Attwood Marshall Lawyers Family Law Associate, Emily Edmonds, joins Robyn Hyland on Radio 4CRB to discuss how the law views people being deceitful when negotiating a property settlement after separation, and what can happen if one party tries to hide or diminish their assets.
Introduction
The breakdown of a relationship is rarely a simple or serene process. We see it play out all too often in Hollywood where the most dramatic and nasty splits result in bitter fights that take years to resolve. The “Brangelina” saga is a prime example of how extensive the battle can be when high-net-wealth and high-profile couples go their separate ways. From fighting over a bigger slice of the pie, to contending over child custody arrangements, it can get very nasty.
Property settlements are one of the most difficult and emotive issues separated couples fight over. It is not uncommon for people to be deceitful and attempt to conceal assets, including their income, superannuation, business assets, or properties, during a separation to try to reduce what their ex-partner might receive in the settlement.
The issue with this is that as part of the property settlement process, each party has an ongoing legal duty to provide full and frank disclosure to the other, in relation to their assets and financial circumstances, until a property settlement is finalised. By doing so it will ensure the division is fair and reasonable.
The law is making it increasingly difficult for people to get away with not disclosing assets in a property settlement, and there are ways to uncover if someone is not being completely upfront and honest with what they earn and what they own.
The most expensive divorce in Hollywood: Angelina Jolie v Brad Pitt
The “Brangelina” saga is one of the most expensive and complex separations that Hollywood has seen. And it’s not over yet!
Jolie filed for divorce in 2016, followed by court proceedings which took place in 2020 over child custody arrangements for their six children, and the former couple continue to battle it out in court with the focus now turning to the French winery, Chateau Miraval, that they purchased together in 2012.
After Jolie filed for divorce, the winery became one of the major sticking points in the division of assets and was eventually split evenly between the two.
In October 2021, Jolie sold her stake in the winery, and four months later, Pitt filed a lawsuit disputing the sale. Pitt has claimed that Jolie knowingly conspired with a rival company that was aiming for a hostile takeover and that she “pursued and then consummated the sale in secret, purposely keeping Pitt in the dark, and knowingly violating Pitt’s contractual rights”.
The lawsuit also claimed that Pitt put more work and financial stake in the winery, arguing that Jolie contributed “nothing to its success.”
Jolie then countersued Pitt for $US250 million in September 2022 arguing that Pitt had waged a vindictive war over the French vineyard as retaliation for the divorce, and that he had squandered the vineyard’s assets on vanity projects and “looted” its valuable trademarks, all to attempt to diminish its value and ensure Jolie did not benefit from its success. It has been argued that his conduct was unlawful and oppressive.
Although a high-profile case, this still a great example of what can play out in a nasty separation.
Negotiating and determining a property settlement
When a married or de facto couple separates, a five-step test is used to determine each person’s entitlement at settlement. An experienced family lawyer will be able to help their client determine what the asset pool looks like so that they can give advice on what they believe that person’s range of entitlement might be.
The property division test follows these steps:
Step 1: Determining whether or not it is just and equitable to adjust the parties’ interests in property. If it is found that an adjustment would be just and equitable, then you will proceed to the next step.
Step 2: Determining what property is held by either party and what the property’s value is. This includes all assets such as bank accounts, superannuation, houses, motor vehicles, insurance policies, household items, etc.
Step 3: Consideration will be given to the contributions made by both parties, both financial and non-financial, during the relationship. Financial contributions include income and property interests. Non-financial contributions include unpaid work such as renovations or work for a family company. And homemaking duties and parenting are also factored in.
Step 4: The future needs of both parties will be assessed. There are a number of factors that will contribute to determining someone’s future needs including what their age and health status is, their income earning capacity, and any commitments either party has to support themselves or a dependent, amongst other considerations.
Step 5: Taking into account the above steps, a court must determine whether it has arrived at a just and equitable division of assets. A court may determine that further adjustments are required, or they may proceed with orders to bring the financial relationship of the parties to an end.
How hard is it for someone to hide assets during divorce?
It is difficult to do! When parties are negotiating a property settlement, both need to disclose all of their assets and liabilities, including those that are jointly owned, owned individually or owned within a company. Each party, as part of the disclosure process, will need to provide:
- Information about any trusts that they have an interest in
- Tax returns
- Payslips
- Evidence of assets sold or disposed of near the end of the relationship
- Superannuation statements
- Bank statements
- Documents relating to any inheritances received
- And any other documents or information that may be relevant.
It comes as no surprise that when couples separate with animosity, one party might try to conceal their assets. Some of the more creative ways a party might attempt to conceal an asset includes:
- Moving money between bank accounts
- Investing in a new business venture
- Investing in cryptocurrency thinking that the investment cannot be traced
- Overpaying bills to attempt to hide money and deplete bank accounts
An experienced family lawyer will be able to identify these things and ensure that all assets form part of the property pool.
What laws are in place to prevent people from hiding assets?
In April 2022, the Government introduced new measures which assists to improve transparency in property settlements as far as superannuation in concerned.
Superannuation has historically been an area that needed greater scrutiny – it’s normally one of the most significant assets people hold when looking at a property pool, so it comes as no surprise that this is something many people have tried to conceal or have removed from the overall asset pool in separation proceedings.
The new laws are designed to ensure fairness in property settlements to prevent under-reporting of superannuation assets, and they enable a secure electronic information-sharing mechanism between the Family Law Courts and the ATO. This means the court has visibility of superannuation information held by the ATO and as such these assets cannot be as easily concealed.
Consequences if someone attempts to conceal assets during a property settlement
There has been a toughening of penalties over the past year as courts try to crackdown on parties hiding assets during separation. Anyone who fails to provide “full and frank” disclosure in family law proceedings can be charged with contempt, and this can result in a significant fine or even imprisonment.
The courts have always required full and frank financial disclosure for property settlements, however the latest reforms acknowledge that people try to do everything in their power to hide assets or devalue assets, and this then increases the costs for the other party who have to take steps to locate the assets, which only frustrates and draws out legal proceedings.
Anyone who attempts to hide assets should expect to be penalised under the tough new disclosure laws.
Time limits to be aware of
There is a common misconception that after separation, any financial decisions, or investments you make will not be factored into the property settlement. This is simply not true. You must disclose financial information which is relevant up to the point that the property settlement is finalised. That means, if a couple separates and takes six months to finalise a property settlement and bring their financial relationship to an end, they will need to disclose their current financial position, including disclosing their most recent payslips and tax returns, and providing information relating to any property that has been disposed of since the breakup, during that 6-month post relationship period.
You only have 12 months from the date of divorce to settle property matters or apply to the Family Law Courts for orders to be made.
De facto couples have two years from the date of separation to settle property matters.
This is one of the main reasons why it is recommended to settle property matters as soon as possible when a relationship breaks down. You don’t need to be divorced to finalise a property settlement – it can be done immediately following separation. By doing so, all parties can move on independently without there being ongoing ramifications for future financial decisions being made.
Attwood Marshall Lawyers – supporting families through separation and resolving disputes with as little conflict as possible
When a relationship comes to an end, it is important to get trusted legal advice as soon as possible to understand how to protect your interests and formalise a settlement as quickly as possible. An experienced family lawyer can help you come to an agreement that everyone is comfortable with, and is fair and reasonable for both sides.
Attwood Marshall Lawyers have a dedicated team of lawyers who practice exclusively in this complex area of law. Our team can help with all aspects of family law including negotiating property settlements, divorce applications, binding financial agreements, parenting arrangements, child custody disputes, child support and spousal maintenance.
To discuss your family law needs, contact our Family Law Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtollley@attwoodmarshall.com.au or book an appointment immediately online with one of our family lawyers.
Read more:
Divorce later in life: 3 common reasons why relationships can break down in your twilight years
You’ve separated from your partner – so what happens next? Property settlements and determining who gets what!
No more hiding superannuation assets in family law proceedings: new measure introduced to give rights to search superannuation entitlements of your spouse
