As accountants you are frequently the first port of call when parties separate. Clients come to you seeking advice as to how to structure their finances in circumstances where they are now separated. This may be particularly important when parties are engaged in a family business or company and they need advice as to how to manage their affairs moving forward.
It is therefore important, when providing your preliminary advice to clients, or otherwise taking your instructions as to how to manage their affairs moving forward, that you are aware of the client's duties under the Family Law Act.
Most importantly, you need to be aware that the parties have a duty to provide full and frank disclosure to the other party in relation to all assets and liabilities under the Act.
The Family Law Rules specifically require particular documents in relation to different assets and liabilities, including statements, financial statements, tax returns etc. that go towards any asset or liability that either party have an interest in.
This means, that a party cannot simply obfuscate those duties by transferring interest they have to third parties to minimise their interest in particular assets. Should parties do so, the court has the power to include those interests (transferred to third parties) to be considered as part of the net assets, and step in and prevent such transactions occurring.
As a starting point, under the Family Law Rules the parties must disclose to each other the following:
- Their income, and any other benefits they receive as part of their employment (including income that is paid to another party, person or legal entity such as a trust or company);
- Any interest that they have in any property (including residential property such as a house, unit or vacant land but also property that is owned by a company or trust, shares, and any other property that they own either in their name or jointly with any other person or entity;
- Any other financial resource they have;
- Any interest they have in a company or trust, whether or not they think that they have the ability to control that entity;
- Any equitable interest they have in any other property (such as property that is going through probate or that is not in their name but they otherwise have an interest in);
- Details of any that have been sold since separation and in the twelve months immediately before separation;
- All liabilities owned, whether in their sole name or jointly with any other person.
Should your client have a family law issue that requires the production of such disclosure or have any questions or difficulties with providing that information (such as one party has retained all the documentation relating to that interest) then it is important to contact a lawyer who specialises in Family Law.
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.
