How is property divided after divorce or separation?
Division of property is usually a complicated process. It can help to understand the requirements of Australian family law, and to have excellent legal advice right from the start. We aim to achieve the best outcome for you and your kids.
Who can apply for a property settlement?
If you’re married you can apply for a family law property settlement once separated, and up to 12 months after a divorce order. If you’ve been in a de facto relationship for at least two years, or you have had one or more children with your former partner, you can apply for a property settlement up to 2 years after separating.
How does a property settlement work?
Australian family law encourages parties to reach their own property settlement agreements. This tends to be more efficient and a less stressful process. A property settlement aims to finalise all financial issues between the parties.
Usually, a family law property settlement starts with mediation or family dispute resolution (FDR). If you’re able to agree, you can decide whether to:
- Enter into a binding financial agreement (see below); or
- Ask a court to approve the agreement by making consent orders; or
- Have the agreement remain as an informal agreement
Whatever path you choose, and particularly if you decide to keep the agreement informal, we recommend that you seek our legal advice before making any decisions. We’ll use our knowledge and expertise to look out for your best interests.
What are the steps in a divorce property settlement?
Whether there’s an agreement for property settlement, or the parties need court intervention to work things out, there are four basic principles set out by Australian family law for determining property division:
Step 1 – Identifying and valuing the parties’ property
This step includes assets and debts (or other shared obligations). These things are considered to be in the pool of property that can be divided. Pets and superannuation can also form part of the property pool.
For property acquired before the relationship or after separation, the circumstances of the situation will dictate any division. If you’re concerned about what property may form part of the property pool, contact us to discuss your situation.
Step 2 – Consideration of each party’s contribution to the property
Contributions can be financial and non-financial. For example, one party may have earned a good income that allowed the purchase of a home. The other party may have looked after the children, the home and supported the other party in career development. This non-financial contribution will be viewed as a contribution to the family’s welfare.
Contributions can also be direct and indirect. For example, one party directly contributes by paying the deposit and mortgage on a house. The other party indirectly contributes by paying bills, buying food and other household goods.
Step 3 – Consideration of each party’s future needs
A court will work out what financial needs each party will have into the future. It will then consider other issues such as their age, health, ability to earn an income, responsibilities for dependent children and any children with special needs, and whether a new partner is financially supporting either party. Often, a settlement is adjusted in favour of the party in the weaker financial position.
We’re highly experienced in assessing the future needs of our family law clients. We can help you too, and we recommend urgent legal advice if you’re going through this process. Contact us to find out more.
Step 4 – Consideration of whether the settlement is fair
A court will then decide whether the proposed settlement is fair. In family law, this is known as a just and equitable settlement.
What happens if the parties agree on a property settlement?
If the parties agree, usually as a result of mediation or family dispute resolution, they can apply to court for consent orders. Or they can make a binding financial agreement (BFA). This is a written agreement that sets out how the property is to be divided. It may also deal with other issues such as spousal maintenance and child support.
BFAs are enforceable in the Family Court. If one party breaches the BFA, the other party can apply to the Family Court for enforcement under Australian family laws.
What are property consent orders?
Consent orders are orders that are made with the agreement of both parties. See our page on consent orders for more information. Consent orders can be made for BFAs.
What happens if the parties don’t agree on a property settlement?
If you can’t agree on a property settlement, you may need to apply to court for orders about how to divide up the property. This will involve an extended hearing and usually costs more, takes longer and is much more stressful. It may take months or years for a hearing to conclude so that a court can make its decision.
A court will base its decision on the four-stage process outlined above.
What information will I need to provide to my lawyer?
As a rule-of-thumb, the more information you can provide to your lawyer about your financial circumstances, the better. Information includes:
- Bank and mortgage documents
- Payslips and rent receipts
- Bills and evidence of household expenses
- Tax returns
- Credit card statements and loan statements
- Business profit and loss statements
- Superannuation statements
- Centrelink benefit statements
- Evidence of children’s expenses, such as school fees and invoices for activities
- Share dividend statements and details of any other investments
Once we’ve reviewed all your documents, we’ll be able to assess how to proceed. Contact us to find out more.