If you are in the process of navigating a financial settlement, or have property proceedings before the Court, then you probably already know that one of the first steps in a property settlement is to work out what assets and liabilities there are to divide.
To assist with this, each party is generally expected to make full and frank disclosure to each other.
Sometimes, we are asked “My ex’s parents are loaded and will leave a big inheritance to my ex. How does that factor in?’ Or “I’m a beneficiary in a family trust. Does this come into play between me and my ex?”
A prospective future inheritance or an interest in a family trust are two examples of something known as a ‘financial resource’ in family law speak.
Sometimes, people do not realise that these arrangements can have an affect on their property settlement. This is why financial disclosure has a heavy focus in property settlements and negotiations, alongside comprehensive legal advice.
What is a financial resource?
A financial resource is a source of future financial benefit that a party may have access to by way of inheritance, beneficial interest or discretionary trust. It is not usually a traditional asset – like real estate or a car.
While the term "financial resource" is not defined by the Family Law Act 1975 (Cth) ("the Act"), some examples of financial resources which may be taken into account in your property settlement include:
- Significant accrued periods of leave, such as Long Service Leave which may be cashed out;
- A future pension entitlement (e.g. a defined benefit superannuation interest);
- Tax losses;
- An anticipated inheritance;
- An interest in an asset which cannot be readily liquidated or sold;
- Superannuation interests and assets held overseas;
- Share portfolios;
- Investments of any nature;
- Windfalls such as gifts or winnings;
- New partners and their income earning capacity or ability to share living costs with you.
The High Court has said a financial resource must to be something that you can reasonably expect will be available. It can’t just be a mere possibility that someone might receive an asset in future.
For example, the chance that you or your spouse might benefit from the estate of a relative, who is still alive and well, does not usually fall into the category of a 'financial resource'. In the example of an interest in the family trust, it may depend on how often in the past, and how likely in the future, it is that you receive benefits from the family trust as to whether or not it is considered a financial resource.
When the assets of a relationship are being divided, consideration is given to each party’s financial resources when the ‘future needs’ of each of the parties is examined. The individual circumstances of the parties, and of the asserted financial resource, are analysed.
The financial resource/s available to a party can (and often will) have an impact on the future financial benefit to that party. That impact may then lead to the other party receiving a higher portion of the assets of the relationship.
The take-home lesson?
Financial resources are not typically assets, but they may be relevant to your family law property division. Knowing whether or not there is a possible financial resource in your scenario is tricky – not everything is ‘up for grabs’ but you also may not be aware of what is possibly going to impact on your situation.
Specialist legal advice can assist you in working out whether financial resources have a role to play in your property settlement or not. At Parker Coles Curtis, we provide practical and tailored legal advice to give you peace of mind and a clear pathway forward. Contact us here or book a complimentary 15-minute appointment with one of our solicitors today.
 Hall & Hall  HCA 23