The breakdown of a marriage or a de facto relationship will often involve the division of property. This can be a stressful time for parties, particularly where there are concerns about your future financial security.
Separated couples who can reach agreement are able to have their agreement formalised by way of a Consent Order or Binding Financial Agreement.
If agreement cannot be reached, either party can commence proceedings in the family law courts to seek orders for property settlement. The court follows the process set out in the Family Law Act to determine how property should be divided between parties.
What is included as “property”?
The court will consider all of the assets, liabilities and financial resources owned by the parties at the time that the matter is being determined. This includes everything that is owned in individual or joint names or in the name of a company or trust that is controlled by one or both parties. Usually this will mean your home, cars, money in the bank, superannuation and furniture / chattels. It can also include an interest in a business, investment properties and shares.
If there is a dispute about the value of a particular asset/s a valuation report from a jointly appointed (or court appointed) independent expert will be required.
We’ve reached agreement, how do we formalise it?
Separated couples who have reached agreement about their property and financial matters can formalize their agreement by applying for a Consent Order or entering into a Binding Financial Agreement. It is important to ensure that your agreement is formalised and legally binding on both parties.
To apply for a Consent Order, parties must complete and file two documents with the Court:
- An Application for Consent Orders – this document sets out the personal and financial circumstances of each party including details of any children and arrangements in place, income, assets and liabilities. It also includes information about the contributions that each party has made during the relationship and the financial position that each party will be left in if the Orders are made;
- Draft Proposed Order – this document sets out the orders that the parties are asking the Court to make about their property division.
It is a good idea to consult with a lawyer before signing any documents about property settlement. A family law specialist can assist you with the drafting of your proposed orders to ensure that they are enforceable and that they are worded correctly so that you benefit from stamp duty exemptions on the transfer of property and/or capital gains tax rollover relief (if applicable).
Once your application has been filed with the Court, a Registrar of the Court will review the application and, if it is deemed to be a just and equitable settlement, the Order will be made by the Court.
A Binding Financial Agreement is a private agreement entered into by the parties. It is not filed with the Court and does not require the Court’s approval, however it must meet certain criteria set out in the Family Law Act in order for it to be binding on the parties.
One of those criteria is the requirement for each party to obtain independent legal advice prior to entering into the Agreement. The lawyers for each party must sign a Statement of Independent Legal Advice which must be annexed to the Agreement, confirming that they have provided independent legal advice about certain matters and that the advice has been understood by their client.
We can’t reach agreement, do we have to go to mediation before we can apply to Court?
No, there is no requirement that parties must attend mediation prior to commencing proceedings about property / financial matters. However, you are required to invite the other party to participate in dispute resolution and make a genuine effort to resolve the dispute by participating gin dispute resolution.
If not agreement is reached because the other party refuses to participate, or you attend dispute resolution and cannot reach agreement, then you must provide the other party with written notice that you intend to apply to the Court for property orders.
Before applying to the Court, you are also required to provide disclosure of any information or documents that are relevant to the dispute. As a minimum, this will include a list of your assets, liabilities and income and a list of all of the documents that you have in your possession that are relevant (for example, payslips, tax returns, bank statements).
How does the Court decide what property I should get?
There is no mathematical formula used to determine a property settlement. A decision will be made by a Judge who has considered all of the evidence in your case, using their discretion. That means that no-one, including a lawyer, can tell you exactly what the outcome of your matter will be.
A specialist family lawyer can provide you with a range of likely outcomes based on the particular facts of your case and taking into account previous decisions the Court has made.
The Court will go through the following steps when considering what orders to make for property settlement:
- Consider whether it is just and equitable to make an Order adjusting the parties interests in property;
- Work out what the assets, liabilities and financial resources of the parties are and what they are worth;
- Consider the contributions that each party has made during the marriage, including financial (income, gifts of funds, inheritances etc), non-financial (improvements to property) and parent / home-making contributions;
- Look at the age, health, income earning capacity, parenting arrangements and financial resources of each party moving forward;
- Consider whether the proposed Order is just and equitable in the circumstances of the case.
Is there a time limit for married couples?
Yes. Unless agreement has already been reached, married couples must apply to the Court for property settlement within 12 months after a Divorce Order has been issued.
After that time, the leave of the Court will be required prior to a party being allowed to proceed with an application. Leave is generally only granted in special circumstances.
Is there are time limit for de facto couples?
Yes. If a de facto couple is unable to reach agreement about property division, they must apply to the Court within 2 years of the date of separation.
After that time, the leave of the Court will be required prior to a party being allowed to proceed with an application. Leave is generally only granted in special circumstances.
What if all the assets are in my former spouse’s name?
It doesn’t matter whether property is owned jointly or by one party only. If it is owned at the time that the parties reach agreement or the Court is considering the matter it will be included as property available for distribution between the parties.
Will the Court make me sell the house?
Whether your house or any other asset will need to be sold will depend on the circumstances of your particular case. Generally speaking, the Court will not force the sale of an asset if there is one party who is willing and able to retain it and the other party is still able to receive their entitlement from other assets or a cash adjustment.
What about property acquired after separation, is it included?
All property owned by either party at the time they reach agreement or when the Court is deciding the matter is included in the ‘pool’ of property. That means that any assets acquired by either party after separation, but before a settlement, can be included in the asset pool.
It is important to note, however, that a post separation contribution by one party can result in an adjustment in their favour if it is found to be a contribution made solely by them.
What about property acquired after separation, is it included?
All property owned by either party at the time they reach agreement or when the Court is deciding the matter is included in the ‘pool’ of property. That means that any assets acquired by either party after separation, but before a settlement, can be included in the asset pool.
It is important to note, however, that a post separation contribution by one party can result in an adjustment in their favour if it is found to be a contribution made solely by them.
