Property & Financial
A brief summary
A property settlement is the division of the asset pool.
Superannuation is treated as a different type of property.
It is a misconception that each person has an entitlement or that there be a 50/50 split.
No two relationships are alike.
The Court goes through a '5 Step Process'.
There are general principles the Court considers when deciding financial disputes
A Court will decide what is just and equitable based on the unique facts of your case.
There is a time limit to apply for property and financial orders.
Once you separate, you will need to reach an agreement as to how you will divide your assets (property) and debts. There are two main ways you and your former spouse or de facto partner can agree on how your property will be divided;
- if you are able to reach an agreement you can formalise your agreement through a financial agreement or by applying for consent orders by seeking the Court make orders in the terms of your agreement; or
- if you are unable to reach an agreement you can apply to the Court for a decision.
The division of your assets and debts will depend on the individual circumstances of your family. Your settlement is likely to be different from others you may have heard about.
The 5 Step Process
The Family Law Act sets out the general principles the court will take into consideration when deciding financial disputes. The general principles are the same, regardless of whether you were in a marriage or a de facto relationship. They include:
- listing your assets and debts are and their value;
- direct financial contributions by each party to the marriage or de facto relationship (i.e. incomes and monetary contributions);
- indirect financial contributions by each party (i.e. gifts and inheritances);
- non-financial contributions to the marriage or de facto relationship (i.e. caring for children and homemaking); and
- your future requirements (i.e. age, health, financial resources, care of children and ability to earn).
Frequently Asked Questions
It is very important that as soon as possible after separation you and your former spouse finalise property and financial matters in the form of a Consent or Court Order or Binding Financial Agreement.
If you do not finalise a property settlement, you are exposed to a number of possible consequences including:
- your spouse making a claim against you for a property settlement at any point in the future (even if the time limit has expired);
- if the time limit expires you have to seek the permission of the Court to make an Order for a property settlement;
- you may incur stamp duty when you transfer an asset and do not have a Consent or Court Order;
- you may incur certain taxes when you transfer or sell an asset (for example CGT);
- you may remain liable for a debt, claim or loan;
- your credit rating could be negatively affected if any debts or loans fall into arrears; and/or
- continuing an ongoing financial relationship with your spouse.
If you were married, you must make an application for property adjustment within 12 months of your divorce becoming final.
If you were in a de facto relationship, you must make an application for property adjustment within 2 years of the breakdown of your de facto relationship.
If you do not apply within these time limits, you will need the special permission of the Court however this is not always granted.
Each party has an obligation to make full and frank financial disclosure of their financial position when finalising a property settlement. If disclosure is not fully made, there is a risk the property settlement could be set aside by the Court in the future.
Regardless of the registered owner of the asset or debt, it is still considered in the asset pool. There may however be a contributions argument over the asset.