Recently separated and not sure of your rights regarding property settlement? Confused about what to do next?
Working out how to divide your property following separation doesn’t need to be like pulling teeth. If you want to get through the settlement process as quickly and painlessly as possible though, there is some important information you should know.
Will everything be split equally in a property settlement?
Many people mistakenly think that when they divorce, property will be divided equally. This is not the case. The Family Law Act sets out what a court must take into account when considering whether to make an order for property settlement.
Family law courts follow a four step process. This involves:
1. Identifying the net assets and liabilities of the parties;
2. Determining the financial and non-financial contributions made by the parties to the net assets and liabilities;
3. Considering factors set out in the Act relating to the needs (current and future) of the parties. The Court then determines whether any adjustments need to be made as a result of these needs; and
4. Finally, the Court considers what orders would be just and equitable in all the circumstances of the case.
Strict time limits apply in relation to property settlements
A settlement can be done at any time after separation, but no later than:
• 12 months after a divorce order becomes final; or
• Within 2 years of separation in the case of a de facto relationship.
After these time limits expire, a property settlement order can only be made with leave (permission) of the Court, which may be very difficult to obtain.
Your property settlement can affect you long into your future. It’s important you have accurate information about what you are legally entitled to. We highly recommend you seek legal advice about your personal situation.
What if we agree about our property settlement?
It’s great if you and your partner can agree on how to divide your assets. It is important however, that the agreement is properly drawn up and filed with the Court. “Handshake agreements” are not enforceable and one party may decide to change their mind later causing all sorts of problems.
Consent Orders – If you and your former partner agree about how you want to divide your property, you can file an Application for Consent Orders with the Court. This doesn’t mean you have to go to court. Rather, your agreement is filed with the Court and provided the Court is satisfied it is just and equitable, the Court will approve it. Your agreement is then binding and has the same force as any order made by the Court after a contested hearing.
It is not necessary for both parties to have Independent legal advice from a family law solicitor, but it is advisable that they do so.
Binding Financial Agreements – Alternatively, agreements about property settlement can be included in a Binding Financial Agreement (BFA’s). Both parties must have independent legal advice and very strict requirements apply. If these are not followed, there is a risk the agreement will be set aside if later challenged in Court.
Generally, Binding Financial Agreements are more expensive than an Application for Consent Orders due to these technical requirements. We generally recommend that a property settlement be finalized by way of consent orders rather than a binding financial agreement. For more information read our blog “Consent Orders v BFA’s”.
If a property settlement involves a superannuation split, any proposed order or agreement must be served on the Trustee of the Superannuation Fund. This is to ensure the Trustee has no objection to the proposed superannuation split. It is unusual for the trustee to have an objection, but there is technical wording that has to be used so it is best to get legal advice if you are thinking of splitting superannuation.