If you are a party to a family law separation you need to make sure you are aware of your obligations under the Family Law Act in respect to full and frank financial disclosure.
The rules of full and frank financial disclosure require that both parties disclose all sources of earnings, interest, income, property (vested or contingent interests) and other financial resources. This applies whether the property, financial resources or earnings are owned by the party, by another person on behalf of the party (for example, the party’s child or de facto partner) or are held in corporations, trusts, company or other such structures.
It is a common misconception that assets held overseas will not form part of a parties’ disclosure obligations. Many people do not realise that the Family Court has express jurisdiction to make orders concerning international assets under section 31(2) of the Family Law Act, which states that the jurisdiction of the Courts “may be exercised in relation to persons or things outside Australia and the territories”.
The Family Law Act 1975 defines “property” as both property which the parties are entitled to or may be entitled to. This includes property held overseas, and property that a party has an interest in (although the property may not be held in their name).
If a party has disposed of any property in the 12 months prior to the relationship breaking down, they will also be required to disclose that property to the other party as part of their financial disclosure obligations. This includes any sale, transfer, assignment or gift of property.
When a court is deciding the just and equitable division of assets in a family law matter, they consider the four-step process:
- The net asset pool of the parties;
- The financial and non-financial contributions of both parties;
- Various adjustment factors including the future needs of the parties; and
Considering the practical effect of the proposed property settlement and whether the settlement is just and equitable for both parties.
Ascertaining the net asset pool is key here, as a court cannot consider a just and equitable outcome without all the facts.
If a property settlement is entered into and it is later found that assets have not been disclosed by a party, the court may overturn the property settlement where they believe there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance.
The court can then make orders to provide further funds to the party that has been defrauded.
If you would like further information on separation involving overseas assets, please contact our family law team.