When the decision to divorce sinks in, you may start to worry about assets and how they will be divided. It pays to remember that money leaves a trail, and panicking about your spouse moving assets around can be a waste of energy. Not always, of course, but generally money can be tracked. Here is some information on protecting the types of assets most people own.
Protecting Real Estate
If you are registered on the title of any real estate, you are protected against it being sold without your knowledge. If you are not registered on title, or you are not sure, your lawyer can search the title and let you know if you are registered or not. If you are not registered on the title, and you are concerned about that, your lawyer can register a caveat on the title, which will prevent it being sold.
The greatest risk associated with real estate may be that your spouse continues to draw down on a flexible mortgage, even if that is in both names. The only way you can prevent that from happening is to ask your partner to agree that you both have to sign any withdrawals, or speak to the bank yourself. If you are not on the title and the mortgage, the bank cannot help you. Your lawyer can advise you about preventing further borrowings. That can be done by court order, or by an undertaking, for example.
Operation of Family Companies
If you are a co-director of a company, you have a right to see all books and accounts. If you have not done so in the past, now is a time to be vigilant about what is occurring in the company. If you are not a director, you have rights as a spouse to know about the operations of a family company, because it will more than likely be an asset of the marriage. If you can’t request this information from your spouse, you may need a lawyer to do that for you.
If you are a director of a company and have been its operator, you will need to continue its operation as normal. It is not an option to run a company down, and most people don’t want to do that in any event. It is a wise plan to give an uninformed spouse disclosure about the company, as it builds trust, and is information that your spouse has a right to and will be given by a court if necessary.
The word “trust” ironically seems to create mistrust, as often there is an understanding that a trust is somehow a secret device for hiding money and assets.
In a typical mum and dad trust, you will both be trustees, or co-directors of a company that is the trustee. If only one spouse is the trustee, that is no cause for alarm, as the trust income and assets are very likely to be part of the family assets, and the information has to be shared. Disclosure about the activities of a trust must be given to comply with the Family Law Act. If there is any failure to do so, there are court based legal remedies available.
A trust is mainly a vehicle for reducing tax, by sharing the income between spouses or spreading it around the family. A trust must file an annual tax return, and all its income and assets are recorded, and that information has to be shared. Lawyers, financial planners and accountants are very familiar with trusts, and can give you the advice you might need about their operation. Your lawyer can give you advice about sharing of trust assets and income as part of the regular division of assets you will be doing.
There are some situations where trust assets may not form part of the asset pool. That is relatively unusual, and you will need legal advice about such a technical matter.
Before you panic, know that in most cases you can protect your assets and there are legal avenues available. See a financial planner or lawyer to discuss your situation.