Separating from your partner can be a painful time. While it is understandable you may want to distance yourself from your ex, it is important to organise any property settlement (and maintenance, child custody arrangements) with your ex soon after separation.
What are the steps involved for property settlement?
Hopefully, you and your ex have parted on amicable terms. Nevertheless, even if your relationship is hostile, unless there are exceptional circumstances for an urgent property settlement order (e.g. domestic violence), the court will not hear your matter until you have followed the pre-action procedure.
- Negotiate with your ex and try to reach an agreement outside of court;
- Finalise your agreement;
- If you cannot reach an agreement, apply to the Court for a Property Order.
Step 1: Negotiating with your ex to come to an agreement
Ideally, you will come to a agreement between yourselves as early as possible about how your assets and debts will be divided in a property settlement. You can do all the initial legwork yourself with:
- a Separation Agreement (for married couples),
- a De Facto Separation Agreement (for couples in a de facto relationship),
- a Post Divorce Property Settlement Agreement (for couples who have already divorced),
which are each a Binding Financial Agreement.
If you’re having trouble agreeing on certain issues or wanting to keep the conversation on track as you work through the key points, possible options are:
- Mediation: where parties are encouraged to discuss and negotiate with one another under the guidance of a mediator. The mediator is an impartial, independent guide who facilitates but is not directly involved in talks;
- Negotiation: where parties engage lawyers to discuss on their behalf. The benefit of this is that discussions are often kept separate from the emotional side of the separation; and
- Arbitration: where parties discuss property division before an arbitrator who ultimately decides on an outcome, known as an Award.
Relationships Australia provides family dispute resolution methods and services.
Step 2: Finalising your agreement
If you and your ex reach a property settlement agreement, you will need to finalise your Separation Agreement (Binding Financial Agreement). To do this, you and your ex each need to get independent legal advice on the terms of your agreement before signing.
If the agreement is fair and you clearly understand what you’re agreeing to, your lawyer will sign a certificate confirming they advised you on the agreement. The agreement then becomes legally binding.
Step 3: Applying to Court for a Property Order
If you and your ex do not agree on a property settlement after family dispute resolution, you can then apply to the Family Court for a Property Order.
What assets can be divided in a property settlement?
The pool of “shared assets” that to be divided is wide. It includes:
- Joint assets (e.g. bank accounts, property, funds);
- Individual assets owned during the relationship;
- Interests in a business, company or trust;
- Superannuation (joint or individual);
- Inheritance and gifts received by one partner during the relationship;
- Assets obtained during the relationship (e.g. cars, houses, personal items, furnishings);
- Assets obtained after separation and before the property division is finalised; and
- Assets from a court order or award (e.g. compensation).
Can debts be shared?
Debts and liabilities are also shared, including:
- Credit card loans;
- HECs debts; and
- Taxation (including stamp duty).
How does the Court determine what is ‘just and equitable’?
There is not a 50-50 property settlement starting point. However, the Court usually follows a 4-step process:
(1) What is the value of the “shared pool”?
(2) What has each party contributed to the relationship? This includes:
- Financial contributions (e.g. wages, awards, what they brought into the relationship at the very beginning);
- Parenting work;
- Family contributions (e.g. housework, grocery shopping);
- Non-financial contributions (e.g. time spent renovating or furnishing the house, managing the family business or trust affairs); and
- Where the money is spent, if one party is alleging the other of waste (e.g. if your ex spends more than 10% of your combined wages on gambling, drinking or drugs, this could be considered waste).
(3) What are the financial needs of each party relative to one another? Things considered here are:
- Health (mental, physical, disabilities);
- Earning potential (e.g. education);
- Parenting commitments;
- Commitments toward other people such as family members;
- The length of your relationship; and
- The existing or reasonable living standards of each party.
(4) How will the property be divided? The Court will consider:
- What is a fair percentage split?
- How will each asset in the “shared pool” be shared? Will it be given to one party or will it be sold and its proceeds split?
- Do adjustments need to be made to match the percentage split?
- On the whole, is the property division “fair and equitable”?
There is a time limit for property settlement
If you and your ex wish to finalise a property settlement, you will need to lodge your application to the Family Court of Australia (‘the Family Court’) within:
- 1 year of receiving your divorce certificate (decree); or
- 2 years of separation (if you are not married).