Protecting Assets After Separation

TGB Family Law Partner Wendy Barry outlines the importance of being proactive and prepared in order to protect your assets following separation.

“I have separated from my partner and I am worried that s/he is trying to hide and move assets, what can I do to protect them?”

It is a common priority for people who separate to preserve the asset pool until such time as a binding settlement can be put in place.

It should be of comfort to know there is much that can be done to protect assets and limit exposure to increased debt.  But the key to being effective in these areas is to be proactive and prepared.

Once a former partner has sold or drained equity in a property, drawn down on lines of credit, withdrawn joint savings etc there are limited avenues available to restore or addback what has been removed.  So prevention in these circumstances is the key.

Some preventative strategies may include:

1. Consider caveating a property where that property is held solely in your former partner’s name.  A caveat effectively prevents the property being sold, transferred, refinanced until such time as your caveat is dealt with ie it compels the person whose property has been caveated to talk to you about the interest you are asserting in the property.  A caveat should not be lodged without receiving legal advice as there can be costs consequences for caveats that are not correctly or appropriately lodged;

2. Obtain an injunction preventing your former partner accessing and potentially draining assets of the relationship.  An application to the court is required to obtain an injunction.  It is not a simple process and legal advice should be obtained before making such an application;

3. Review all of your bank accounts to work out those that are held in joint names then contact the bank to ensure no monies can be accessed without the signature of both parties.  Review also lines of credit and where you might be ahead in your mortgage repayments.  Remember that making the account “two to sign” puts the account off limits to you (individually) so be sure this is appropriate in your circumstances.  You may prefer to withdraw some of the monies in the account and then effect a “two to sign” regime with the bank.  You should get advice about what is best in your circumstances before taking action;

4. Drop limits on credit cards or if appropriate close the credit facility – you may need to pay off the card before closing it.  Make sure you keep a statement of the credit facility showing the balance at separation so that if it increases post separation you will be able to prove the increase and in certain circumstances limit the debt to the balance at separation;

5. Change passwords to bank accounts, social media accounts and computers;

6. Update your:

a) Binding death nominee – in the event of your death your superannuation will be paid to your binding death nominee.  If your nominee is your former partner and you do not want him or her to receive it then you may wish to make arrangements to change it to the person you now want to receive your superannuation;

b) Will to reflect your new circumstances; and

c) Life insurance policy to reflect who you wish to benefit under the policy.

If your partner has already depleted the pool do not despair there are some remedies available but they could come at considerable legal cost because often they will involve proceedings in court and if not court proceedings then potentially lawyer to lawyer negotiations.  These remedies may include:

1. Making an application to set aside transactions that have been taken to deliberately defeat your entitlement eg transferring or selling a property.  Such an application is made to the Court as part of an overall application for a property settlement and should not be made without obtaining legal advice;

2. Seeking an injunction against your former partner accessing further monies (see paragraph 2 above).  In some instances an undertaking from your former partner may suffice but you will need assistance in drafting an appropriate undertaking;

3. Applying for an addback in your property settlement for monies inappropriately accessed by your former partner.  Addbacks are ordered in very limited circumstances so seeking an addback is something that requires careful consideration with an experienced lawyer before it is made.

Of course there is no one size fits all approach because every person’s circumstances are different but if you suspect your partner is about to or has taken steps to manipulate the assets of the relationship you should immediately get legal advice about how to protect your pool of assets.

For further information or assistance, contact your nearest TGB office and discuss your issue with an experienced family lawyer.