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What happens to your property before, during and after a divorce or separation?

A main concern for people when they separate is what will happen to the property they have accrued during the relationship.  It’s no wonder then that questions around the division of property are some of the most common we are asked at Daykin Family Law.

We frequently advise on concerns related to the family home and ownership of property in the event of separation, so we’ve pulled together some of key facts you need to know about property before, during and after divorce or separation.

 

How do we go about dividing property and assets?

There are several options available when it comes to the division of assets, but for most separating couples, what happens to the family home can negotiated and agreed as part of property settlement.  There is no set way how this agreement can be reached, and often depends on reaching an outcome that suits both parties and the children, if any.

Simply put, a 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 things you and your partner own or have an interest in.  This can include real property, businesses, shares and chattels to name a few.

If you require more information on the process and time constraints in detail, we’ve covered 8 Things You Need to Know About Property Settlement here.

 

Who pays the mortgage after separation?

At a time when budgets are often stretched, this question is a common one.  Firstly, if the mortgage is in both names (‘joint names’) then both parties are legally responsible for paying the mortgage.  If payments are not made, by either or both parties, then the bank can take steps to legally repossess the property, despite any separation or divorce proceedings that are in place.

If, in the event that one party, whether living in the house or not, refuses to make mortgage repayments, there are a number of options to consider:

  1. Contact the lending institution and inform them of the circumstances.  It may be better that they are aware of the reason for defaulted payments and may be able to reach a compromise with you on repayments pending final division of your property through the Family Court or Federal Circuit Court.
  2. If you and your partner can agree to sell the property, this will ensure the mortgage is paid.  Any proceeds following the sale can be held in a trust account until you reach an agreement with your former partner.
  3. In some circumstances, you can obtain a Court Order for spousal maintenance to force your partner to contribute to ongoing mortgage payments.

Whether you keep making mortgage payments depends on a number of circumstances.  For example, continuing to make mortgage payments can enhance your property entitlements if those payments are considered to be post-separation contributions in certain scenarios.  

In other circumstances, it can be advisable to cease making contributions where that person is no longer living at the property and has to rent new premises and lacks the capacity to make such payments.  Ultimately, the decision made surrounding mortgage payments can impact on property settlement . It is strongly advised to seek advice from a family law specialist to decide the best course of action for your individual circumstances.

 

We’ve separated.  Who stays and who goes?

In situations where one spouse is unable to live under the same roof as the other, a ‘holding pattern’ can be agreed that allows one spouse to take rented accommodation and for resources to be made available for this purpose until the property settlement is finalised.  If no agreement can be reached and neither spouse wants to leave, an application can be made to the Court for an order granting sole occupation. In order to do this, it may need to be demonstrated that it isn’t viable for both spouses to live together, and that the funds are available to fund a separate accommodation for the other party.

 

We were in a de facto relationship. Can we still apply to the Court for Property Orders?

Yes, you may be able to.  The Family Law Act 1975 contains certain mirror provisions that apply to both married and de facto couples.  An application for property settlement arising from the breakdown of a de facto relationship can be made in circumstances where:

  • the separated couple have been living together on a genuine domestic basis for two years or more; or
  • there is a child of the relationship; or
  • a party has made substantial contributions of a certain nature and serious injustice would result.

 

Can we begin the property settlement process before we divorce?

Yes, you can commence the process at any time.  A settlement can be a lengthy process, so it can be advisable to begin the property settlement process as soon as it is feasible.  Sometimes, the longer parties wait before dividing the property, the greater the chance that problems may arise, for example one of the parties could be reducing the property pool by wasting, selling or disposing of property.  

It should also be noted that the Court will usually identify and value property that exists at the date of the final hearing, meaning property acquired by the parties after the date of separation can be taken into account.

However, it is important to only begin the process when you can think rationally.  Where there is any hostility, it is advised to seek the assistance of a lawyer.  Separating de facto parties must bring proceedings for Property Settlement and/or maintenance within two years of the date separation and married couples must do so within twelve months of a divorce order taking effect.  

 

We have children.  Will this affect the property settlement process?

Putting aside the legal aspects, if you have children, this can bring an emotive aspect to considerations around property, especially in the short term.  In what is normally a turbulent time, parents should consider whether it is viable, appropriate and financially possible for one parent to remain in the family home with the children in the interim period of separation or divorce.  Some separating couples in this situation prefer the primary carer to stay in the family home to ensure continuity for the children.

While both parties may strive to ensure continued access to the family home for the children, sometimes this may not be feasible.  Many primary caregivers are not the primary income earners and may be concerned about how they might be able to make financial ends meet while maintaining continuity for the children in the family home, or how they will solely take on a mortgage.  

Alternatives such as spousal maintenance may be an option in this scenario, to ensure one party pays for particular outgoings for a period, even if they are not living in the family home. Where there are financial strains from not immediately dividing the property assets, we strongly advise getting legal advice to try and reach the most balanced outcome for both parties.

 

What do I do now?

Separation, divorce and property settlement can be one of the most emotional and financially important decisions of your life so it’s crucial to work with a lawyer with the expertise and experience you need to be able to make informed decisions about your entitlements and which course of action is best for you personally and your children.  

Daykin Family Law offers a discounted initial consultation wherein you can understand your entitlements and obligations.  We can discuss your entitlements 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 throughout your whole matter.

Each case is different and depends on the individual situation, so contact us today to start the discussion on how we can help you move your financial separation forward.

 

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?

Separation and divorce in Australia: what’s the difference?

How might separation impact my business?

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?

Separation and divorce in Australia: what’s the difference?

How might separation impact my business?