business – or interest in the business – or trust. The whole of the business will not form part of the asset pool – just your share. But it may mean that the other owners will be involved to a small degree in your family law matter while the new legal ownership is sorted out.

Misconception #4 – “but I owned it before we met”

Depending on the circumstances this may mean that the business – or interest in the business – is not part of the asset pool – but that depends on a number of circumstances, including what has actually happened in terms of contributions to this and other assets during the relationship and indeed what other assets there are.

Misconception #5 – “but my ex had nothing to do with the business”

It is important to remember that it does not necessarily matter whether you have both been active in the running of the company – it may be an asset which forms part of the asset pool available for division – because in family law we look at the overall (financial and non-financial) contributions that have been made.

 

Now, none of these may be relevant in a matter - mainly because the other party agrees to exclude a business interest - but the presence of a business does mean that the division of assets may be more complicated.

How to: change an existing Order

I get quite a few enquires about changing existing parenting orders – perhaps the Orders that were made years ago didn’t envisage your children’s High School needs, or maybe you need to move away, or maybe the kids are just spending more time with friends or on extra-curricular activities or part-time jobs and the Orders no longer suit.

If both parents agree that changes are needed to the Orders and you both agree on those changes you have two options:

* You can enter into a Parenting Plan varying the existing Orders. You should obtain specific legal advice about the effect of a Parenting Plan in these circumstances; or

* You can both sign draft Consent Orders, which the Family Court can make into new Orders, without the need for either of you to appear in Court. Again, you should seek specific legal advice.

If you have been approached about changing existing Orders – or if you want to approach the other parent about changing existing Orders – you should consider if the change proposed is in the best interests of the kids – that consideration comes before any advantage to you or the other parent or any impact on you or the other parent.

If you wish to change existing Court Order but the other side doesn’t agree – or the other side wants a change and you don’t agree – it may be necessary to make an application to the Court.

However, in order to make an application to change existing Orders it will be necessary to show that there has been a significant change of circumstances that makes a change necessary.

What exactly constitutes a significant change of circumstances can be a vexed question. A change in circumstances can include the age of the child, the health of the child, or the financial circumstances of the household. But it needs to be a significant change in circumstances and not simply the passage of time or a change in the Family Law Act.