What You Need to Know About Division of Assets Owned by a Third Party
When you are going through the process of dividing your assets during a divorce, it can be easy to assume that the only people who will be involved are you and your ex-partner. However, in situations where assets owed to, or owned by, a third party are tied up in the individuals involved in the divorce process, aforementioned third parties can become involved in the proceedings also. The following information explains how this can occur and what the result may be for the people involved.
You may be wondering how your divorce/separation can involve other individuals or entities…
Despite the fact that divorce and separation is often a very personal legal process, the truth is that it can have a wider effect on certain parties involved with the married individuals. The Family Law Act gives the court power to make orders which are not only binding on third parties, but can affect their rights and interests also.
The people who may be considered relevant third parties can range from…
- Friends and relatives who may hold investments or personal loans with the individuals seeking a property settlement.
- Companies or partnerships with whom the separating parties have shareholding interests.
- Executors of deceased estates.
- Banks and other financial institutions.
- Trusts, trustees and appointors of trusts.
- Business partners of one or both of the divorcing parties.
- Creditors and Bankruptcy Trustees.
While the concept of involving other people, especially family and friends, in your divorce can seem daunting, it’s important to remember that the court only makes orders in a just and equitable manner. The order must be reasonably necessary and appropriate so as to preserve the rights of the third parties who may become involved.
So what are the situations in which third party assets become involved?
There are many situations in which a court may make an order that affects a third party. For example, in the situation where the divorcing parties gave a personal loan to friends or family, the court may order that all monetary reimbursement of that loan is to be given to one individual, rather than as a shared asset. This is also true if money is owed to a third party; the court may find that one individual should incur the financial responsibility of paying it back. Similarly, in situations where companies are involved, the court has the power to order the transfer of debt or shares into one individual’s name.
In every situation, the court takes the appropriate measures to ensure that the order is appropriate and fair on all individuals or groups involved by looking at the relevant facts presented by the relevant parties. It is important not only for the separating individuals to get advice from a specialist family lawyer, but also for the third party to get such advice as to their rights and entitlements.
Do you have a question about family law or relationship law?
Call now 03 9088 3184
If you would prefer an Australian Family Lawyers team member to contact you, complete the form below.