In Australia parties are at liberty to decide between themselves how they will divide their property after separation.
Couples can commence the property settlement process immediately following separation. There is no requirement that couples wait 12 months from the date of separation as required to make an application for divorce. In fact it is often better to sort out your property matters, sooner rather than later.
Married couples are entitled to make an application for property settlement.
De facto couples are able to make an application to the Court for property settlement orders if:
- they have lived together on a genuine domestic basis for a total period of at least 2 years; or
- there is a child of the de facto relationship; or
- one or both parties have made substantial contributions and it would be unjust for that party if they were not able to obtain a property settlement.
It is important to be aware that there are time limits in which parties are able to make an application to the Court for a property settlement. Married couples have one year from the date the divorce order becomes final to make an application to the Court for property settlement. De-facto couples have two years from the date of separation to make an application to the Court for property settlement. Parties must seek the Court’s leave (permission) to make an application for property settlement following the expiration of the relevant time period (12 months or 2 years). This leave is not granted automatically.
Property settlement process
The first matter that the Court determines in a property settlement process is whether there should be any alteration of the parties’ current assets and liabilities. Commonly the answer to this is yes, it if fair to make an adjustment, however, on some occasions the answer to this question may be no.
The Court then follows a four step process as follows:
- identifying the assets, liabilities and financial resources of the parties and their values;
- assessing the financial and non-financial contributions of the parties both during the relationship and since separation;
- determining whether either party should receive an adjustment in their favour due to future needs. At this step the Court considers matters such as differences in ages and earning capacity and whether one party has primary care of children;
- whether the proposed orders after completing steps 1-3 are just and equitable (fair).
Documenting an agreement
If parties reach an agreement in relation to the division of the property it is important that they document their agreement in a legally binding manner. This will prevent either party from changing their mind and seeking additional assets from the other later.
There are two ways to document a property settlement agreement as follows:
- Consent Orders – Parties complete and file an application for consent orders along with draft orders in the terms of their agreement in the Family Court of Australia. If they approve, the Court will issue orders in the terms of the parties’ agreement;
- Binding Financial Agreement – This is a written agreement signed by both parties. It is not registered with the Court, however, there are strict legal requirements which must be met for the document to be binding. One of these requirements is that each party obtains independent legal advice from a legal practitioner in relation to the impact of the agreement on their rights and the advantages and disadvantages to that person of entering into the agreement. The legal practitioners must provide the advice before the document is signed by their client and a statement confirming the advice was given must be signed by each legal practitioner and provided to the other party.
If you have separated we recommend that you make a fixed fee initial consultation with one of our experienced family lawyers so that we can go through your property settlement matter with you and advise you on the next steps to take.