Quick exit
Ending a relationship can be a challenging and emotional time for all concerned. Getting legal and financial advice early will help to reduce anxiety and give clear guidance about what to expect moving forward.
What is a property settlement?
When a couple separates, a family law property settlement directs how the assets of the relationship are to be divided, this also includes any debts that have accrued.
The reason why property settlements take place is that it aims to bring an end to the financial relationship between the couple.
How can lawyers help?
Lawyers and mediators can assist parties to reach agreements. Depending on the property to be divided, the agreements can be drafted into Consent Orders or Binding Financial Agreements. A lawyer can advise which is the most appropriate for your circumstances.
The law and courts do not have to be involved in a property settlement, so it is possible to reach a private agreement and simply ‘divide and walk away’. However, some agreements must be in writing, especially those dealing with real property. Without seeking legal advice first there is a risk that agreements could be made without parties being aware of their rights under the Family Law Act 1975 (Cth). Informal agreements do not oust the jurisdiction of the Court but there are time limits.
If you need a Court to decide on your entitlements:
- If you are married you must make the application within 12 months from the date your divorce is finalised
- If you are in a defacto relationship you must make application within 2 years from date of separation.
An application can be made out of time, but you will need to prove special circumstances and explain to the Court why you could not do it earlier.
What are the steps involved in a property settlement?
There are four steps that are used to identify and divide the assets and liabilities from the relationship:
- Step 1 is to identify the property
Assets can include: real estate; share portfolios; money in the bank; motor vehicles; boats; caravans and any valuable personal items such as artwork, antiques and jewelry. Superannuation is also property and is often treated separately.
Liabilities include: mortgages; lines of credit; loans; credit cards and all other debt;
The law says that both people involved are required to make full and frank disclosure of their financial circumstances, which means that financial statements, copies of tax returns and bank statements might be required to be provided to both parties.
- Step 2 is to think about the contributions that both people made to the relationship
Each party’s contribution at the beginning and during the relationship will be considered as well as any post separation contributions. Child support payments and continuing to pay a mortgage or rent are examples of post separation contributions.
Contributions are not just financial. Personal contributions such as domestic duties, child rearing, home renovations, and unpaid work in a business are all taken into account. For example, suppose one party earned an income while the other party had no income, but looked after children and the home. In that case, the law considers that both parties contributed.
- Step 3 is to think about future needs
Consider the needs and financial resources of each party and whether there are special circumstances that would justify one party getting a larger share of the property. Special circumstances might include living with a disability, caring for children full time or needing to retrain before rejoining the workforce.
Financial resources can be: an inheritance; a compensation or redundancy payout; substantial financial support from family; a lottery win; an entitlement to a distribution from a trust; or some other entitlement that will mature in the future. What is included will depend on your individual circumstances.
This is not an exhaustive list so it is wise to obtain legal advice and also financial advice if needed.
- Step 4 is to consider whether the property settlement is fair
For a court to make orders a settlement must be fair to both parties.
Am I entitled to some of my partner’s superannuation?
There is recognition that one party’s future financial security might have been compromised because of time spent out of the workforce, so part of a property settlement can be an agreement for a ‘super split’. This is where an amount of super is ‘split’ from one party’s account and transferred to the other party’s super account.
Court Orders are required for a superannuation company to effect the split so you should seek legal advice in relation to this.
Our service may be able to help if superannuation is your only asset. Contact us for an appointment to discuss this.
What if I am financially dependent upon my ex?
Where one person has been financially dependent on their partner during the relationship, or has some future need or special circumstance, ‘spousal maintenance’ may be appropriate if the other party has the ability to pay.
Spousal maintenance is a temporary measure while property negotiations are underway. It usually comes to an end when agreement is reached and implemented. The family law promotes a ‘clean break’ principle and prefers settlements that finalise financial matters between the separating parties, rather than continuing financial arrangements for support.
Barwon Community Legal family law services
Barwon Community Legal has family lawyers on staff offering free advice appointments during the week and ongoing casework for eligible clients.
Volunteer family lawyers from the broader Geelong area provide free advice appointments at our night service clinic on Tuesday evenings. To make an appointment contact our office on 1300 430 599 or complete our online request form here:
https://www.barwoncommunitylegal.org.au/contact-us/request-an-appointment/
For further information please see these resources:
https://www.barwoncommunitylegal.org.au/my-family/property-settlements-spousal-maintenance/
https://www.fcfcoa.gov.au/fl/forms/financial-statement-kit
