8 Things You Need to Know About Property Settlement
Whether you are leaving a marriage or de facto relationship, you may require a Property Settlement or the division of assets upon the breakdown of your relationship. We’ve pulled together a list of our most commonly asked questions to help you navigate this complex area of law.
What is Property Settlement?
Generally speaking, Property Settlement is the division of assets and liabilities between a separated couple, whether married or de facto. Property Settlement involves the division of the property held by both parties.
The Family Law Act 1975 (Cth) sets out the law regarding Property Settlement and, importantly, deals with people on an individual basis. So, whilst you may have heard stories from friends and family who have been through Property Settlement, it is important to note that those circumstances may not necessarily apply to you and your ex-partner. Every relationship is different, so it’s crucial to obtain advice about your situation and circumstance from an expert.
What is ‘Property’?
Property is generally classed as all of the assets (things you own). This could be in joint or separate names, or could be held by someone else on a party’s behalf. Some examples include;
- Your family home
- Holiday home
- Cars
- Boats
- Household effects (anything from the sofas to the cutlery)
- Personal items such as jewellery and clothing
- A business
- Savings and superannuation
- Shares
- Debts
- Credit cards
- Leases such as Hire Purchase Agreements
- Family pets
It can also include property you held in your own name prior to the relationship, or property you acquired following separation.
Do separating couples need to have a Property Settlement?
Negotiating a Property Settlement is really important – if you don’t finalise your financial relationship, either party is able to come back and make a claim for property settlement at a later date. In this case, the Court considers the property at the date of proceedings rather than the date of separation. This could mean that any debt accrued by the other party is brought into the property pool in some circumstances, despite the debt being accrued after separation. This can apply to superannuation and savings, assets acquired with another person right through to extreme cases like a lottery win. Aside from physical property, practical issues such as mortgage payments, personal loans and credit cards also need to be taken into consideration.
Whilst Property Settlement can be the most complicated part of the separation, it is also one of the most important steps to take, as it finalises your financial relationship. This means that neither party can make any further property settlement claims against the other if the agreement is made binding and enforceable or property settlement Orders are made by the Court.
What are the time constraints for Property Settlement?
Whether you have recently separated from a marriage or de facto relationship, you are able to apply for property settlement now. You don’t need to wait for a divorce, for example, before having a Property Settlement. This can occur shortly after separation.
Generally speaking, it may be best to consider property settlement as soon as you can feasibly do so. However (with a couple of exceptions) separating parties must bring proceedings for Property Settlement within two years of separation for a de facto couple or twelve months of a divorce order taking effect for a married couple. If a Property Settlement is not reached prior to these time limits, it is possible for the other party to bring an application ‘out of time’ in certain circumstances so you may still be at risk.
I’ve heard that property is usually split 50/50 in a property settlement. Is that true?
Whilst many people think this is the case, there is actually no rule or presumption that dictates the equal division of assets in Australia. Property Settlement is always at the discretion of the Court who will weigh up many factors in making their decision. Some of these factors can include;
- How much money each party contributed
- Contributions made towards parenting and homemaking
- The length of the relationship
- Non-financial contributions
- The current and future needs of each person
The longer the relationship, the more likely it may be that the Courts may consider both the contributions of the parties are equal, but the reality is that each case is unique and different.
Whether you reach an agreement out of Court, or have to litigate to obtain your entitlement, the law we advise you on when it comes to property settlement is the same.
Broadly, this process involves:
- Ascertaining the legal and equitable entitlements of both parties (which can include assets in another person’s or entity’s name), known as the “property pool”;
- Assessing whether or not it is just and equitable to make orders for property settlement and, if it is, assess each party’s financial and non-financial contributions to the property pool and the relationship;
- Considering other relevant factors which will impact on your entitlement, such as your state of health, discrepancies in respective earning capacities and care of children of the relationship under the age of 18 years; and
- Considering whether the structure and monetary outcome of the proposed settlement is just and equitable or, in other words, appropriate
What if my ex-partner doesn’t want a Property Settlement?
Sometimes, one party may request the property settlement and the other party does not want to finalise the settlement. In this case, your family lawyer can contact the other party in writing to progress towards financial separation, or suggest mediation. If this is refused, a last resort is then to bring an application for property settlement despite their wishes. The Court will then decide on a just and equitable division of assets and liabilities, as well as superannuation.
How do I start the Property Settlement process?
Whether amicable or not, the best way to finalise the Property Settlement is to commence the process as soon as is practical. At Daykin Family Law, we normally start the process by advising you of your entitlements, then proceed to draft a letter to send to the other party with your agreement. Where it is possible, we will try to avoid the necessity of going to Court by coming to an amicable resolution.
In some cases, where there is little likelihood of achieving an amicable result through mediation, we will assist you in commencing Court proceedings.
The Property Settlement process is aimed at negotiating a settlement outside of Court, and as such, most cases do not go to trial.
What should I do next?
If you are considering a Property Settlement, the first thing to do is to understand your rights and obligations. Daykin Family Law has extensive experience in navigating, resolving and finalising property settlement and financial issues upon the breakdown of a relationship, including acting for third parties whose interests are affected by marriage or de facto relationship breakdowns.
Daykin Family Law offers a discounted initial consultation wherein you can understand your entitlements and obligations. We will work out your entitlement and suggest the best course of action to settle the matter quickly and efficiently.
If you believe you can come to an amicable agreement with your partner, it is still important to have that agreement formalised in a binding and enforceable way. Property Settlement can be a complex area of law; therefore, sound and pragmatic advice is needed to ensure that all issues are fully assessed from the outset and steps are put into place to protect you and your interests throughout your whole matter.
Each case is different and depends on the individual situation, so if in doubt, contact us today.
If you require further information on separation or divorce, check out some of our other articles:
Applying for a Divorce – What Do I Need to Know?
Family Separation & Responsibility
Am I Entitled to Spousal Maintenance?