Property settlement refers to the division of assets and liabilities after your marital relationship or defacto relationship has broken down. There are three legal ways to achieve the above division namely through litigation in the Family Law Court or a binding financial agreement or though an application for consent orders (non-litigious).
What is property?
Property is anything of value acquired before, during and after separation. This includes but is not limited to shares, superannuation, cars, trusts interests, home, jewelry, money, pets, home contents, inheritance, business among others
What are liabilities?
Liabilities owned jointly or individually are also divided between the parties and they include credit card debts, debts, loans, income tax, capital gain tax and stamp duty obligations.
Ways to split property
It is always preferable and advisable to settle property without the intervention of the Court as it will save you time and a lot of money.
Binding Financial Agreement
If both parties have agreed to the property split such agreement can be recorded in a Binding Financial Agreement (BFA). A Binding Financial Agreement is a contract entered by both parties which sets out the terms how property and liabilities are to be divided. The Family Law Act 1975 provides laws which allows parties to enter such agreement before, during and after a relationship. Agreements entered into prior to the relationship is known as a prenuptial agreement.
If both parties agree to enter a BFA, they need to firstly engage into financial disclosure. Thereafter they need to understand all the terms prescribed in the agreement and seeking independent legal and financial advice is a prerequisite to the legality of the agreement. If not followed, the court may set aside the agreement with devastating outcomes.
You and your former partner can apply for consent orders if you both agree on a property settlement. A written agreement is prepared and filed with the Court for its approval. Once you sign the agreement you are expressly agreeing to the terms prescribed. Once the court approves of the orders sought by both parties, it is effectively legal. You may be abstained from appearing to court when consent orders are applied for.
What happens if both parties cannot agree on a settlement?
In the event parties cannot agree to a settlement one party will file an initiating application, a financial statement and an affidavit with the court whilst the other will file a response to Initiating Application, financial statement and a response affidavit.
The court will take into account what is fair and reasonable prior to altering the parties’ interest. The court will identify direct and indirect financial and non- financial contributions made by or on behalf of each party. The court will also look at the future needs of each party to assess whether an amendment should be made to the percentage-based entitlement. Finally, the Court needs to be satisfied that the result is just and equitable in all circumstances.
Applicable time limits
A defacto couple has two years from the time of separation to make a claim for property settlement. A married couple has 12 months from the time their divorce is finalized to make property settlement. An extension of time can be applied for but you will have to show exceptional circumstances. It is important to note that it is rare for an extension
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