Financial & Property Settlement

SMART. STRATEGIC. FOCUSED ON YOU.

Financial and Property Settlement

What is a property settlement?

A property settlement occurs when a couple makes a legally binding agreement about how to split of the assets and liabilities of their relationship, or when the Court orders the split of assets and liabilities of a relationship.

What is the process for a property settlement?

There are four main steps in assessing a property settlement:

 
  • Identify and value the assets, financial resources and liabilities of each person, as at the date of the property settlement;
  • Identify relevant contributions of the parties;
  • Identify the future needs of each person in the relationship. This includes in come, health needs and obligations to care for children (if any) in the future;
  • Taking the above three factors into account, adjust the property, assets and liabilities of the parties to achieve a just and equitable outcome.

What factors influence a property settlement?

A property settlement is influenced by a wide range of factors, but these are some of the most common ones:

 
  • What assets and liabilities each person had at the start of the relationship;
  • Financial contributions during the relationship, particularly including lump sums like inheritances and gifts from family;
  • In some cases, any talents or special abilities that each person must earn money;
  • The homemaker contribution of either party, being the domestic duties that each person has completed;
  • Whether there are any children from the marriage;
  • If there are children, each party’s contribution to caring for them;
  • If there are children, who the children live with following the end of the relationship; and
  • Financial contributions by either party after the breakdown of the relationship.

 

Property Settlement Options

The three ways to properly finalise a property settlement are by:
  • Binding Financial Agreement: This is a private agreement between partners/spouses that is legally binding. It is not filed with the Court. Both people are required to obtain independent legal advice before signing a Binding Financial Agreement and have a lawyer sign a document stating that they have provided the advice.
  • Consent Orders: These are Orders that are agreed between the parties, and then submitted to the Family Court to be approved. Neither party needs to attend at Court, because the whole process is managed with paperwork. It is not necessary for both people to obtain independent legal advice before signing Consent Orders (but it is recommended).
  • A decision from a Judge: To obtain a decision from a Judge, court proceedings need to be filed. At any times during the court proceedings, people can still choose to settle their case by agreement.

In most situations, it is in the best interests of both parties to finalise their property settlement by agreement. Taking a case to trial to have a Judge decide it can be a slow and expensive process. If a property settlement is not finalised in one of the three ways listed above, there is a very real risk that the other party can still apply to the Court for property settlement orders, even if the parties had agreed on a property split between themselves.

Valuations

To determine the value of the asset pool, it is often necessary to value assets such as properties, businesses and superannuation policies. Sometimes there are costs of engaging experts to provide formal valuations. It is common practice that parties share these costs.

Review your Will

  • It is important to make a new Will after separation. If your current Will leaves most assets to your ex-partner/spouse, the fact that you have separated does not change that. If you do not have a current Will, then depending on the precise circumstances, your ex-partner/spouse could potentially receive all your assets if you were to pass away. 
  • Our sister company, Legal Essentials, can help you with your Will and estate planning. They can even meet with you at the same time as your Family Lawyer. 

Under the Court Rules, the parties to a property settlement case are obliged to provide full and frank disclosure. If a person fails to provide full and frank disclosure they could be penalised by the Court and could be ordered to pay the other party’s costs.

An asset of a relationship is any asset owned by either member of the relationship whether jointly, individually or with any other person in Australia or overseas. Even if an asset was owned by one of the parties before the start of the relationship, it will still be considered an asset of the relationship. Common types of assets include: property, motor vehicles, bank accounts, businesses, companies, trusts and superannuation.

A Financial Resource includes an interest in any entity, property or trust, where the party does not actually own that asset so it cannot be viewed as an asset of the relationship. Financial Resources need to be declared through the disclosure process.

A liability of a relationship is generally any debt owed by either person in the relationship, whether jointly or individually, or with any other person. This could also include a liability resulting from dealings with a company or a trust. Relevant liabilities generally include debts incurred at the start of the relationship, during the relationship and after the end of the relationship.

Slightly different time limits for property settlement apply to married couples and de facto couples.
A party to a marriage can apply to the Court for a property settlement any time between the day of separation and the day one year after the parties are divorced. This means that if you have been divorced or are in the process of getting a divorce but have not finalised your property settlement, we recommend that you speak with a Family Lawyer to discuss making arrangements for a property settlement as soon as possible.
A de facto partner can apply to the Court for a property settlement any time between the day of separation and the day two years after separation.
If you are out of time to apply to the Court for a property settlement (i.e. if you were married and it is over one year since your divorce, or if you were in a de facto relationship and it is over two years since separation), you will need to get permission from the Court before you can apply for a property settlement. Whether the Court will give you permission is highly dependent on the specifics of your case – if you are in this position, we recommend speaking with a Family Lawyer as soon as possible to find out your options.

Get in touch