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23 February 2016 The imprecise science that is 'future needs factors' in family law

By Sherlene Heng, Senior Associate

One of the steps the Court takes when determining property settlement matters is to consider the factors set out in section 75(2) of the Family Law Act (for married couples) or section 90SF (for de facto couples).These are often described as the "future needs factors", and their calculation is not an exact science as you'll see below.

Sometimes parties with the primary care of the child/children ask for a 20% adjustment in their favour under this section.

However, there is no automatic presumption that they will receive a 20% adjustment and certainly no percentage adjustment mandated by the Court.

Each case is decided on its own merit.

We have considered some of the judgements of 2015 and summarised them, as follows, insofar as they relate to future needs (note these cases have not been heard on appeal should an appeal be pending):


 
REFERENCE                                                         AGE                                        LENGTH OF RELATIONSHIP                  TOTAL POOL CHILDREN FACTORS TAKEN INTO CONSIDERATION                     ADJUSTMENT
Huntley & Freeman per
Newbrun J                             
60 (husband) and 65  (wife)               20 years Approximately $2 million                          None
  1. Husband had $450,000 financial resource         
  2. Wife would receive superior income due to retention of capital assets
  3. Parties had otherwise modest average incomes                                                           
None
Daniels & Daniels per Coker J 51 (husband) and unknown (wife) 22 years Approximately $890,000 N/A - adult
  1. Husband had greater capacity to earn income (having access to drawings of approximately $176,000, whereas wife only recently commenced working part time and had limited involvement in workforce for period prior)
  2. However, husband had health issues that may impact future employability
  3. Adult child of marriage lived with the wife, but court did not find this shoudl be given consideration
2.5% in favour to wife                          
Booth & Booth per Benjamin J 51 (husband) and 48 (wife) 20 years Approximately $670,000 3 (2 were adults with special needs, 1 was 17)
  1. Parties had similar earning capacities although the husband had perhaps a little less
  2. Wife had care for two children with special needs and court was satisfied that she had some obligation to support them into their adult years
3% in favour of wife
Ortona and Peters per Thornton J 42 (husband) and 44 (wife) 10 years Approximately $100,000
 
2 children aged 10 and 11
  1. Husband's capacity for employment was greater than the wife (husband earned $86,000 and wife relid on Centrelink income and had not been in paid employment for about 12 years)
  2. However, the husband had majority of responsibility for care and fianncial support of children

5% in favour of wife

Maddison and Maddison per Lapthorne J 54 (husband) and 43 (wife) 14 - 15 years Approximately $450,000 3 children aged 11, 12 and 17 primarily living with the mother on a 10:4 fortnight arrangement
  1. The husband was in a position over time to earn greater income than the wife (court was satisfied that the wife had a condition that reduced her ability to work full time.
  2. The wife had and would continue to have primary care of the children and the husband provided limited financial support.
10% in favour of wife
Corbon & Klousner per Thornton J 47 (husband) and 45 (wife) 14 years Approximately $1.8 million 2 children aged 8 and 12 primarily living with the mother on a 9:5/fortnight arrangement
  1. There was a disparity of income in favour of the husband which was likely to continue (the husband earned arppoximately $560,000 and the wife $125,000)
  2. The husband paid child support as assessed and all school fees
  3. The wife would have a greater responsibility for care of the children (although the husband had greater financial responsibility for them)
15% in favour of the wife
Marino & Salvai per Burchardt J 42 (husband) and 45 (wife) 16 years $241,000 2 children aged 4 and 7 living with mother                                     
  1. There was a disaprity of income in favour of the husband (who earned in excess of $60,000 per year whereas the mother was on Centrelink benefits and had doubtful future earning capacity)
  2. The mother had the full time care and expense of the children - the court feared the father would not pay child support in the future.
20% adjustment in favour of the wife
Lane and Lane per Brown J 45 (husband) and 42 (wife) 16 years Approximately $820,000 2 children aged 8 and 15 (8 year old with the wife and 15 year old with the husband)
  1. Husband had a greater earning capacity (earning in excess of $500,000 per annum whereas the wife was still in training in a position which was likely to result in a low rate of pay)                                                                                       
30% in favour of the wife

 

 
 

IN SUMMARY:

Every matter is different and none of the scenarios listed above will necessarily apply to your situation. It is interesting to consider however that:

  • Any assessment of future needs is by nature an imprecise exercise.There is some "crystal ball gazing", as it were, given that no one can predict the future and therefore no one can accurately predict what future needs will be.

  • While one party may predominantly have the continuing care of the children this may be balanced in part by child support payments and an ongoing involvement in the care of the children.

  • Considering both parties' income earning capacity is important when determining property settlement matters. It is likely that a party will obtain an adjustment in his or her favour if over time it appears that the other party has the capacity to earn substantially more. This however does not merely take into account what both parties are currently earning or their current circumstances but their capacity to earn an income in the future.

  • Health issues are relevant only to the extent that they impact on a party's future employability or future expenses. Merely stating that one of the parties has a health issue will not be sufficient for that party to obtain an adjustment.

For the purposes of this exercise we have only considered sections of these judgements dealing with future needs. It is however important to remember that when making a determination, judges do not consider future needs factors in isolation.  The outcome at the end of the day must also reflect what is just and equitable in all the circumstances.


For further information, please contact:

Greg Parker, Partner  |  Phone: +61 2 9233 5544  |  Email: gpp@swaab.com.au

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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