If you have separated, or plan to do so, you will want to finalise financial matters between you.
It is important to get the right advice from professional property settlement lawyers so that you know what you are entitled to.
Reaching An Agreement
If you and your partner agree on how to divide your family property, you can enter into a binding financial agreement or obtain consent orders.
If you do not formalise your agreement properly, it may mean that both partners are left open to a later claim by the other person. This can be devastating if a party diminishes or disposes of the assets, or increases the debts in the asset pool. It is always best to address the financial issues promptly if you separate.
What is a Binding Financial Agreement?
Put simply, a binding financial agreement is an agreement which covers the division of property, superannuation and, if required, spousal maintenance. This can be a cost effective method of formalising how the parties divide the assets.
Consent orders require a slightly more detailed assessment of the assets and liabilities of the separating parties, and the future needs and financial circumstances of them. As a general rule, they have a higher degree of enforceability.
If you have been in a de-facto relationship at the time of separation, you need to deal with these matters within two years of separation. If you have been married, you must do so within 12 months after your divorce.
Binding Financial Agreements require that each party receive independent legal advice for it to be legally binding.
The 4-Stage Process Used to determine how Assets are Divided
The process in Australia that will determine how assets are divided is a 4-stage process, as follows:
1. Identifying the Value of the Asset Pool
The asset pool will be comprised of everything that the parties own. This includes real estate, shares, businesses, cars, boats, tools, jewellery, cash, and assets of trusts. This property will form part of the asset pool.
It does not matter whose name these assets are in. The Family Law Act looks across all legal entities and takes into account everything in which the parties have an interest. Other interests, for example where the ‘asset’ is not in either party’s name but in which each person has a beneficial interest in the asset (also known as constructive trust) may also be included. Sometimes when clients first come to see us, they are worried that the property is ‘not in their name’. However, it is not relevant whose name in which the asset is registered. All the assets are taken into account in the asset pool regardless.
2. Contributions of Each Party
Both financial and non-financial and direct and indirect contributions before, during, and after the relationship are relevant. The law recognises that different parties bring different amounts of money and other assets to a relationship. As a general rule, the longer the parties are together, the less relevant the assets that the parties owned prior to the relationship.
Contributions like looking after the family by raising children and home duties are just as relevant as earning a wage and making direct financial contributions. All these factors will need to be weighed in the balance.
3. Future Needs Adjustments
Adjustments based on the future needs and means of the parties will have a significant impact on how the pool of assets will be divided.
Some factors that the law considers relevant are:
- a persons’s earning capacity, compared to the other;
- a person’s age, compared to the other;
- a person’s health, compared to the other;
- if there are children, who will have primary care of them and to what extent; and
- a person’s ability to generate an income and especially if, taking into account the length of the relationship, one of the parties has sacrificed the opportunity for career advancement or skill development
These are known as the ‘future needs factors’.
4. The Division Must Be ‘Just and Equitable’
The words ‘just and equitable’ have been described by the High Court as being the overriding requirement’ to determine whether to make an order at all and what the order should be, if one is made. In determining whether the order is just and equitable, the court must consider the justice and equity of the outcome, that is, the actual order itself, and not just the underlying percentage distribution of the assets.
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FAQs: Property Settlement
Do I need to have a family law property settlement?
All de facto and married couples need to reach a family law property settlement when the relationship ends. It’s always best to properly finalise a property settlement to ensure that either partner cannot make further claims on each other’s property in future.
When should I have a family law property settlement?
It’s best to complete a property settlement directly after the relationship or marriage ends. If you delay it the court will consider all property owned by both parties at the date proceedings begun, rather than the date the relationship ended.
All property and debt accrued after the separation and before the proceedings began therefore may be considered.
Can I have my property settlement out of court?
Yes it’s possible to have your property settlement out of court, however it’s always best to seek legal advice from a property settlement lawyer for help formalising arrangements.
This can be done by a consent order from the family court or by completing a binding financial agreement.
How can a property settlement lawyer help?
There may be a lot at stake during a property settlement and the law that governs it is complex. An experienced property settlement lawyer can advise you throughout the entire process to maximise your chance of reaching a fair and equitable settlement.