Property Settlement

Property settlement is a critical aspect of the separation process in Australia, where parties involved must decide how to distribute their property and assets. This process is legally recognised and can be formalised in several ways, depending on whether an agreement can be reached between the separating parties.

The Family Law Act 1975 provides the legal framework for property settlements in Australia, ensuring that the division of property is conducted fairly and equitably, considering the unique circumstances of each case.

Property includes a broad range of assets and liabilities, including but not limited to:

• Real estate (owned jointly or independently)

• Business interests and investments

• Superannuation (retirement funds)

• Trusts

• Vehicles

• Jewellery

• Inheritance and gifts

• Cash and bank deposits

• Pets and animals

There are several ways to handle property settlement:

• Mutual Agreement Without Court Involvement: If both parties can agree on how to divide their property amicably, they can formalise their agreement through a financial agreement or an informal arrangement. However, it’s important to note that informal arrangements are not legally enforceable.

• Consent Orders: Should the parties reach an agreement, they can apply to the Family Court for consent orders. Consent orders are agreed upon by both parties and approved by the Court, making them legally binding.

• Court Application for Financial Orders: When an agreement cannot be reached, either party can apply to the Court for financial orders. The Court will then decide on the property division based on the evidence presented and in accordance with Australian family law principles.

The division of property is not automatically equal (50/50) between parties. Instead, the Court considers several factors to determine a fair division, including:

• Overall Asset and Debt Assessment: The first step is to identify and value all assets and liabilities of the relationship.

• Financial Contributions: Contributions by each party towards acquiring, maintaining, or improving the assets, including wages and salaries.

• Indirect Financial Contributions: Contributions such as gifts and inheritances that have benefited the asset pool.

• Non-Financial Contributions: Consideration of roles such as childcare, homemaking, and contributions to the career or education of the other party.

• Future Needs: The Court also considers each party’s future requirements, including age, health, financial resources, the need to care for children, and future earning capacity.

The Court aims to achieve a just and equitable outcome, considering both parties’ past contributions and future needs. Given the complex nature of property settlements, legal advice from the reputable team at AJB Stevens is highly recommended.

When a relationship or marriage breaks down, it’s essential to engage a property settlement lawyer to help divide assets and liabilities. This area of Australian law is quite complex, as it involves not only the division of assets accumulated during the relationship but also considers assets owned before the relationship, liabilities, business interests, superannuation, and other financial resources.
There are several reasons why consulting with a property settlement lawyer is not just beneficial but often necessary:

Expertise in Family Law
Property settlement lawyers specialise in family law and understand the legal framework governing property settlements in Australia. They are well-versed in the Family Law Act 1975 (Cth) and relevant case law, enabling them to navigate the complex legal landscape effectively. Their expertise ensures that all legal avenues are explored and that your rights and interests are vigorously defended.

Objective Assessment
Emotions can run high during a separation or divorce, potentially clouding judgment. A property settlement lawyer offers an objective perspective, focusing on the facts and legal principles to guide you toward the most beneficial outcome. They help you understand what you are legally entitled to, ensuring that decisions are made based on logic rather than emotion.

Identification and Valuation of Assets and Liabilities
A comprehensive assessment of the asset pool is critical in property settlements. This includes identifying and valuing all assets and liabilities, whether straightforward or complex. Property settlement lawyers have the experience to deal with various types of assets, including businesses, investments, superannuation, and international properties. They can also advise on the tax implications of different settlement options.

Negotiation and Mediation Skills
Many property settlements are resolved through negotiation or mediation, avoiding court intervention. Property settlement lawyers possess the negotiation skills necessary to advocate effectively on your behalf. They can facilitate discussions, propose equitable solutions, and work towards achieving a fair agreement that reflects your contributions and future needs.

Preparing Legal Documents
If an agreement is reached, it must be formalised to be legally binding. A property settlement lawyer can draft a legally sound financial agreement or prepare consent orders for submission to the court. These documents ensure the agreement is enforceable and protects against future claims.

Representation in Court
Should negotiations fail, having a property settlement lawyer to represent you in court is invaluable. They can prepare and present your case compellingly, ensuring that all relevant evidence is considered. Their advocacy can make a significant difference in the outcome of your case.

Settling property matters during a separation or divorce can be complex, but it doesn’t always require going to court. In Australia, the legal system encourages separating couples to resolve their property disputes outside of court wherever possible. This reduces the strain on the judicial system and offers a more flexible, private, and often less stressful way for parties to agree.

Alternative Dispute Resolution (ADR) is one way to settle property without court intervention. It includes various methods to help parties resolve disputes without litigation. These methods include:

• Mediation: A neutral third party, known as a mediator, helps both sides communicate their needs and interests to reach a mutually acceptable agreement.

• Collaborative Law: Each party hires their own lawyer trained in collaborative law practices. Together, they work as a team to negotiate and resolve the dispute.

• Arbitration: An arbitrator (a neutral third party) hears evidence from both sides and makes a decision that can be binding or non-binding, depending on the terms agreed upon beforehand.

Once an agreement is reached through negotiation or ADR, it’s essential to formalise the arrangement to make it legally binding. There are two main ways to do this:

1. Financial Agreement: Parties can enter into a financial agreement that outlines the division of property, assets, and liabilities. This agreement does not require court approval but must meet specific legal requirements, including advice from a lawyer for both parties.

2. Consent Orders: Alternatively, parties can apply to the Family Court for consent orders. Although this involves submitting documents to the court, it does not require the parties to physically attend court proceedings if the agreement is fair and reasonable. Consent orders have the same legal effect as a judge made them after a court hearing.

Obtaining legal advice is crucial regardless of the method chosen to settle property matters. A family law solicitor can:

• Provide a clear understanding of your legal rights and obligations.

• Help assess your financial situation, including identifying and valuing all assets and liabilities.

• Assist in negotiating a fair and equitable settlement.

• Ensure that any agreement complies with Australian family law.

• Draft the necessary legal documents to formalise the agreement, whether it’s a financial agreement or an application for consent orders.

While going to court is not necessary for settling property matters, family law is complex so it’s worth seeking legal advice. A qualified lawyer can guide you through the process, ensuring that the settlement is fair, compliant with legal standards.

Property is, quite literally, anything of value. This can include:

• Any property owned (jointly or independently)
• Business interests
• Superannuation
• Trusts
• Vehicles
• Jewellery
• Inheritance assets
• Money
• Animals

Property acquired during the relationship is not the only property that needs to be divided during a property settlement. Property owned prior to and after the separation may also be included.

Debts are included in property settlement calculations. Debts can include:

• Loans
• Taxes
• Stamp duty obligations

Liabilities are divided between the parties, whether they are held jointly or individually.

The legal framework surrounding property settlements after the breakdown of a relationship is governed by specific time limits, as outlined in the Family Law Act 1975 (Cth). These time limits are crucial for anyone considering or undergoing a separation or divorce, impacting the ability to seek a court-ordered property division. Understanding these time limits is essential to protect your financial interests and rights under Australian law.

Time Limits for Property Settlement

1. Married Couples: For individuals who were married, the law stipulates that you have 12 months from the date your divorce becomes final to apply for a property settlement or spousal maintenance in court. The divorce becomes final when the divorce order takes effect, usually one month and one day after the divorce is granted.

2. De Facto Couples: De facto couples, including those in same-sex relationships, have a different time frame. They must apply for a property settlement or maintenance within two years from the date of separation. Determining the exact date of separation can sometimes be complex, especially when couples live under one roof after their relationship ends.

Extensions of Time

While the courts generally adhere to these time limits, it is possible, though rare, to apply for an extension of time beyond these periods in exceptional circumstances. To be granted an extension, you must demonstrate to the court:

• Why you did not apply within the standard time limit.

• That your ex-partner would not suffer unfair prejudice if the extension were granted.

• That you or your children face hardship if the extension is not granted.

Given the complexity and rarity of obtaining such extensions, it is advisable to take action within the standard time frames whenever possible.

Importance of Timely Settlements

Beyond legal requirements, there are practical reasons to finalise property settlements quickly:

• Asset Value Fluctuations: The value of shared assets (such as real estate, investments, and businesses) may change over time. Delaying the settlement could result in disparities in asset valuation, affecting the settlement’s fairness.

• Financial Clarity: Finalising the property settlement provides both parties with clear financial independence and allows for future planning without the uncertainty of unresolved property issues.

• Emotional Closure: Completing the property settlement process can also offer emotional closure, allowing both parties to move forward after their separation.

A qualified lawyer can provide guidance tailored to your specific situation, help you understand your legal obligations and entitlements, and ensure that any property settlement or maintenance applications are lodged within the required time frames.

Contrary to common misconceptions, there’s no automatic entitlement to an equal (50/50) share of property upon the dissolution of a marriage or de facto relationship. Instead, the Family Law Act 1975 provides a framework for determining how property should be divided based on principles of fairness and equity.

The court considers a comprehensive range of factors when deciding on the division of property, including but not limited to:

1. Assets and Liabilities: The first step involves identifying and valuing all the relationship’s assets and liabilities, including real estate, investments, superannuation, business interests, debts, and any other financial resources.

2. Contributions: Contributions to the asset pool are broadly categorised into financial contributions (such as income, property brought into the relationship, and financial management) and non-financial contributions (such as unpaid labour in home maintenance, childcare, and contributions to the career advancement of the other partner).

3. Future Needs: The court also considers each party’s future needs, which can include factors like age, health, financial resources, care responsibilities, and the ability to earn in the future. This ensures that the settlement accounts for both parties’ ongoing financial security.

4. Just and Equitable Requirement: The court must be satisfied that the proposed settlement is just and equitable for both parties involved.

For couples seeking control over how their property is divided in the event of a separation, a Binding Financial Agreement (BFA) offers a viable solution. A BFA can occur before, during, or after a relationship. It allows parties to stipulate how assets and financial resources will be allocated without the court’s intervention, provided certain conditions are met:

• Legal Advice: Both parties must receive independent legal advice regarding the agreement. This advice must cover the agreement’s effects on their rights and the advantages and disadvantages of entering into the BFA.

• Voluntary Agreement: The agreement must be entered into voluntarily, without coercion, duress, or undue influence.

• Full Disclosure: Both parties must fully and frankly disclose all their assets and financial resources.

BFAs can provide certainty and protect assets, but they must be drafted carefully to ensure they are legally binding and withstand potential challenges. A family law solicitor can help you do this. They will also help you understand your rights, evaluate your contributions and future needs, and guide you through negotiating a fair and equitable property settlement.

Although it is typically assumed that property will be divided equally between each party, this is not always the case. There is no formula that the courts use to determine a property settlement. However, there are a few guiding principles that the property settlement is based on. They are:

• The totality of your assets measured against your debts
• The direct financial contributions each party brought to the marriage or de facto relationship (wage and salary earnings, etc.)
• Indirect financial contributions by each party such (gifts, inheritance, etc.)
• Non-financial contributions to the marriage or de facto relationship (childcare, homemaking, etc.)
• Future requirements (a court will take into consideration age, health, financial resources, care of children and future earning ability)

Each situation is unique and will depend on the individual circumstances of your situation.