Divorce and separation can be some of the most difficult events in a person’s life. While family lawyers in Melbourne can help you to navigate these transitions, it is important to know about how best to broach this conversation with your partner.

Let’s look at six effective tips for discussing divorce and separation with your partner.

1.    Remain Calm And Collected

Tell your partner that you have been thinking about separating for some time and that you would like to talk about it. Remember to be as kind as the circumstances will allow. Even if your partner expects the news, divorce, and separation are never easy things to talk about.

It can also help to prepare something to say ahead of time with the help of professional family law firms like Rockwell Family Law. This will ensure that, in the midst of all the emotions that will come up, you are still able to get across what you want to say.

2.    Try To Avoid Blindsiding Your Partner

While in some cases your partner may be completely unaware of your desire for a separation or a divorce, there is always the chance that they may not be on the same page. Blindsiding someone can emotionally devastate them and create more difficulties later on when you try to reach an agreement about long-term arrangements.

3.    Choose The Right Time And Place

Make sure to give some thought to where and when you are going to break the news to your partner. If both of you have been openly hinting at divorce or separation for some time, then this may be less important. There is never a great time to start this conversation but avoid piling more emotional strain if there are other major life events happening in your partner’s life.

4.    Do Not Dive Into Details

If you are broaching the subject of divorce or separation with your partner for the first time, it is not effective to start talking about what the details of the new arrangement will be. Let the news sink in and give your partner time to consider what you have said.

5.    Tell Your Kids Together

Regardless of what disagreements exist between you and your partner, it is always important to act with the interests of your children in mind. In the ideal scenario, the best way to inform your children about a separation is to do so together, unless your partner is abusive, in which case it is important to consult with a family law firm for guidance.

6.    Consider consulting a couples’ counselor or psychologist

All of these matters are sensitive and often more difficult to execute in practice than they sound on paper. In many cases the end of a relationship can be best managed with the assistance of a professional such as a couples’ counselor or a psychologist.

Ask Professional Family Lawyers For Help

These six pieces of advice are all effective entry points for broaching the subject of divorce or separation with your partner. However, sometimes it can be difficult, even when following this advice, to find the right way to get the conversation started. If you are struggling to move forward, contact our professional and knowledgeable Rockwell Family Lawyers to get the help you need.

With us well into the New Year and and with easing of COVID restrictions, now its a good time to start think about Estate Planning. With more Australians owning more assets, its important to ensure that your assets are protected.

What is Estate Planning?

Estate Planning can be as simple as just organising a will. Further Estate Planning (beyond a will) may include preparing a plan to manage and transfer your wealth, make provisions for your loved ones, preparation of a powers of attorney, certain health directives and tax implications/considerations for yourself and beneficiaries.

Below is a summary of the key documents that might be used during estate planning:

• Will – is a legal document that expresses your wishes as to how your property is to be dealt with after your death.
• Power of attorney – is a legal a document that lets you appoint someone to make decisions about personal, medical and financial matters if and when you are unable to make decisions.
• Testamentary trust – is a type of trust that is usually created by a will and comes into existence after you die.  It can assist in controlling how your assets are managed for your beneficiaries once you pass.

Im not old or wealthy enough to consider Estate Planning!

Regardless of your current personal circumstances Estate Planning (which might include a will, power of attorney or forming a testamentary trust) is important to consider at any age.  By being proactive about Estate Planning, it will provide you with comfort, certainty and security knowing that if anything were to happen, your loved ones are cared for in accordance with your wishes.

Tax considerations that may arise from a Deceased Estate

You don’t naturally associate deceased estates with tax considerations but below are some things that may need to be actioned:-

• Preparing and finalising tax returns for the deceased person;
• Obtaining a TFN and lodging trust tax return/s for the deceased estate;
• The sale or transfer of certain assets may incur capital gains tax (CGT);
• Superannuation death benefits may be taxable where its paid to a non-dependant of the deceased;
• Dealing with assets in complex structures like trusts or companies can cause unintended CGT consequences; and
• State based taxes such as land tax and stamp duty where property is transferred and an exemption/concession does not apply.

If some of the tax considerations are not properly addressed or advised upon, they can lead to large tax bills for your beneficiaries, which is probably the last thing you want to do to them.

It’s important to remember that Estate Planning ensures your loved ones are well protected.  It should be tailored to suit your wishes. Rockwell Family Law has experience in assisting and preparing tailored Estate and Tax Planning for clients, including preparing wills and managing deceased estates.

Going through a family law separation can be both difficult and emotionally draining.  The last thing on your mind would be the tax implications that arise from a separation and this is why it is so important before finalising any financial arrangements that you seek proper legal advice.

The tax implications of a separation and division of assets from a relationship is extremely complex and the advice for it needs to be tailored and specific to your circumstances.

The Family Law Team at Rockwell Family Law are highly experienced in not only managing family law property and parenting matters but are also skilled in advising and assisting clients in preparing tax effective BFAs and Consent Orders.

Tax Implications

There are various tax implications that need to be considered in family law agreements impacting on the following:

• Maintenance payments
• Property division, settlements and Court orders
• Shares and investments
• Business interests – where the parties operate their own business
• Tax debts
• Superannuation
• Trusts

Maintenance Payments

Generally maintenance payments are exempt from income tax if the payments are made to a person for the benefit of a child.  The person making the maintenance payments also cannot claim the payments as a tax deduction on their annual tax return.

GCT

Capital gains tax (CGT) is the main issue that appears when property divisions and Court orders as well as interests in shares and investments are involved.  Various concessions, exemptions and roll-over reliefs may apply to the transfer of the type assets as part of a separation.  The binding financial agreement (BFA) or consent orders made by the Court, from a separation needs to be reviewed to ensure that there are no surprises or unexpected tax implications from the division of assets between the parties as part of the separation process.

State Taxes

An additional issue that can appear as a result of property divisions are state taxes such as land tax and duties.  Again, there are various concessions and exemption that may apply but the BFA or consent orders needs to be reviewed to ensure that the appropriate or proper exemptions apply and that parties avoid any taxes which they should be exempt from if the documents are correctly worded

Dividing Joint Business Interests

Business interests need to be carefully considered.  The transfer of business interests may trigger a CGT liability for the transferring party.  Where there are complex structures involved (the use of companies or trusts) a detailed review needs to be undertaken before interests are transferred between the parties, even before being put down in writing as part of the BFA or consent orders.

Tax Debts

As surprising as it sounds, tax debts can be shifted between the parties as part of a property settlement.  This is a significant risk whereby the wealthier party could be forced to pay the tax debts of their former partner as part of a property settlement, even if these debts relate only to their former partner.  Other financial liabilities may also be transferred in a similar manner as well.

Superannuation

Superannuation will be a big one as for many Australians, superannuation will be one of their largest assets.  Superannuation can be and usually is divided like any other asset as part of a separation.  This area is complex as it depends on whether the superannuation is part of an APRA (Australian Prudential Regulation Authority) regulated fund or is in a SMSF (Self-Managed Superannuation Fund).  Detailed advice again needs to be considered when looking at dividing superannuation between the parties as in some circumstances superannuation will need to be valued.

Generally, the tax consequences from splitting super on relationship breakdown could include:

• A super lump sum payment and pension paid to the member spouse and non-member spouse being taxed separately.
• Super lump sum components being calculated for member spouse and non-member spouse entitlements individually.
• Amounts being included in your total super balance, which may affect your ability to contribute to super.

In Summary

The tax implications due to separation are numerous and often complex and really need to be reviewed, by experts, prior to finalising any family law settlements.

If you’re potentially facing financial hardship as a result of a divorce or the end of a de-facto relationship, our team of lawyers will help you understand your rights around spousal maintenance. Drawing upon 25 years of family law firm expertise, Rockwell Family lawyers will guide you on the ins and outs of spousal maintenance eligibility and obligations.

Spousal Maintenance

The topic of finances frequently escalates relationship tension and causes disputes, particularly when partners have vastly different financial means and expectations. This is especially heightened during divorce or separation, when one partner may be left financially challenged and in need of support from their former partner.

The Family Law Act 1975 (section 75) stipulates that a person has to help maintain a financially disadvantaged former spouse or partner for a reasonable amount of time if they can afford to do so.

So whether you are seeking spousal support or being asked to pay spousal maintenance, a whole host of factors will determine what is fair and reasonable, to ensure each person can maintain an adequate and deserving standard of living post relationship or marriage breakdown.

What is Spousal Maintenance?

Spousal maintenance, or spousal support, is the financial support paid by a former spouse or partner post-separation or divorce to help the other maintain a reasonable standard of living when they are proven to be unable to support themselves. This applies to both hetero and same-sex marriage or de-facto relationships.

Spousal support (known as ‘alimony’ in America but not used as a legal term in Australia) is entirely separate from child support. The window for spousal application needs to be made within 12 months post-divorce or two years after the break up of a de-facto relationship.

How is Spousal Maintenance Calculated?

There are no hard and fast rules nor defined formulas when it comes to calculating spousal maintenance in Australia, as it depends on each couple’s unique circumstances.

Spousal maintenance can be decided by an amicable support agreement, or if more contentious via the legal route and filing a spousal maintenance application through the Family Court of Federal Circuit Court.

The Courts will award an order of maintenance after a close examination of each person’s personal and financial situation in the context of their needs and ability to pay.

The essential two-step criteria require:

1. The partner seeking maintenance to prove they are unable to support themselves or have a financial income shortfall in meeting their needs to keep a reasonable lifestyle.
2. The partner being asked to pay maintenance can afford to extend financial support without compromising their lifestyle and expenses.

When determining spousal maintenance eligibility and amount, each person is assessed across a wide range of variables such as:

1. Their financial state of available funds, income, property, assets, or other resources
2. Access to or interest in any trusts or estates
3. Age, health, education, employment status
4. Earning and employment potential and capacity relative to their physical and mental abilities
5. Level of care and control of dependant children of the relationship under 18 years
6. Lifestyle (and reasons why maintenance is being sought)
7. Relationship status (if entered a new relationship or cohabitation with another)

The evaluation process and court set out to ensure both parties have a reasonable standard of living that is not detrimental to their respective physical or mental state of health.

How is Spousal Maintenance Paid?

Spousal maintenance can be paid in two ways, periodically or in a lump sum. Periodic or recurring payments over a finite period are the most common, as weekly or monthly installments. Under special circumstances, support payments can be indefinite, although this is rare.

These support payments are deemed to cover essential daily living expenses as well as rates, utilities, healthcare expenses, rent, or mortgage payments.

Lump sums, once-off payments, are frequently part of a property settlement or decided where the payor is unable or unlikely to maintain ongoing payments. Sometimes, a lump sum payment is considered most appropriate in assisting towards a big outlay, like a motor vehicle or furniture.

How Long Does Spousal Maintenance Last In Australia?

Depending on each particular case and the former partner’s needs, spousal maintenance is usually awarded as a certain sum of monies to be paid via periodic payments over a specific time. Payments could be ordered until final property settlements have been awarded, or until the applicant has secured employment and regained a reasonable standard of financial security.

Payments, whether fixed for a set term or in some cases for life, can be reassessed or further orders made where either party’s financial or personal situation has changed. The right to spousal maintenance usually ceases if the receiver remarries.

For More Legal Advice Regarding Spousal Maintenance, Book a Consultation With Rockwell Family Law

Breakups and divorce generate major upheaval in one’s way of life and standard of living. Adjusting to being ‘solo’ again, creates a lot of emotional confusion around what is logical, fair, and right, especially without any established prenuptial agreements in place.
Managing out-of-court amicable settlement agreements is ideal. Either way, every couple’s case needs to be dealt with on its merit, so getting expert family law advice from Rockwell Family Law will help you understand your entitlements and obligations around spousal maintenance to keep you and your life on an even keel.