In a 1992 case involving an artist, the court divided the family assets two-thirds to the artist husband and one third to the wife, on the basis the husband had special skills as an artist and made a major contribution to the couple’s substantial assets.
But over the years there has been a “watering down” of that principle, which would make it more difficult for a spouse in Jeff Bezos’ position to make a greater claim over the couple’s assets.
“There is less inclination from courts to call something a special skill,” Bartal says.
She says legally the involvement of a third party (in Jeff Bezos’ case he was understood to be having an affair with Lauren Sanchez, the wife of Hollywood talent agent Patrick Whitesell) should not affect the financial settlement in Australia.
“We’ve had a no-fault system since 1975 so an extramarital affair would not have an effect on the division of assets,” she adds.
However, when negotiating the settlement, emotional factors can come into play. “Guilt does amazing things to people.”
Special contribution difficult to argue
Swaab family lawyer Marilyn Hauptmann says judges will decide cases based on individual circumstances but if the Bezos divorce took place in Australia, it would be difficult to establish a case forsplitting assetsdifferently on the basis one party had made more financial contribution to the relationship.
“These days it’s much harder to have the court decide there has been a special contribution. If the husband is out there making all the money and being away from the family home, that puts extra burden on the wife to look after everything else, including the children,” she explains.
“So the court may consider if she wasn’t there to look after the children, he might not have been able to acquire the wealth he did. Because she has taken on a lot of the burden around the house, all he has to do is concentrate on his business.”
Hauptmann says while it’s possible to sign a financial agreement during a marriage, practically it would be more difficult to get the parties to agree at that stage than at the beginning of a marriage.
“It’s easy to enter into a prenup at the very beginning. It’s all ‘lovey dovey’ so everyone presumes the marriage is going to be happy and last forever.
“[During the marriage] it’s going to be more difficult. If you’re the financially weaker party, what advantage is there to you in signing an agreement?”
Another factor to consider for couples going through a divorce in Australia is the proposed changes to the court system. The aim is to merge the Family Court with the Federal Circuit Court but the proposal hasbeen stalledunder the weight of a hostile Senate committee and limited sitting days before the election.
Bartal says the uncertainties around the Family Court reforms and the delays in the system mean alternative dispute resolution such as mediation and arbitration are becoming more popular among separating couples.
“Twenty years ago, there was a level of mistrust towards alternative dispute resolution. People were reluctant to even mediate,” Bartal says.
But now mediation is the “go to” option for most people. In the past two years arbitration, where a third party who is typically a family law barrister or former judge is appointed to make a binding decision on the couple, has started gaining traction for couples wanting a quick resolution.
“It gets people in and out quicker. If you’re a business owner, you haven’t got two years to wait around,” Bartal says. Arbitration can be done within three to six months, compared to going through a court processwhich can take several years, and is much cheaper.
Property valuation tricky
Determining what the family assets are actually worth is another issue.
Suzanne Delbridge of Delbridge Forensic Accounting, which specialises in property valuation in family disputes, says it is common for one spouse in the relationship to overestimate their wealth based on the outward signs.
“If you are having lovely holidays, sending children to private schools but you are not aware of the level of debt, it can be a very disappointing surprise,” she says.
She says complications often arise where family businesses, family trusts and overseas assets are involved.
Valuation of family businesses can be tricky, she says, particularly when an industry is going through big changes.
During the future of financial advice (FOFA) reforms, the valuation of financial planning businesses was difficult because of the potential impact the FOFA reform would have on their future revenue flows.
Similarly, the Hayne banking royal commission has made the valuation of financial services businesses more difficulties because of the uncertainties around the royal commission’s findings and recommendations, she says.
Another issue to be aware of is access to finance during a divorce settlement.
Mat Jacobson, founder of POWER, a support and advocacy group for victims of economic abuse, says it is “unbelievably common” to see one spouse being cut off financially while they are negotiating a settlement.
“It’s effectively strangling through financial means. It’s a pressure tactic to try to force a partner into accepting a settlement that could be way less than what they are entitled to,” Jacobson adds.
He says it is important to hire commercial lawyers and accountants to get a proper valuation for joint assets.
In addition, he advises the financially weaker party in the relationship (typically the wife) to take interest in the couple’s finances from early on in the relationship – well before any separation.
“If the husband does all the investment and all the banking and the wife looks after the children and the house, that’s a bad recipe for getting yourself into a vulnerable position.
“You should ask: where are our investments, what are we putting into superannuation, what are our bank deposits, should we be buying stocks?”
He says it should raise an immediate red flag if a spouse asks about the couple’s financial situation and the other party says: “You don’t need to worry about that”.