ESTATE PLANNING
by Stephen Bourke
The appointment of a testamentary guardian and family law
A testamentary guardian is a person appointed under your will to be the guardian of your minor children in the event of your death. We often see clients after they have separated from the other parent of their children. Because you may hold the other parent in a less than favourable light, the question often arises – who will look after my kids if I am dead? You can appoint a Testamentary Guardian but what happens if the other parent is still alive? Does it make a difference if there are Family Court Orders in place? The starting point under the Family Law Act 1975 is that each parent has parental responsibility for their child. That responsibility is ongoing. However, it may be altered by a court order. Thus when parents separate and orders are made in relation to the ongoing parental responsibility, one parent may be responsible for providing day to day care and the child may live with them while both parents may share the long term parental responsibility. What happens when the parent responsible for where the child lives dies? If the court orders do not make provision for living arrangements of children following the death of the parent with whom the children live, the surviving parent does not automatically assume responsibility to provide residence. It may require further orders and it may give rise to contest between the surviving parent and other family members or interested parties such as step-parents. What if the deceased parent had made their new spouse (a step-parent) or some other person a testamentary guardian? The testamentary guardian is responsible for the long term responsibility but not the daily care responsibility of the children. What does this mean in practice? It means that the testamentary guardian is responsible for financial matters and other decisions that affect the long term care and welfare of the child. This includes the right to start court action about where the child might live. Summary After a couple separate: • If there is no Court Order – both parents share equal parental responsibility. If one parent appoints another person as a Testamentary Guardian, that Guardian will share equal parental responsibility for long term care but does not have daily care and control over the child with the surviving parent. The surviving parent will have sole parental responsibility over daily care and control of the child which includes where the child will live. • If there is a Court Order (and the order does not make provision for the death of a parent) – the deceased parent (with whom the child was living) can appoint a Testamentary Guardian who assumes the parental responsibility for the long term care of the child but does not have daily care and control over the child. The surviving parent, Testamentary Guardian or other interested third parties may need to seek an order from the Family or Federal Circuit Courts to determine where the child will live.
Certus Law specialises in superannuation, trusts and estate planning. Visit Certus Law at Level 5, 28 University Avenue, T: 6268 9090, www.certuslaw.com.au
FAMILY LAW
By Jacquelyn Curtis
Luck and lottery – a fable for separating couples
A recent case decided by the Family Court in Sydney is a timely reminder for separating couples to legally formalise their financial and property matters after separating. In the case, the wife had a $6 million win six months after separating from her husband. The parties had been married for 20 years and had not legally formalised a property settlement at the time of the win. The husband brought a Court application, seeking half of the lotto win. He argued that the wife had purchased the $59.45 winning ticket from “joint funds” and that throughout the marriage, the wife bought weekly lotto tickets from joint funds which increased her chances of winning the major prize. The Court rejected the husband’s argument, finding that the husband had made no contribution to either the funds used to buy the ticket or the lotto win. However, the Judge made orders giving the husband an additional $500,000 from the parties’ property settlement to take into account the disparity between the husband and wife’s individual financial circumstances and the husband’s limited future working capacity. When making orders for property distribution at the end of a relationship, the Court considers the asset pool, the contributions by each party to that asset pool (both financial and non-financial) and the future needs of each person. The Court must make orders that are just and equitable in all of the circumstances. In this case, the husband received an additional payment to take into consideration his future needs relative to the needs of the wife. Some might think that the wife was not hardly done by in forfeiting $500,000 from $6 million. However, had the parties legally formalised a property settlement before the lottery win, the Wife’s lottery win would have been safe from the husband’s claim and the winnings would have remained entirely hers – instead making it a case of bad luck for him. Once a property settlement has been formalised by way of Court Orders or a Binding Financial Agreement, it is final. The orders or agreement can only be set aside in limited circumstances, dramatically reducing the risk of a former spouse being able to make a claim against newly acquired assets or windfalls. Similarly, for those operating a business or thinking of starting up a business after the end of a relationship, formalising a property settlement with a former spouse is an important risk management consideration. The “take-home message” for separated couples is to get your financial and property affairs in order in a timely fashion and to legally formalise any agreement you may reach with your former spouse. You never know what tomorrow may bring.
18 Kendall Lane, New Acton Canberra City ACT 2601 T: (02) 6212 7600 E: mail@ddcsfamilylawyers.com.au www.ddcsfamilylawyers.com.au
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