Approximately one out of every three marriages and de facto relationships in Australia end in divorce or separation. And just like the relationships that preceded them, every separation is unique. Some are amicable and relatively easy, whereas others end up being complicated, drawn-out, and emotionally draining. One of the main reasons why many separations and divorces become so problematic is the property settlement process.
What Is A Property Settlement?
After deciding to separate, couples go through settlement proceedings in order to determine who gets what assets and how debts will be settled, as well as arranging custody and drawing up parenting orders if required. Part of this process is called a property settlement, which is the formal arrangement for how to divide monetary resources, property assets, and financial liabilities between parties after their marriage or de facto relationship is over.
As set out in the Family Law Act of 1975, the division in a property settlement after separation can be made with or without the assistance of the court. Either way, the resulting financial settlement is then formalised in a legally binding document called a Separation Agreement.
What Counts As Property?
When determining the assets to be divided for a de facto or divorce property settlement, property doesn’t mean just real estate. The definition of what the Family Court constitutes as property is actually quite broad. Almost any asset of value can be defined as property, such as cash, shares, vehicles, investments, Jewellery, superannuation, art, real estate, inheritances, and business interests.
The property settlement isn’t limited to assets gained during the relationship. In fact, property settlement can include anything acquired prior to the relationship as well as after separation. Property can also be owned partially or wholly by one or both parties, whether in joint names or a family trust.
Also included in a property settlement are debts and liabilities, which also get divided between each party. They too can be joint or individual liabilities such as debts, taxes, credit cards, and personal loans. It doesn’t matter how the asset or debt was acquired or whose name the property is under, or who incurred the liability.
It’s also important to be aware that for a property settlement agreement to be considered legal, both parties are required to disclose all of their current financials. If all assets and liabilities aren’t reported completely, there will be severe consequences for dishonesty.
When To Start The Property Settlement Process
Once you’ve both decided to separate, you can start discussing the division of your financial assets and liabilities. Some couples are able to come to an amicable agreement regarding their property settlement within a couple of weeks of their relationship ending. In fact, the agreement can actually be completed and formalised before even starting the process of filing for divorce.
This isn’t a bad idea, considering it’s sometimes in the best interests of both parties to finalise their property settlement as soon as possible. For example, when assets of the relationship can wildly fluctuate, increase, or decrease in value over time.
Plus, the Family Law Act of 1975 stipulates property settlement must be completed within a strict time limit of 12 months after the divorce is finalised. De facto couples must also have their property settlement finalised within two years from their separation date. There may be exceptional circumstances when the court would consider granting an extension to the property settlement time limit, but this only happens very rarely.
What Is Involved With The Property Settlement Process
Before commencing any legal proceedings, The Court requires couples to genuinely attempt property division on their own terms. So start by identifying and listing all joint and individual assets and liabilities which will be combined to form the property pool.
Everything regarding the division of assets needs to be discussed together with your ex-partner to see if you can come up with an arrangement on property settlement. If an agreement you both approve of can be reached amicably, it’s very important to then ensure everything you agreed on is formalised in a legally binding document. This can be done by preparing a jointly written agreement which is signed by both parties as a consent order to be approved by the Family Court.
However, if the process fails and both parties are unable to agree to a resolution, an application can be made for the Court to commence property settlement proceedings. Once the financial assets and liabilities of both parties are disclosed in full to the Courts, they will be able to start making evaluations in order to determine a percentage for property division.
The Court will start by providing an assessment of the net property pool contributions throughout the relationship by each party. The contributions will be calculated as percentages or a range of percentages for each party. Once each party’s current circumstances and future financial needs have been evaluated, The Court will then make adjustments to their percentages.
Finally, The Court will evaluate all circumstances of the case to ensure a just and equitable percentage of property division which is appropriate for each party. While there’s no set formula used by The Courts when determining a property settlement, each case is determined individually depending on specific circumstances.
Do You Need Legal Representation Or Help?
While there are some helpful resources available which can assist with finalising property settlements without The Court’s assistance, you should seek specialised legal advice before making your final decision. In fact, due to the complex nature of dividing assets, you should speak with a family lawyer whether you’re able to reach an agreement or not. Then you can make an informed decision when navigating the settlement process and dividing your assets.
You should immediately contact an expert in family law property settlement if you have any reason to believe your ex-partner is attempting to dilute your resources. Your lawyer will be able to discuss the legal avenues available to you which will prevent them from illegally selling off any assets or creating more debt until after the property settlement has been reached.
Separating from your spouse or de facto partner is often one of the most financially important and emotionally difficult experiences in life. So before deciding to sign something in the heat of the moment, you should definitely speak with a family law expert to check that everything is protected, fair, and legally binding. Once you’re confident your future is secure, you can start putting it all behind you and move on with the rest of your life.
