When a marriage breaks down and the process of divorce commences, as well as when a de facto relationship ends, one of the key areas of negotiation between the two parties when going through separation is the property settlement. Property settlement essentially means finalising the distribution of assets and liabilities (property and money) between you and your former partner.
Ideally, you will be able to reach an agreement with your former partner regarding “who has what” in a property settlement. If so, you can make the division of assets legally binding through either:
- a Binding Financial Agreement (also known as a Separation Agreement) or,
- consent orders.
When agreement can’t be reached, the parties will need to ask the court to decide. The court will ask both parties to submit various pieces of information and use it as a basis for determining an appropriate property settlement for each party under family law.
Binding financial agreements and consent orders don’t require court
In a binding financial agreement or consent orders, you can set out details of the assets, maintenance payments and other financial benefits and how you would like them to be split between you and your former partner. You likely know your financial and property details better than anybody else.
If agreement can’t be reached, the court will request a large amount of detailed information in order to inform its decision making. The judge will make a decision based on consideration of the contributions that both parties have made to the marriage as well as future financial prospects. Contributions include those that are financial and those that are ‘in kind’ (such as homemaking).
Control over your property settlement outcome
The property settlement that a judge decides on won’t necessarily be one that you’re happy with as you have no control over the outcome. Once the matter goes to court, the final outcome is beyond the control of individual parties. While it’s possible to ask the court to reconsider its decision, this can be costly and take time.
The terms of consent orders must be ‘just and equitable’ whereas a binding financial agreement doesn’t have to be just or equitable, as long as both parties receive independent legal advice on their agreement (including the advantages and disadvantages). You can also get a confidentiality clause drafted into a binding financial agreement.
Avoiding court saves time and money
It’s almost always cheaper to agree on a property settlement through a binding financial agreement or consent orders, rather than having the court decide. Once the judicial system is involved in the decision making process, repeated visits to court and collation of the information that the judge requires can take many months and cost a considerable amount in legal fees.
A property settlement is a crucial part of divorce proceedings. If possible, it should be decided between the parties and formalised through a binding financial agreement or consent orders. This frequently gives both parties an appropriate outcome and is less adversarial and cheaper than a court case.
If you are considering divorce, in the process of obtaining a divorce or separating from your partner, it’s wise to obtain expert legal assistance to maximise your chances of a satisfactory outcome.
You can also complete much of the legwork, saving thousands on legal fees, using this Binding Financial Agreement Kit (Separation Agreement).
If there are children to the relationship, then you’ll need to make a separate agreement for parenting and child support arrangements with a Child Support Agreement Kit (which includes a Shared Parenting Plan).