Undergoing a family law property settlement? You might be interested to know how long service leave will be considered in dividing up your assets.
During a relationship, a party may accumulate fairly significant entitlements for long service leave. If the relationship breaks down, the other party to the former relationship may seek to require that those entitlements are taken into account or shared in the final division of property between the parties. It will be important to know how the court considers that entitlement and whether that other party has any claim on it.
To understand the position of the Court, it is necessary to understand the difference between assets and financial resources.
Property and Financial Resources
Property or assets, in a family law sense, includes real property, personal property and choses in action, such as the family home, a car, or a trust where a party is both the appointor and the beneficiary with unfettered control of that trust.
In contrast, a financial resource is something which is not in the possession or control of a party, but something to which that party may be entitled to at some point in the future. That entitlement may arise in a particular set of circumstances or at a particular point in time. It may include something like a family trust of which a party is a discretionary beneficiary (but not additionally a trustee) or in some cases, an anticipated inheritance (particularly where the Testator has not yet deceased).
Depending upon the circumstances, long service leave may be treated as akin to an asset or merely a financial resource.
If the long service leave is treated as in the nature of property, then it can form part of the asset pool that can be divided between the parties in a family law property settlement.
However if it is treated as a financial resource, then it is considered as a contribution during the relationship made by the party who is entitled to it and a factor that, dependent upon the particular circumstances, may be taken into account and lead to a percentage adjustment of the asset pool in favour of the other party.
For example, a person’s long service leave may be considered in the nature of an asset rather than a financial resource where the person entitled to it could take the leave as either a lump sum or periodic payments, but only as a periodic payment if that person found a temporary replacement for himself or herself whilst taking the leave. If a person has cashed in their long service leave entitlement and the cash or assets purchased with that cash remain in existence, then that cash or assets would more likely be treated by a Court as available to be dealt with in any property settlement between that person and his or her former partner.
However, where a long service leave entitlement has accrued but has not been taken, a Court may treat it as only a financial resource.
The way in which long service leave is treated can have a significant bearing on the outcome of a property settlement in family law.
If you have any questions about family law property settlement or would like advice in this area particular to your circumstances, you are welcome to contact us and we will be happy to assist.