In family law proceedings, the court has broad discretion to
divide the assets and liabilities of the parties to a relationship.
One asset that is subject to division (or at least a notional
attribution within the asset pool) is a redundancy benefit received
or expected to be received by a party.
A redundancy occurs when an employee is "made
redundant" and terminated from their employment. An employer
must compensate an employee made redundant with a payout that is
dependent upon the length of their service with that employer. The
employee is also entitled to an additional payment which represents
any accrued leave and long service leave benefits.
Any such monetary redundancy benefits received by a party can be
taken into account in the division of the parties' assets by
the Family Court. For instance, if a party in a Family Court
property dispute receives a sizable redundancy payout from their
employer and contributes that amount to the relationship, this
contribution will be considered a financial contribution made by
them. Financial contributions to the relationship are one of the
factors that the court uses in deciding what each party will
receive from the asset pool.
Depending on the size of the asset pool and size of the
redundancy payout (as well as other factors), the inclusion of the
redundancy payout could enable the party contributing the
redundancy to receive a larger percentage of the asset pool. Even
if the redundancy payment is received just prior to, or just after,
separation, that redundancy may well be included as part of the
asset pool available for distribution because it relates to
employment occurring during the relationship and, in that case, the
court is likely to regard both parties as having contributed to it
A more complicated scenario occurs when one party to a family
court property matter understands that they will be made redundant
in the future. In such a scenario, that party is obligated to
disclose the potential redundancy (and the monetary value thereof)
to the other party. Failure to properly disclose a future
redundancy could result in any financial settlement being set aside
due to that non-disclosure. The relevance of a future redundancy
depends upon the degree of certainty that it will be received.
Not all redundancy compensation will be considered by the court
when dividing property. For instance, if the redundancy package
includes a payout for a loss of future earnings in circumstances
where the recipient is unable to obtain replacement employment, the
court may find that, because these benefits relate to
post-separation income, they should not be subject to division. The
logic is that, if the redundancy payment is to tide you over during
a future period when you won't be able to find a job, that
redundancy should not be treated as an asset.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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There are several requirements that must be completed by an executor before the distribution of assets to beneficiaries.
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