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In the event of a divorce or separation, property is divided between the ex-partners (including married, defacto and same sex partners). This is known as a property settlement.
Practically this can mean that:
- The family home may have to be sold and the proceeds divided
- One party might retain the home and pay the other party for their interest
- Superannuation may be split from one party to another
- Other assets or liabilities may change hands.
The division of assets and liabilities will depend on the circumstances of your matter and will be determined according to the principles in the Family Law Act. Here are some factors that will be taken into account:
- The length of the relationship (cohabitation)
- The assets and liabilities each party brought into the relationship
- Each party’s respective financial and non-financial contributions during the relationship, such as income, inheritances and improvement of assets through personal exertion (i.e. renovations)
- Each party’s contribution to the welfare of the family, including caring for any children
- Each party’s health and future earning capacity
- Where there are children, the age and ongoing care requirements for those children
There are many other mistaken beliefs relating to property settlements, including:
- You get to keep any assets you had before the relationship, including any house you owned, or any inheritances or gifts your received during the relationship
- You only need to do a property settlement if you own a house – remember that superannuation is an asset that can also be divided, and liabilities are just as easily shared as assets
- You will lose your entitlement to the home if you are the one that moves out or causes the separation
Whenever possible, your property settlement should be resolved as soon as possible following the breakdown of your relationship.
The Court is required to take into account all assets and liabilities of the parties at the time the property settlement is determined – not at the date of separation. If you continue to accrue superannuation or savings, those additional assets will form part of the property pool available for division.
Marriage: You do not need to be divorced to have a property settlement. However, if you do get a divorce, then you only have a period of 12 months during which you have an automatic right to apply to the Court for a property settlement. If you have been divorced for more than 12 months and have not applied to the Court, there are some circumstances when the Court will grant an extension of time in which to apply for a property settlement.
De Facto: If you were in a de facto relationship, you must apply for a property settlement within two years of separation (although the Court is similarly able to grant an extension of time in certain circumstances).
In some instances it is appropriate to have a property settlement during your relationship, prior to separation.
Once an agreement is reached on property settlement, it is imperative that it is accurately recorded in a binding document. There are only two binding options:
- Consent Minutes of Order: For property settlements following separation, most clients prefer to enter into Consent Minutes of Order. These forms are usually prepared by a solicitor on behalf of one party to ensure the agreement is properly documented. Whilst it is recommended that parties both have independent legal representation, it is not necessary for the other party to have a lawyer. Once completed, the proposed Orders are submitted to a Registrar of the Family Court for review and then are made as final Court Orders. They provide you with the protection of formal Court Orders, without either party or their solicitors being required to attend at Court.
- Financial Agreements: Parties can record the terms of their property settlement in a binding financial agreement, although this form of binding agreement is generally only used for “pre-nup” style agreements prior to separation. Each party to a financial agreement must have independent legal representation.
An agreement will only be binding if formalised by way of Consent Orders or a Financial Agreement; anything less will not be binding and can be replaced by a later Order of the Court.
Armour Allen Lawyers have a dedicated and experienced team of family lawyers. We can assist you in achieving the best possible property settlement and ensure that your property settlement is legally binding, giving you the long term protection you need.
For more information regarding property settlement, you can download Your Guide To Property Settlement, or contact our law firm. We offer a first interview free at no cost and no obligation.