Property Settlement Basics
If you have recently become separated or divorced from your partner, you will know that to finalise your relationship, from a practical point of view, you will need to reach a property settlement. You may be wondering what are the property settlement basics that you need to know before embarking on this venture.
What are the property settlement basics?
The property settlement basics that you should be aware of include:
- The time limits that are applicable for reaching a property settlement with your ex-partner;
- The different ways that you can reach a property settlement with your ex-partner without having the court make the decision for you;
- The factors that the court will take into account when deciding on how property should be divided between an ex-couple; and
- The items or things that are included in a property settlement.
Time limits for reaching a property settlement
One of the property settlement basics is that there are time limits that apply to filing an application with the Family Court for a property settlement. If you are or were married to your ex-partner, the time limit extends to one year after the date of your divorce. You will need to be separated for at least one year before you file for a divorce, so effectively you will have at least two years before the Family Court will bar you from applying for a property settlement.
For couples that were living together as a de facto couple, there is a two-year time limit for applying for a property settlement. This two-year time limit runs from the date of separation. The date of separation is sometimes unclear for de facto couples as sometimes the couple will be still living under the same roof after separation for some time.
If a relationship has ended and you find yourself outside of these time limits you may still be able to apply for a property settlement. Under section 44(6) of the Family Law Act 1975, the Family Court can allow an application for a property settlement that is out of time in certain circumstances. An applicant would need to show that hardship would be suffered by either a party to the former relationship or a child if the leave was not granted. The Family Court grants leave in such cases by looking at the circumstances of each case.
Different ways of reaching a property settlement agreement
One of the property settlement basics is knowing how a property settlement can be reached. It is possible not to attend the Family Court and still reach a property settlement. There are three main ways that a property settlement can be made without having the Family Court make a decision. These are by way of an informal agreement, by way of an agreement consented to by the Family Court or by way of a binding financial agreement.
Suppose you are having trouble reaching an agreement with your ex-partner. In that case, you may like to consider getting an alternative dispute resolution professional, such as a mediator, to help work with both of you to assist you to reach an agreement. This approach may be a less expensive means of achieving your ultimate goal than resolving to have the Family Court determine your property settlement.
The first way that parties can reach a property settlement is by coming to an agreement between themselves. There is not a requirement to formalise this agreement. However, difficulties can occur later if the agreement is not formalised. Also, there may be some things which you fail to consider if you do not take the steps required to formalise the agreement and in doing so, making it enforceable. Even if you and your ex-partner decide not to formalise your agreement, it is still a good idea to get your informal agreement in writing.
If you come to an agreement with your ex-partner about how the property owned by both of you should be distributed between you, one of the ways that you can formalise the agreement is by seeking a consent order from the Family Court.
You may be able to obtain a consent order without having to attend court in person.
Binding Financial Agreements
An alternative way to formalise a property settlement and ensure that it is enforceable is by incorporating the agreement into a binding financial agreement. Such an agreement is binding and enforceable even though it does not need to be filed in court. However, some formal requirements that must be met for a binding financial agreement to be enforceable. These formal requirements include having each party to the agreement receive independent legal advice before signing.
What does the Family Court take into account when making a property settlement order?
If you and your ex-partner cannot agree on a property settlement, the Family Court may apply its judgement and make an order for you. There are a number of factors and principles that the court will consider in determining the correct property settlement. An understanding of what these factors are could be said to be one of the property settlement basics. The Family Court, first and foremost, will seek to do what is just and equitable for all parties to the property settlement.
Sections 79(4) and sections 75(2) of the Family Law Act 1975 and sections 90SM(4) and sections 90SF(3) of the Family Law Act 1975, contain a list of more specific factors that the Family Court will take into account in determining a property settlement. These include:
- The duration of the relationship, and whether the relationship has affected the earning capacity of one of the parties;
- The contributions that each party made to the relationship – either financial or non-financial. Non-financial contributions may include homemaking or caring for children; and
- What the future needs are of either party to the relationship. For example, whether one party has a health condition that needs to be attended to, whether one party will have the primary duties of caring for the children and what the financial resources are of either party.
What is included in a property settlement
One of the property settlement basics is that the property settlement relates to all property that is held by the parties to the relationship at the time of the property settlement. This includes things which sometimes immediately do not come to mind, such as superannuation and property or income acquired after separation but prior to property settlement.
If you require legal advice or representation in any legal matter, please contact Armstrong Legal.