If you are an accountant, financial planner or a wills and estate lawyer, we wish to draw your attention to a family law issue that can affect your clients who are married or in a de facto relationship. Particularly in circumstances where they are in a second relationship or have a second family. In this article we will unpack what involuntary separation is, how an involuntary separation issue ends up in the Family Law Court and what you as their trusted advisors should be aware of, that can have a significant impact on the finances and the estate of one or both parties to a relationship.
What is Involuntary Separation?
Involuntary separation is when a couple are physically separated, despite their wish to continue to live together.
The most common way that involuntary separation comes about is when one person in a marriage or de facto relationship is experiencing illness or requires care in a nursing home or other care facility. Another way in which involuntary separation can occur is when one person in a relationship has obtained a visa to live in Australia and the other has not or one party is living away for extended durations for the purpose or work, caring for other family members or another reason. This is not exclusive to the elderly as it can relate to people in relationships where one person has a long-term illness or high-care requirements caused by an illness or accident.
Sometimes there are concerns or questions by family members as to whether the couple are separated due to involuntary circumstances or whether the relationship has in fact, come to an end.
When Does an Involuntary Separation Concern Lead to Court?
These matters can end up in Court where a family member, medical professional or advisor is concerned as to the decision-making capacity of one person. There are sometimes additional concerns about the behaviours of their spouse or partner, including financial abuse.
It can sometimes be unclear as to the true status of a relationship, particularly where there are doubts about the cognitive capacity of one person in the relationship. In particular, where there is:
- Dementia; or
- Cognitive decline
Where there are doubts as to the decision making capacity of one party to the relationship, the question may be asked, “Do they still have the mental capacity to decide whether they are in a relationship or whether they are separated?”
These questions are often asked by the children of a previous marriage or de facto relationship, where there are second families or a second marriage or de facto relationship and they are concerned about whether the relationship still exists, or whether the other person is maintaining the idea of an ongoing relationship, for their own benefit.
Involuntary Separation in De Facto Relationships
The most recent case that has brought involuntary separation back into focus was the case of Fairbairn v. Radecki. While Ms Fairbairn had children from a previous relationship, she and Mr Radecki entered into a de facto relationship in 2005 keeping their finances strictly separate, including entering into cohabitation agreements, the last of which was signed by both parties in 2015.
Ms Fairbairn experienced cognitive decline commencing from 2015 and had reduced decision making capacity, resulting in a diagnosis of dementia in 2017. Ms Fairbairn’s position as to whether they were in a relationship or not, was unclear due to her diagnosis. From 2015 to 2018 Mr Radecki and Ms Fairbairn’s children from a prior relationship, were in dispute about how she was to be cared for. In 2017, where it was said that Ms Fairbairn’s health was in decline and ‘precarious’, Mr Radecki undertook a planned overseas holiday for three months. Mr Radecki whilst overseas did not contact Ms Fairbairn nor touch base with any of her family members to enquiry after her health and wellbeing.
Later that year upon his return he learned that a doctor had ascertained that Ms Fairbairn had reduced capacity to make decisions for herself and her children had been nominated as Enduring Powers of Attorney. Mr Radecki, who had always insisted that Ms Fairbairn’s children were unnecessarily putting her ‘in an institution’, wrote a letter to Ms Fairbairn’s children that was signed by Ms Fairbairn. The letter said they should revoke their Enduring Power of Attorney and support Mr Radecki’s approach to her care.
After Ms Fairbairn’s children did not revoke their Enduring Power of Attorney, Mr Radecki drove her to a Courthouse and revoked the appointment of her children as her Enduring Attorney, and made changes to her will that were in Mr Radecki’s favour.
Upon learning of that step, Ms Fairbairn’s children then applied to NCAT (NSW Civil and Administrative Tribunal), which led to the NSW Trustee and Guardian being appointed to make decisions regarding Ms Fairbairn’s care, where she was moved into an aged care facility in March of 2018. The Trustee sought property orders to sell Ms Fairbairn’s real property (i.e. home) to fund her ongoing care, arguing that Ms Fairbairn and Mr Radecki’s relationship had ended. The Court ruled that the relationship had ended, therefore ordering the sale of Ms Fairbairn’s home.
However Mr Radecki refused to move out of the home and successfully appealed the decision arguing that he was still in a de facto relationship with Ms Fairbairn. Mr Radecki provided evidence that he had continued to visit Ms Fairbairn in the aged care facility, had historically paid for some of her care and brought her home each week for her wellbeing.
In March 2022, the Trustee appealed the case taking it to the Full Court of Australia. The Court’s objective was to determine whether there was an ongoing relationship or not. In May of 2022, the appeal was allowed, enabling the sale of Ms Fairbairn’s home to fund her ongoing care.
The High Court’s judgment outlined that despite the Family Law Act’s definition of a de facto relationship as a couple living together on a “genuine domestic basis”, that is not always possible given the need for care (aged care or otherwise).
They went on to state that it was not the mental capacity of Ms Fairbairn that determined this judgment, nor was it that the de facto couple had to live separately, and that it would be an injustice “if two people who live apart (including for reasons of health) were incapable of remaining in a de facto relationship.”
The reason for the appeal being allowed was that Mr Radecki had behaved in ways that indicated he did not make the ‘necessary or desirable adjustments’ that would evidence an ongoing relationship. The High Court determined that the relationship had ended on 25 May, 2018.
Knowing if the Physical Separation is Voluntary or Involuntary, is Vital
When a married or de facto couple’s relationship ends, the property settlement process is able to commence immediately. Where the couple are not married but are in a de facto relationship, and if the relationship has come to an end, then there is a requirement by law that the division of property and financial settlement is to be completed within two years of the date of separation. Therefore, knowing when a de facto relationship ended is quite critical.
And, in the Fairbairn v Radecki case, Ms Fairbairn’s estate was left open to suffer the consequences because she was unable to get access to her property to fund her care.
In the event that one person in the relationship acts in the interests of themselves over that of the person in care for instance, and exerted undue influence or coercion, steps must be put in place to ensure that this risk can be minimised. Ms Fairbairn’s efforts to keep her assets strictly separate including entering into a cohabitation agreement, highlights how vulnerable one person and their estate can be and more may need to be done.
Assisting your Clients
As accountants, financial planners and lawyers, ensuring your team is alert to the warning signs that may indicate a separation, financial abuse or coercion, is incredibly important. Particularly when your clients are approaching their retirement years, have ill health, experiencing cognitive decline or have moved into a nursing home or aged care facility.
Importantly, this is not exclusive to de facto relationships. It extends to married couples and undue influence or coercion from friends and or family members in relation to their care and finances.
Where there are second or third families or a second relationship, and there are concerns as to the status of the relationship where one person requires additional care, it is the joint assets that may need to be looked at to fund that care, if there are not other resources available. Even if there are additional resources to fund the care, the question that needs to be asked is:
“Has this been an involuntary or forced separation because of circumstances or has the relationship ended?”
Because if the relationship has in fact ended, it triggers a separation and subsequently a property and financial settlement.
Knowing if the relationship has ended is important to ensure that the property settlement process can commence, and minimise the risk of the estate being inaccessible to fund the cost of care or the estate becoming diminished through the actions of someone who is not acting in the best interests of the person they say they are still in a relationship with, or through excessive legal costs that come with a dispute like this one.
As their advisors, encouraging your clients to ensure that they are planning to ensure there are funds to afford the cost of their care while also maintaining the family home for the remaining partner is one way to minimise the impact on your client, their spouse or partner, and their families. Equally important is ensuring that the Powers of Attorney and Enduring Powers of Attorney are in place now, as well as Advance Health Care Directives and a detailed statement of their wishes, long before there is illness or any doubt as to their decision making capacity.
With our ageing population in Australia, along with modern family structures, I predict that we are going to see more issues arising similar to those in the Fairbairn v Radecki case, and concerns about whether a couple is involuntarily separated or if the relationship has ended.
As your clients’ trusted advisors, you will often be the first to know of any second de facto relationships or marriages. To help avoid the collateral damage that can ensue, we encourage you to share this article about this family law case with your team and your clients to illustrate the importance of minimising the risk, particularly given that the funding of illness or age-related care may be required.
To avoid the risk of dispute, it is also about encouraging your clients with families to involve their family and ensure they are alive to the issues, particularly where there are second or third relationships. That is, if they do lose capacity, everyone already knows who is going to step in and that their family has a clear understanding about their intentions and wishes.
Related Articles: Binding financial agreements as an estate planning tool
If you found this article interesting, leave a comment or share it with your team, colleagues or clients.
Phillips Family Law is an award-winning Family Law practice serving clients across Australia and abroad. Regardless of where you or your clients are in the decision-making process, we help people become informed and aware of their options. To discuss your situation confidentially, phone (07) 3007 9898 or secure a time by filling in our confidential form here.
Disclaimer: The content in this article provides general information however it does not substitute legal advice or opinion. Information is best used in conjunction with legal advice from an experienced member of our team.