Property Settlement Agreement: A Complete Guide [2020]

Property Settlement Agreement in Sydney

A family property settlement agreement may not be a major discussion topic for most folks.

However, in some situations, property settlement agreements are a necessity so that both parties can move on.

Unfortunately, enough bad stories pop up that people dread the idea, and they come to the table with all sorts of preconceptions that then get in the way.

Splitting up assets in a divorce is never a light endeavour, especially if there have been negative experiences within the relationship.

We seek to make this difficult time as painless as possible and the leading property settlement lawyers at Unified Lawyers will ensure you have a smooth and speedy resolution to your matter.

Understanding The Property Settlement Process

Under the court’s perspective, anything it deems “property” lands on the eligible list for splitting up or allocating.

The same is true if estate planning is in place.

Ironically, the court treats debts the same as assets, so they can be assigned by the court just as quickly if no one agrees to the responsibility ahead of time. And that sometimes produces some unpleasant, one-sided surprises.

However, you both can agree on debts and obligations, which provides predictability and sharing of liability.

What is considered property in a settlement?

• Investments and savings
• Real property such as land or a house
• Pensions and retirements
• Bank accounts
• Trusts and future winnings
• Partnership assets
• Personal property
• Automobiles

You can include even pets in a property settlement agreement.

Basically, any shared obligation, debt, money, asset or property sits in determination by the court. There are very few items or properties that the court can’t reach and make a decision on in a divorce or separation.

As a result, having an agreement makes sense because the court will appreciate the fact that the parties have already agreed to a determination, saving time and avoiding work for the court itself

What is a Consent Order?

A Consent Order is a legally binding agreement made between parties to settle their property, financial, or parenting matters after separation or divorce.

It is typically reached outside of court, with both parties agreeing on the terms, and then formalised by applying to the court for approval.

Once the Consent Order is approved by the court, it carries the same legal weight as a court decision.

This means that if either party doesn’t comply with the terms of the order, the other party can go back to court to enforce it.

Often, a Consent Order is the most straightforward and amicable way to resolve a property settlement.

While not an option for everyone, Unified Lawyers can work with you to achieve a Consent Order if this is your goal.

How does inheritance work in a property settlement?

When it comes to property settlement and inheritance, inheritance is generally considered separate and not automatically divided between the parties.

This means that the person who received the inheritance usually retains full ownership of it.

However, the way the inheritance is treated can change depending on how it was used during the relationship.

For example, if the inheritance was invested in the family home or shared bank accounts, it may be considered a contributed asset in the property settlement.

Additionally, the length of the relationship, and the contributions of both parties to the marriage or de facto relationship, will be taken into account by the courts.

If the inheritance is kept separate and hasn’t been mixed with shared assets, it is more likely to remain solely with the person who inherited it.

However, each case is unique, and the court will make decisions based on fairness, taking into account the specific circumstances of the individuals involved.

Understanding the Property Settlement Process Step-by-Step

• Stage 1 : The court needs to figure out the size and nature of the property pool. This includes all the assets, debts, and superannuation—whether in one person’s name or joint names. Both parties have to disclose their assets to the court and to each other. If superannuation is a significant factor, it might be treated as a separate asset pool.
• Stage 2 : The court looks at both parties’ contributions to the relationship. This isn’t just about money—financial and non-financial contributions are also counted. For example, if one person worked full-time while the other cared for the children, the court will consider both types of contributions when making its decision.
• Stage 3 : The court considers the future needs of each party. This includes things like age, health, and earning capacity after the separation. They’ll also think about how caring for any children post-separation will impact each person’s ability to support themselves.
• Stage 4 : Finally, after all the above steps, the court decides what would be a just and equitable property settlement, making sure the division is fair for both parties.

What Does a Property Settlement Agreement Look Like in Practice?

Francesca & Sergey

Francesca and Sergey, a couple from Sydney, decided to separate after 12 years of marriage.

They had two young children, Ann (8) and Grace (6), and wanted to resolve their financial and parenting matters quickly and amicably.

They worked with a family lawyer at Unified Lawyers to create a property settlement agreement before finalising their divorce.

What They Agreed On :

• Family Home : Francesca would keep the house in Surry Hills (worth $1.2 million) and pay Sergey $400,000 for his share. The children would continue to live with Francesca in the family home, providing them with stability.
• Children’s Care and Custody : They agreed on shared custody of Ann and Grace, with the children spending weekdays with Francesca and weekends with Sergey. They also agreed on a flexible arrangement for school holidays to ensure both parents could spend quality time with the kids.
• Savings : They split their $50,000 savings equally, with each getting $25,000. This would go towards their individual living expenses and any child-related costs.
• Superannuation : Francesca gave Sergey 30% of her superannuation (about $150,000), and he transferred $100,000 from his to her.
• Car : They sold their $20,000 car and split the money equally.
• Debts : They agreed to each take on half of their $15,000 joint credit card debt.
• Pets : They decided to share custody of their pets—Francesca kept the dog, and Sergey took the cat.

Outcome :

By handling everything early, Francesca and Sergey avoided lengthy court battles.

They reached a fair agreement and got the court’s approval through a Consent Order.

With the children’s well-being at the forefront, they ensured that both parents remained actively involved in their lives.

This arrangement helped them both move on with their lives and avoid future disputes, especially as property values in Sydney continued to rise.

Angela & James

Angela and James, both business owners, had a complex financial situation after 10 years of marriage.

Angela owned a successful interior design business, and James owned a $2.5 million property portfolio, including several rental properties.

What They Agreed On :

• Business Ownership : Angela agreed to give James 30% of the value of her business, which was valued at $500,000.
• Property Portfolio : James kept all of his properties but agreed to transfer $1 million in assets to Angela to balance the financial split.
• Family Home : The couple’s $1.2 million family home was sold, and the proceeds were split evenly.
• Superannuation : James agreed to transfer $200,000 from his superannuation to Angela.

Outcome :

This was a very complicated settlement due to the number of assets involved, but both parties worked together to ensure a fair division.

With the help of their family lawyer, the settlement was finalised, and a Consent Order was signed, which avoided protracted court hearings.

Steps Towards a Successful Agreement

There will be differences in how specific items are distributed, but a couple of actions can help clear up the ambiguity that usually leads to stress and arguments.

• Estimate the value of assets and come to a general agreement on what they are worth. Real property, such as a home, can be determined objectively via the help of a licensed valuer. Real estate agents can help too if both partners are fine with an unofficial estimate.
• Try to identify what each spouse has brought into the shared property pool.
• Figure out a likely budget that each partner needs to move forward independently after the divorce or relationship comes to an end.
• Focus on reaching a fair agreement on how to distribute property, whether it’s a house settlement process, or land settlement process. The more items agreed upon and settled, the less there is to sort out if anything has to be decided by the court.
• Come up with a basic draft of an agreement that includes as many of the above details agreed upon ahead of time. This shortens the property settlement process and focuses any final vetting by an attorney and saves billing from time spent asking you for the details you already know.