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Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

Separation can be a confusing time with many aspects of your life up in the air. With any separation comes the uncertainty of where your life is headed and how your circumstances will change as a result of your separation. Common questions you may ask yourself are ‘when can I see my children’, ‘where am I going to live’ and ‘who’s going to pay the bills’.

One aspect that is often overlooked during this time is which of your assets will be the subject of the division of your property, and what assets are actually defined under the Family Law Act 1975 (Cth) as ‘property’.  Not all ‘assets’ are treated as ‘property’ in the event of a separation. Big ticket items such as the family home, cars and cash savings may be obvious – but what about the distribution from a trust? A prospective inheritance? Workers compensation for loss of future earnings? We list below what items may actually be subject to a Family Law claim in the event of a separation.

What is property?

The term ‘property’ is defined in section 4 of the Family Law Act to mean ‘property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion’.

The definition is considerably broad and has been interpreted very widely to include both real and personal property. It can include almost anything of value such as:

  1. Real property (owned either jointly or individually);
  2. Business interests,
  3. Trust interests,
  4. Jewellery,
  5. Cars,
  6. Shares,
  7. Assets acquired through inheritance,
  8. Insurance policies,
  9. Cash savings, and
  10. Animals.

The Family Law Act looks beyond the legal title of assets and ultimately looks towards who is the beneficiary of the property. For example, if real estate is held on title by one party, it may be considered that the other party’s share is held on trust for them. This means that rather than your entitlement being based on who legally owns the property, it is rather based on your contributions to the relationship and other factors relating to your future needs.

Liabilities of parties are also subject to division in a property settlement and are incorporated in the total ‘asset pool’.  The total value of assets less the liabilities of the parties ultimately provides the net asset pool. It is important for all of the parties’ property (whether an asset or liability) to be assessed during a property settlement as the overall aim of any property settlement is to bring the parties’ financial relationship to an end.

Similar to assets, liabilities are included whether they are held jointly or individually. Again, the definition is broad-reaching and includes almost all debts such as:

  1. Mortgages,
  2. Personal loans,
  3. Credit card debts,
  4. Tax debts, and
  5. Stamp duty obligations.

What is not classified as property?

While the definition of property is broad, there are a number of things that, while they may be considered assets, are not considered property for the purposes of the Family Law Act.

Examples of such items include:

  1. Business goodwill,
  2. Non-transferable licences,
  3. Unassignable rights or interests,
  4. An anticipated inheritance from someone who is still alive,
  5. A pending claim for damages for personal injury,
  6. Borrowing capacity,
  7. Long service leave entitlements,
  8. Future pension entitlements,
  9. Tax losses, and
  10. Overseas superannuation.

These sorts of assets are often considered ‘financial resources’, rather than property. Financial resources are things which do not presently hold a monetary value, but will have the ability to generate an income in the future.

While financial resources are not considered part of the asset pool, the Court can still take these into account when considering each of the parties’ future needs, as they are resources that one party may be able to draw on in the future to assist them financially, which the other party does not necessarily have.

How is the property valued?

Once the property is identified, a value must be attributed to each item to be able to assess the overall asset pool. For larger items of the property pool, such as real estate and businesses, sworn valuations can be obtained from independent, expert valuers. These valuations are often only valid for a period of three months and as such are generally only required to be obtained in the absence of an agreement between the parties to further negotiations.

For smaller assets, such as household contents and various other chattels, it is unrealistic to itemise and value all items. While substantial funds may have been expended towards the items, generally they hold nominal value in the scheme of the overall asset pool and are considered to be worth only what they could be sold for at a second-hand rate. Pets are generally considered in the same vein as while they may hold significant sentimental value, they often hold significantly less monetary value. For more information on who keeps the family pet in a divorce, see our article here.

Superannuation

Superannuation is also considered as ‘property’ under the Family Law Act although is often considered separately to the non-superannuation assets of the parties. This is generally due to the fact that most people are unable to access their superannuation at the time of separation, so it is a unique asset in that respect and as such there are special regulations to deal with it under the Family Law Act.

It is common in long marriages for superannuation to be equalised between the parties. In such circumstances, there is a superannuation split payment from one party’s superannuation which is rolled over to the non-member’s fund. Every situation is unique, however, and we recommend that you obtain legal advice for your own individual situation.

Need assistance?

Should you like to know more about how your assets will be divided following separation, our accredited specialist family law team would be pleased to assist you. You can contact them on 1300 205 506 or via email at family@sharrockpitman.com.au to arrange an appointment for advice on your entitlements in any property settlement.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by one of our lawyers

,

.

Alana Di Paola

For further information contact

Ath Balaskas

Ath is a Senior Associate of Sharrock Pitman Legal.

She is an Accredited Specialist in Family Law (accredited by the Law Institute of Victoria). For further information, contact Ath on her direct line (03) 8561 3319.

More on

Family Law

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be placed on the Supreme Court website for at least 14 days prior to any application.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself does not take long to process the application (maybe another 1 to 2 weeks) and this is done 'on the papers' using the electronic Court filing system. This means you do not have to go to a court hearing. There is also a general discretion for the Court to issue a 'Requisition' asking that you provide more information before they process the application and this can delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

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For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.