“Do I get more from my divorce if our adult kids live with me?”
Short answer: No, not generally speaking…unless….
Long answer:
As any parent knows only too well, kids are kids for life. That is never truer than when your kids become adults, and yet they still live with you. On first blush, according to the HILDA[1] survey, men leave home around age 24 and women 23. On a deeper dive researchers found adult children leave home in their late 20s. So what happens when you separate and your educated and possibly employed adult children still rely on you financially? Although adult children generally do not directly participate in family law cases their situations and financial requirements can indirectly shape the distribution of assets and the structure of financial arrangements. Grasping these intricacies is crucial for individuals navigating the complexities of separation and court proceedings. This is when Caroline Counsel Family Lawyers can help you better understand your unique circumstances and what may be a possible range of outcomes for you.
Understanding Property Settlements under the Family Law Act
In Australia, the Family Law Act 1975 governs how a Court resolves financial disputes between couples who are separating. It is also used by lawyers to assist separating couples resolve their matters without having to go to Court. The end result of the law is for the Court to arrive at a just and equitable outcome based on the net pool of assets available for division between a separating couple taking into account each party’s contributions (financial and non-financial and that of homemaker and parent) and their respective future needs.
Factoring in Cost of Supporting Adult Children in Property Settlements
When assets are divided, it is between the separating couple and no provision is made for adult children. It is up to each parent to decide what, if anything, they give to their adult children either whilst still alive, or on death, in a Will. There are specific scenarios when an adult child’s situation may be directly or indirectly considered:
- Indirect Consideration: In cases where one parent continues to provide significant financial support to an adult child, it could potentially affect their ability to contribute to the overall property settlement.
- Adult Child Maintenance: If adult children have ongoing financial needs, as a result of illness or disability or is unable to support themselves due to ongoing education expenses, this may require one or both parents to provide adult child maintenance either in terms of housing, food and education expenses or a periodic payment. There can be orders made for periodic payments or parents can agree on how assets are distributed between them to take these ongoing expenses into account.
Laukkanen & Laukkanen
The recent case of Laukkanen & Laukkanen (No 2) [2023] FedCFamC1F 1123 (22 December 2023), Justice Gill made orders in a case whereby an adult child (anonymised as Mx C) suffered from severe mental health challenges, was separately legally represented due to vulnerability and a myriad of mental health issues. Initially, Ms B Laukkanen claimed that she and Mx C were beneficial owners of certain matrimonial property held in trust for them.
Throughout the proceedings, the parties sought adjournments to try and resolve their dispute. On 18 December 2023 the parties put their agreed settlement to the Court to ratify. The settlement included Ms B Laukkanen discontinuing her claim, a property settlement between the husband and wife whereby a division of 60/40 in favour of the husband (which reflected his “superior contributions…through a bequest received by the husband during the marriage”), and provisions for settling a property in Suburb E jointly upon Ms B Laukkanen and upon a trustee for Mx C. The husband and wife both asserted that an aspect of the settlement was to provide housing security for Ms B Laukkanen and Mx C, whereby it was described as an “advance… inheritance from his estate.”
Justice Gill considered the settlement with reference to section 79(1)(d)(i) of the Family Law Act 1975 (Cth), which provides that:
Section 79 (1)(d)(i): “In property settlement proceedings, the court may make such order as it considers appropriate: to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
This section permits the court to make orders for the benefit of a child of the marriage. This provision was analysed in light of the High Court’s ruling in Dougherty v Dougherty [1987], emphasising that such orders must be just and equitable. The High Court summarised the law:
The Family Court is empowered to make an order under that section where it is satisfied that in all the circumstances it is just and equitable to do so, but the circumstances must be such that the claim arises out of, or has a sufficient connexion with, the marriage relationship. If s.79 is to be a law with respect to marriage, and for that reason to be within power, it must be because of the connexion between the jurisdiction which it confers and the relationship of marriage: see Reg. v. Lambert; Ex parte Plummer. The jurisdiction which it confers is a jurisdiction to alter property interests. Thus, the rights and duties which the Family Court may validly create or define under the section are confined to those which have their basis in the marital relationship.
The settlement was supported by both the husband and wife, recognising their ongoing duty towards Mx C’s welfare. Ms B Laukkanen’s role in caring for Mx C, given his severe condition and suicidal tendencies, further justified the settlement. The terms were deemed proportional to the husband and wife’s responsibilities arising from their marital relationship and the exceptional circumstances surrounding Ms B Laukkanen and Mx C.
The husband and wife included notations to the Consent Orders:
It is further noted that in consideration for interest in real property located at [F Street] [Suburb E] [Region D] (to be transferred to the second respondent (and the Trustee of the [Mx C] Trust (All Needs Protective Trust) as tenants in common in equal shares), pursuant to the final orders with the first respondent, the second respondent has, at the time of entering into these interim orders, entered into a Deed of Release with the applicant husband and such Deed of Release will come into effect upon the making of the final orders on the above terms as between the applicant and the first respondent.
…
P. The intention of these Consent Orders is:
- To provide the adult children with the [Suburb E] Property as tenants in common in equal shares, with [Mx C]’s share to be placed into a trust established for their benefit;
- To pay all expenses associated with the transfer of the [Suburb E] Property and the preparation and sale of the [Suburb G] property, as defined in these orders, including Capital Gains Tax (CGT) liabilities that will arise for each property, from the proceeds of sale and the Westpac home loan account numbers ending […]86 and […]39, where applicable;
In conclusion, Justice Gill found the settlement to be one which was just and equitable within the meaning of the Family Law Act, taking into account the overall division of property between the husband and wife as well as the specific needs of the wife in caring for and the special needs of Mx C. The net effect meant that the wife had somewhere to live where she could care for their son.
This case underscores the court’s discretion under the Family Law Act to settle property upon adult children in exceptional circumstances, based on their ongoing relationship with one of both of their parents and their unique needs.
If you or your adult children are having difficulty understanding what your rights might be in relation to ongoing financial support post a separation, at Caroline Counsel Family Lawyers, we can provide you with that advice. Make a complimentary 30 minute consultation with one of our lawyers today.
[1] Household, Income and Labour Dynamics in Australia (HILDA) Survey
Georgia Mort, Senior Associate
Caroline Counsel, AccS(Fam), Principal, FDRP, Nationally trained Mediator
Caroline Counsel Family Lawyers
P: (03) 9320 3900
The information in this blog does not constitute legal advice and cannot be relied upon by you. If you require advice specific to your situation you must contact Caroline Counsel Family Lawyers. The contents of this blog are relevant as of 15 July 2024. We recommend you obtain specific advice relevant to you and your family’s situation.
