Property Settlements

A property settlement is where you and your partner finalise your financial matters during separation in preparation for divorce proceedings. Property Settlements include both your assets and property and can be done at any point after separation. It applies to both de facto and married couples.

Once a divorce is granted (for married couples) both parties have 12 months to commence proceedings for a property settlement.

How will our assets be divided?

There are a number of factors considered when splitting assets in divorce. This includes consideration of physical and financial assets as well as liabilities.What this means is the division of assets has more to do with the contributions and needs of each person, rather than who’s name is attached to the asset.

Determining the most just and equitable split of assets is calculated under the Family Law Act using a four-step process, that includes;

1. Valuation of assets

Assesses the assets and liabilities you and your ex-spouse have or have control over and will include both join assets and liabilities, those you each have on your own, any assets in family trusts and your superannuation. Each party must fully disclose individual bank balances, the value of owned property or shares, debts owing on loans and any interest in a business or company. It includes those assets and liabilities acquired before, during and sometimes after the relationship.

2. Assessing the contributions of both parties

Not all contributions are financial. This step helps in understanding what each of the parties have brought to the relationship, both in financial and non financial terms.Non-financial contributions can include providing childcare, renovating a property, a deposit to purchase a property, or being a guarantor on a home loan. Even indirect contributions made by family members.

3. Determining future needs

Once the assets and liabilities have been assessed, the current and future needs of both parties need to be considered.This will take into account age, health, future earning capacity, employment prospects and financial resources. Who will be providing the majority of childcare, each parties individual living requirements, and the extent the relationship may have had on each person’s earning capacity is also taken into account. Access to support from family members, for childcare, living arrangements or financial support may also be considered when dividing the asset pool.

4. Evaluating the impact

The final step is the court deciding whether their split of the assets and debts is fair and equitable.The court may determine one person is given a higher portion of the assets if they have significantly less earning capacity.

What options do we have when arranging the asset split?

There are four options a couple have when splitting their assets after divorce. The options to consider are:

1. A non-legal arrangement

Non-legal arrangements can be made when a couple splits amicably and are able to agree on how their assets will be split without any legal confirmation. If, at a later stage, this type of arrangement is not working effectively, or of someone changes their mind, or spends all of their money, the parties can go to court and ask for financial orders under the Family Law Act.

2. A binding financial agreement

Can be made prior to (pre-nuptial agreement) during or at the end of a relationship and sets out the assets provisions in the event of a breakup. Both parties are bound to the terms of the agreement unless there are extenuating circumstances.

3. Consent orders

If both spouses have reached agreement about parenting and asset distribution and want to formalise the agreement to make it legally binding, you can apply for consent orders. Consent orders can also be used to vary or discharge existing family law orders,

4. Litigation

This is where the family court determines how the couple’s assets and liabilities will be split. This process is , lengthy, costly and usually requires attendance in court. Litigation is generally considered a last resort due to the emotional and financial impact it can have on the family.

You can apply for property orders before your divorce is finalised and up to 12 months after. If you do not have property orders within 12 months of separation, you may not be able to make a claim.

The division of assets can be challenging.

Therefore it is important to get independent and unbiased legal advice. They will be able to simplify the process, ensure all assets and liabilities are accounted for, understand the needs and rights of each individual party and help you receive what you are entitled to whilst keeping in mind what’s best for the children involved .