Recent reports on the wealth that MacKenzie Bezos may walk away with following her divorce from Amazon founder, Jeff Bezos, may leave you wondering how property settlements in Australia are decided — especially when a business is involved. In this article, Rachell Davey and Cheryl Chua discuss what the Court takes into account and how Financial Agreements can help.
Will the (bread) winner take it all?
The short answer is: not necessarily.
Even if all the assets including business interests are held in one party's name, there are other important factors such as the other party's financial and non-financial contributions to be considered in a property settlement.
The Family Law Act 1975 (the Act) sets out the factors that a Court must take into consideration when dealing with financial disputes / property settlements.
Broadly speaking, if there is no Financial Agreement between parties, the Act requires consideration of:
- all the assets that the parties have an interest in (jointly, separately or through entities/trusts etc);
- financial and non-financial contributions (which includes but is not limited to a party's role as primary home maker / carer of the children and the sacrifice of a party's own career to support the other's career);
- future needs of the parties; and
- adjustment of property to achieve a just and equitable outcome for the parties.
These considerations and other factors — such as the duration of a relationship/marriage — mean that the business interests of one party or the wealth of the bread winner can be identified as matrimonial property. This can be perceived as being "up for grabs" but really is (fairly) available for division in the circumstances of the relationship / marriage being recognised as a joint venture.
Can I safeguard against fighting over assets if my relationship / marriage breaks down?
A Financial Agreement can offer various advantages depending on your unique circumstances, including:
- certainty as to the division of assets in the event that your relationship/marriage was to breakdown or has already broken down irretrievably;
- avoiding submission of the settlement agreement to the Court for an assessment as to whether the outcome is "just and equitable";
- ability to outline the dispute resolution process (in the event of a disagreement); and
- avoiding possibly lengthy and costly litigation.
It is possible to enter into a Financial Agreement before, during or after a relationship / marriage. There are, however, strict requirements that need to be met to ensure the Financial Agreement is valid and binding on the parties if or when relied upon.
Financial Agreements can be overturned by a Court, but it is also possible for a Court to exercise its powers to declare it binding.