Wickham Lawyers

NEWS & rESOURCES / March 24 2023

Are transferred assets gone for good? Not neccessarily

We are often asked about what may happen if their ex-spouse deposes of assets that would ordinarily belong in the asset pool.  The transfer of assets to related parties, such as adult children or other relatives or friends, below market value may raise concerns and lead to legal challenges. The transfer of assets may be deemed an attempt to evade an existing or anticipated order, which can result in scrutiny by the Court.

However, if parties transfer an asset while happily married, with no current plans to separate, and without an expected order, establishing the transfer’s intent may be challenging. It raises the question of whether the possibility of the parties separating in the future is sufficient to meet the criteria of an “anticipated order.”

Does the Court possess the authority to reverse transactions that may have occurred long before any separation is anticipated? 

The matter of Ferguson v Ferguson [2022] FedCFamC2F 1194 highlights the importance of caution when it comes to transferring assets during a divorce or separation. In this case, the judge overturned a property transaction that occurred 21 years prior, which was intended to defeat the wife’s claim to matrimonial assets.

The husband, who was happily married at the time, signed his marital home over to his daughter from a previous marriage, with the couple taking out a life tenancy over the property. The wife signed the documents without understanding their effect until seeking advice from a solicitor in 2019. The husband’s intentions were to isolate the property from a potential family law settlement, and he had communicated this to his daughter. The court found that the transfer was a windfall gain for the daughter, contrary to the interests of both spouses.

The court ordered that the wife’s position be reinstated, and the title revert to the spouses jointly, with provision for “adjustments” to be made. It is crucial to seek legal advice when considering transferring assets, especially to family or friends, protecting assets from divorce or separation, or entering into a serious relationship.

Transferring assets for illegitimate purposes can have serious consequences and may result in paying a portion of the other parties’ legal fees.

Property disputes in separation can be stressful and time-consuming, and it is crucial to plan ahead and seek advice to minimise frustrations and ensure a smooth process.

This is a cautionary tale for those who would similar actions.

Even when parties are happily married and have no intention to separate, disposing of assets may still trigger a challenge to these transactions. The court can utilise section 106B to undo transactions made to defeat existing or anticipated orders for property settlement, and it can be challenging to determine what constitutes an “anticipated” order.

If you’re considering restructuring your assets or taking steps to protect them in the event of a separation, it’s vital to seek legal advice.

The court can overturn transactions made to defeat an existing or anticipated order, which can be expensive, time-consuming, and emotionally draining for all parties involved. Proper planning and obtaining professional legal advice can help ensure that your assets are protected while minimising the risk of legal challenges.



Click one of our contacts below to chat on WhatsApp