Family Law and Divorce

Separating from a partner is not only an emotional challenge but also a financial one. The complexity of dividing assets and debts has increased significantly with the emergence of new asset classes, financial products, and recurring commitments. To ensure a fair and transparent division, it’s essential to understand both traditional and modern financial considerations.

Traditional Assets and Debts

Assets

1. Real Estate: Includes the family home, investment properties, and land holdings.
2. Financial Accounts: Joint or individual savings accounts, term deposits, and investment portfolios.
3. Vehicles: Cars, motorcycles, boats, caravans, or other recreational vehicles.
4. Superannuation: Retirement savings accounts, including self-managed super funds (SMSFs).
5. Personal Belongings: Jewellery, art collections, antiques, and valuable collectibles.
6. Business Interests: Company shares, partnerships, or sole proprietorships.
7. Insurance Policies: Life insurance and income protection policies.

Debts

1. Mortgages: Loans against real estate properties.
2. Personal Loans: Secured or unsecured loans for vehicles, renovations, or other purposes.
3. Credit Card Debt: Joint and individual card balances.
4. Business Loans: Debts tied to business operations or investments.
5. Tax Liabilities: Outstanding income tax or capital gains tax obligations.
6. Family Loans: Informal loans from friends or family members.

Emerging Asset Classes

1. Cryptocurrency and Digital Assets

The rise of digital currencies and blockchain technology has introduced new complexities in asset division.

• Examples: Bitcoin, Ethereum, NFTs (non-fungible tokens), and stablecoins.
• Key Challenges:
  • Identifying undisclosed wallets or transactions.
  • Valuing assets due to high volatility.
• Tips:
  • Use forensic accountants or blockchain specialists to track and value digital assets.
  • Ensure all crypto holdings, wallets, and exchange accounts are disclosed.

2. Other Digital Assets

• Examples:
  • PayPal or Venmo balances.
  • Digital gaming accounts with tradable assets (e.g., skins, in-game currency).
  • E-commerce stores or platforms generating income (Etsy, eBay, Amazon stores).
• Considerations:
  • Determine current and potential value.
  • Assess ownership and usage rights.

Modern Debts and Liabilities

1. “Pay in 4” and Buy Now, Pay Later (BNPL) Services

Services like Afterpay, Zip Pay, and Klarna have become increasingly popular.

• What to Consider:
  • Outstanding balances for ongoing purchases.
  • Future payment commitments.
  • Allocation of shared debts incurred before separation.

2. Subscriptions and Recurring Payments

• Examples:
  • Entertainment: Netflix, Spotify, gaming subscriptions.
  • Fitness: Gym memberships or online fitness apps.
  • Software: Adobe Creative Cloud, Microsoft Office.
• What to Do:
  • Create a list of recurring payments.
  • Decide who will retain or cancel subscriptions.

3. Short-Term Loans

• Examples:
  • Payday loans.
  • Loans linked to fintech platforms or apps.
• Key Considerations:
  • Review terms and interest rates.
  • Allocate responsibility for repayment.

4. HECS/HELP Debts

Student loans under the HECS/HELP scheme are not directly divisible but still affect financial capacity.

• Consideration: Factor these into discussions about income and financial obligations.

5. Gambling Debts Hidden in Betting Apps

In today’s digital age, gambling debts often lurk within betting apps and digital wallets, making them harder to detect. During separation, it’s crucial to identify and disclose these debts to ensure a fair financial settlement.

• What to Consider:
  • Request a full list of all betting app accounts and transaction histories.
  • Examine bank statements for recurring payments to gambling platforms.
  • Non-disclosure can lead to legal penalties or adjustments in settlements.
• Tips:
  • Seek legal advice to determine how gambling debts should be treated during negotiations.
  • Protect shared assets by freezing joint accounts or removing access to shared funds if gambling continues post-separation.

Tips for Addressing All Financial Matters

1. Transparency Is Key:
   • Both parties should fully disclose all assets and liabilities, including unconventional ones.
   • Non-disclosure can lead to legal penalties or adjustments in settlements.
2. Valuation Best Practices:
   • Use professional valuers for properties, businesses, and unique items like art or crypto.
   • Consider obtaining independent valuations for significant assets.
3. Debt Allocation:
   • Determine which debts are joint and which are individual.
   • Seek legal guidance to formalise responsibility for repayment.
4. Legal Advice:
   • Engage a family lawyer to ensure the division complies with Australian family law.
   • Legal advice is essential for creating binding financial agreements.

Conclusion