What is a property settlement and can you get it done before you divorce?

If you are separated and heading for divorce, consider finalising your property settlement as soon as possible to secure the best outcome for your future.

What is property?

Property refers to all your assets, financial resources, superannuation and liabilities. The Family Law Act defines property as being the ‘net asset pool’ which can include:

  • matrimonial home
  • investment properties
  • bank accounts
  • family Trusts
  • jointly owned assets
  • superannuation
  • shares/interests in a business or companies
  • cars and/or any other vehicles
  • debts

Why is it better to finalise your property settlement before you divorce?

In Australia, you cannot file an application for divorce unless you have been separated for 12 months. However, you can commence and/or finalise a property settlement at any time after you separate.

We strongly recommend people finalise their property settlement as soon as possible after separation and before getting a divorce order. This is because your assets at the date of settlement or trial are what is taken into consideration rather than your assets at the date you separate.

Because it is likely each party will continue with their lives after separation and in doing so, may buy or sell assets, unless there has been a property settlement, these transactions will affect both parties even though the couple is separated.

Are married and de facto relationships treated the same?

If you are married, you must apply for a property settlement within a year of a divorce order becoming final. A divorce order becomes final one month and one day after the date on which the order was made.

If you are in a de facto relationship, you must apply to the court for your property settlement within two years from the date of separation.

Failure to commence proceedings in the court within these timeframes means you will need to seek permission from the court to commence proceedings out of time. It is at the court’s discretion as to whether or not they grant permission and they will only do so in limited circumstances.

How is property divided?

When the court is deciding on a just and equitable division of the relationship property, each case is treated as unique. The court will consider the contributions each person has made to the relationship (both financial and non-financial), together with each person’s future needs.

Both parties will need to disclose all of their assets and the court has the discretion to split any of the property even if it’s under one party’s name. The factors the court considers when deciding are:

  • future financial needs of each party
  • earning capacity of each party
  • whether they have children and who cares for them
  • age
  • health
  • any other special circumstances
  • whether the division would be practical and in the party’s interests.

How is a property settlement finalised?

Property settlement can be finalised either by:

  1. an application for consent orders (which is filed in the Family Court) and orders are made by the court
  2. a binding financial agreement (which is not filed in court).

 

Cornerstone Law Offices can help you understand your entitlements, negotiate property settlement with your former spouse or partner, and obtain a just and equitable outcome. Call us on 1300 267 637 for a complimentary consultation or contact us by clicking here.