Around 30% of first-time marriages end in divorce and despite this, there are still myths surrounding the Property Settlement Process. Things aren’t always split 50/50, the man doesn’t come off worse, and you don’t have to go to Court for your property settlement. Property settlement after separation, but before the divorce is finalised, is the right way to manage the process for everyone, but what does that look like?
What Is A Property Settlement?
There is a difference between a property and a divorce settlement. They are entirely different legal processes. A property settlement is a process whereby the parties formally divide their property after separating. This process can begin as soon as the couple has separated. Before a couple can divorce, they must remain separated for a period of twelve months. This is the legal termination of the relationship and once a divorce is finalised, both parties can then remarry. You do not need to apply for a divorce to complete a family law property settlement.
Under the Family Law Act 1975, there is a provision for de facto couples as well as married ones. If you are in a de facto relationship you can still pursue a property settlement. Does your relationship qualify?
- If you have been living together for at least two years
- If you have a child together
- If the Court deems it unjust to ignore the de facto spouse’s contributions, whether financial or otherwise.
What Counts As Property?
Before a divorce property settlement, the property pool must be determined and agreed upon. In terms of real estate, you can look at the market to get an idea of the value of any properties you may hold. While you can seek a valuation from an estate agent, they are going to give it a higher value than a bank would.
If you and your former partner cannot agree then you will need to agree to enlist a property valuer. This person will provide both parties with a detailed report, but it will cost you. If you continue to disagree on matters, you may find the Court appointing an independent valuer on your behalf.
Any type of material possession, such as stocks and bonds, shares, vehicles, etc is classed as property.
Both parties are required to provide full relevant closure to the Court. This means they must disclose their bank statements, tax returns, and superannuation statements as well. If you do not comply with this you may be forced to pay costs, your case could be dismissed, or you could be held in contempt of Court.
Who Decides Who Gets What In A Property Settlement?
There are five steps typically followed to determine what each person is entitled to in a separation or divorce.
Is a property settlement just and equitable?
The Court can deem that it is not and it is down to the Court’s discretion based on the circumstances and facts of the situation. In some cases, the Court may determine that parties walk away with what they had when they entered the relationship or what is in their possession or sole name.
The property pool
This includes all liabilities and assets, whether in joint names or sole. This could include businesses, vehicles, trailers, water vehicles, bitcoin, bank accounts, real estate, superannuation, and shares. Liabilities include loans, mortgages, credit cards, and any other debts.
The Court uses the date that the final documents were filed with the Court, so any property obtained up until that point is considered property pool. If any property is sold following separation, the proceeds would go into the property pool. This is why it’s so important to reach a property settlement agreement with your former partner as close to separation as possible. This allows a clean break and you can both move forward independently.
The contributions of both parties
With the property pool agreed, the contributions of both parties will be considered. More specifically:
What parties brought into the relationship, the contributions during the relationships, and those made post-separation.
Future needs will also be considered, including care of children, earning capacity, age, health, and other potential issues.
Is it equitable?
Finally, the fifth step repeats the first. Is this proposed settlement just and equitable?
You don’t need to go to Court to come to an agreement, the vast majority of cases do not make it that far. Generally, the parties work with their lawyers or a mediator and come to an agreement and the Court is only required to bind the agreement legally.
To make your property settlement a legally binding agreement you need to file it with the Family Court of Australia. Then you must, with solicitors advising both parties, enter into a Binding Financial Agreement. The benefit of legalising the agreement is it offers finality and security.
Do Time Limits Apply?
Is there a property settlement time limit? For de facto couples, property settlement proceedings can happen between the day of separation up to two years following separation. However, in the case of married couples, there is a time limit of twelve months from when the divorce is finalised. If you remain separated but are not divorced, you do not have to worry about time limits until you begin divorce proceedings.
As always, there are exemptions. You can seek permission from the Court to bring proceedings after the time limit if you can prove not doing so would cause you hardship.
Why You Should Seek Legal Help
Whether you have a wonderful relationship with your former partner or a contentious one, you should always seek legal help. You are responsible for your interests, but by calling skilled family law lawyers you have someone else fighting for you. More importantly, the lawyer in your corner has a vast knowledge of the family law courts and knows how to make sure you get what you deserve. If you are separated and in need of advice, please get in touch with us today. AJB Stevens can help you get the property settlement you are due.