About the Author
James Lee
Published on August 23, 2024
With emotions running high after the breakdown of a marriage or de facto relationship, it’s understandable that even thinking about what is going to happen to your assets may be overwhelming.
When a relationship ends, it leaves you facing some big changes which can make it difficult to know where to start. In order to be able to move forward with your life, you need to work through some matters, and a great place to start is a property settlement.
To make this process easier and to give you a starting point, our top divorce lawyers in Sydney here at Unified Lawyers, have helped to put together this guide to family law property settlement in Australia, so you understand your rights and entitlements, and you can make informed decisions about your future.
Keep reading our comprehensive guide to property settlement family law in Australia here.
Property settlement: definition and laws
A property settlement is the legal process of dividing assets, liabilities, and financial resources between separating or divorcing parties.
In Australia, the Family Law Act 1975 provides the legal framework for how property settlements should be handled, making it clear that it is essential for both parties to receive a fair and equitable share of the property acquired during the relationship, regardless of whether the couple was married or in a de facto relationship.
When we say fair and equitable, many people assume this may mean a 50/50 split of everything, however, under the Family Law Act, a wide range of factors are used to determine what constitutes a fair distribution of assets and liabilities. These factors include the financial and non-financial contributions made by each party, the future needs of each party, and the overall financial circumstances of the parties involved.
It’s important to note that property settlements are not just for married couples divorcing, but also de facto relationships separating, and both opposite sex and same sex couples too. The process for the property settlement between married couples versus de facto relationships is essentially identically, as long as the de facto relationship meets the criteria of being a genuine de facto relationship.
In terms of the property included in a property settlement, this is also a wide range of things, including but not limited to:
- real estate
- bank accounts
- superannuation
- investments
- businesses
- debts and liabilities
- art
- cryptocurrency
When it comes to working out who will get what in the breakup, this can be determined privately if the couple is able to come to an agreement themselves. If you are able to come to an agreement privately, this can be made legally binding though consent orders or a binding financial agreement. You can also seek the help of legal professionals to negotiate or mediate between you and your former partner. Or if you’re unable to come to an agreement using any of these methods, you can apply to the court for court orders We’ll talk more about these methods later.
Regardless of the method used to reach an agreement, it’s highly recommended that you seek legal advice. This is to ensure that you are protecting your interests, meeting all of your legal obligations and can help to make the process a lot fairer and faster.
Property settlement in family law: timing and recommendations
Timing is everything, especially in property settlements and family law matters. Time limits apply for when you have the legal right to make a claim for a property settlement and these time limits differ depending on the type of relationship you were in.
For married couples, you have up until 12 months after your divorce has been finalised to commence property settlement proceedings. For de facto couples, you have up until two years after the relationship has ended to begin the property settlement process. While it may seem like de facto couples have more time on their side, it’s important to remember that married couples cannot apply for a divorce for 12 months after their separation date.
Generally, as family lawyers in Sydney, we highly recommend that you start the property settlement process sooner rather than later. You don’t have to wait a certain time period after the relationship ends, so if you’re married and separated, applying for a divorce for a divorce in Australia or in the 12 month separation waiting period to apply for divorce, you can commence the property settlement process.
Our biggest tip is to seek legal advice early. A family lawyer can advise you of the process and things you should consider, as well as answer your questions and in many cases, prevent you from making decisions that could adversely affect your entitlements.
Even if you do seek legal advice initially, it doesn’t mean that you have to work with a lawyer throughout the whole process, it can simply be an exercise for peace of mind.
Property settlement in family law: working out a financial separation calculation
One of the most crucial aspects of property settlement in family law is calculating the financial separation between the parties involved.
This process involves assessing the value of all assets, liabilities, and financial resources, as well as evaluating both financial and non-financial contributions made by each party throughout the relationship.
Below is a basic calculation process broken down for you:
Step 1: identifying and valuing assets and liabilities
The first step is to identify all assets and liabilities. Assets can include the family home, investment properties, bank accounts, superannuation, shares, vehicles, businesses, and any other property of value. Liabilities might consist of mortgages, personal loans, credit card debts, and any other financial obligations.
Each asset and liability must be accurately valued to determine the net value of the property pool. This often requires professional valuations, especially for significant assets like real estate, businesses, and superannuation.
Step 2: assessing financial contributions
This step involves assessing the financial contributions made by each party during the relationship. Financial contributions can be both direct and indirect:
- Direct financial contributions: These include income earned, payments made towards the mortgage, and any other direct financial inputs into the acquisition or maintenance of assets.
- Indirect financial contributions: These may involve financial support provided in more subtle ways, such as paying household bills or contributing to savings that indirectly supported the family’s finances.
Step 3: evaluating non-financial contributions
Non-financial contributions are just as important as financial contributions. These include the care and raising of children, homemaking, and other efforts that supported the family unit but didn’t involve direct financial input.
The Family Law Act recognises the value of these contributions, and they play a significant role in determining a fair division of property.
Step 4: considering future needs
When working out the financial separation, it’s also important to consider the future needs of both parties.
Factors such as age, health, earning capacity, and the care of children are all considered.
The goal is to ensure that the division of property supports the ongoing needs of both parties, especially when one party may have greater financial needs due to these factors.
Step 5: calculating the division
Once all contributions and future needs have been assessed, the next step is to calculate how the property should be divided. The court’s goal is to achieve a fair and equitable division, but as we mentioned earlier, this does not necessarily mean a 50/50 split. The specific circumstances of the relationship, the contributions made by each party, and their future needs will all influence the final division of property.
Property settlement in family law: what you’re entitled to in a separation
In a property settlement, entitlements are not just about who gets what, but about ensuring a fair division that reflects the contributions made during the relationship and the future needs of each party. This process is guided by the principles of equity, meaning the focus is on achieving a balanced outcome rather than an exact split of assets.
The value of what each person is entitled to is influenced by both financial and non-financial contributions. This includes the income earned and property purchased, as well as efforts like caring for children or maintaining the household. All of these contributions are considered to ensure that the division of property fairly reflects the efforts and sacrifices made by both parties.
Additionally, future needs are a critical consideration in determining entitlements. Factors like age, health, and earning capacity are considered to ensure that the settlement supports both parties as they move forward with their lives. This holistic approach ensures that the settlement is not only fair in the immediate aftermath of the separation but also sustainable in the long term.
In summary, if you’re wondering what is my wife entitled to in a property settlement in Australia, it’s important to remember that you’re both entitled to a share that reflects your contributions and meets your future needs. It’s about ensuring that both parties can move forward on stable and equitable footing.
Divorce settlement entitlements and calculations
The calculation of divorce settlement entitlements builds on the groundwork of identifying assets, assessing contributions, and considering future needs. By evaluating the property pool—which includes all assets and liabilities—and balancing these factors, a fair division is determined. This process ensures that the outcome is equitable, reflecting the specific circumstances of both parties.
While the approach may vary depending on the details of each case, the guiding principle remains the same: to achieve a settlement that respects both the past contributions, and the future well-being of each person involved.
Making property settlement binding
After agreeing on how assets are divided after divorce or separation, it’s highly recommended that your property settlement agreement is made legally binding. This ensures the agreement is enforceable, providing both parties with security and preventing future disputes. In Australia, this can be done through either consent orders or a binding financial agreement (BFA).
Consent orders
A consent order is a legal document that formalises the agreement between you and your former partner regarding the division of assets and liabilities. It is submitted to the Court for approval. Once the Court approves the agreement, it becomes legally binding, meaning both parties must follow the terms set out in the order.
Consent orders are a popular choice because they are straightforward and have the backing of the court, which provides added security.
To apply, both parties must agree on the terms, complete the necessary forms, and submit them to the court. While legal advice isn’t mandatory, it’s strongly recommended to ensure your interests are protected.
Binding Financial Agreements (BFAs)
A BFA is a private contract that outlines how your assets and liabilities will be divided.
Unlike consent orders, a BFA doesn’t require court approval, offering more flexibility. However, it’s important to ensure the agreement is fair and legally sound, as a poorly drafted BFA can be challenged in court and to do this both parties must seek independent legal advice before signing a BFA to ensure it’s enforceable.
Whether you choose consent orders or a BFA, it’s vital to ensure your settlement is legally enforceable and fair. Seek independent legal advice, clearly document all assets and liabilities, and, if using consent orders, submit them to the court for approval. If your circumstances change, consider reviewing and updating your agreement.
Property settlement in family law: identifying and valuing assets, liabilities, and financial resources
One of the most critical steps in the property settlement process is accurately identifying and valuing all assets, liabilities, and financial resources. This step ensures that the division of property is based on a clear and complete understanding of what’s at stake. Inaccurate or incomplete information can lead to an unfair settlement, so it’s essential to approach this stage with thoroughness and attention to detail.
Assets
Assets in a property settlement include anything of value owned by either party, whether individually or jointly. Common assets to consider include:
- Real estate: The family home, investment properties, and any other real estate holdings.
- Bank accounts: Savings, checking, and term deposit accounts, both individual and joint.
- Superannuation: Superannuation accounts are often one of the most substantial assets in a property settlement and must be valued accurately.
- Vehicles: Cars, motorcycles, boats, and other vehicles owned by either party.
- Investments: Shares, bonds, mutual funds, and other financial investments.
- Businesses: Ownership interests in businesses, whether fully owned or as a shareholder.
- Personal property: Valuables such as jewellery, art, furniture, and other significant personal items.
- Family trusts and companies: Interests in family trusts, companies, or partnerships.
Liabilities
Liabilities are just as important as assets in a property settlement. They include any debts or financial obligations that either party owes, which will need to be accounted for in the settlement. Common liabilities include:
- Mortgages: Outstanding loans on any real estate, including the family home.
- Personal loans: Loans taken out individually or jointly, including car loans, student loans, and personal lines of credit.
- Credit card debt: Outstanding balances on credit cards.
- Business debts: Any debts related to a business owned by either party.
- Tax liabilities: Outstanding tax debts or obligations to the Australian Taxation Office (ATO).
- Other debts: Any other financial obligations, such as unpaid bills, alimony, or child support arrears.
Valuation of assets and liabilities
Once all assets and liabilities have been identified, the next step is to accurately value them. This can be a complex process, especially for high-value items like real estate, businesses, and superannuation. Accurate valuation is crucial for ensuring a fair division of property.
- Real estate valuation: Engaging a professional property valuer is recommended to obtain an accurate market value for real estate holdings. The value of real estate can fluctuate, so obtaining a current valuation is essential.
- Superannuation valuation: Superannuation can be challenging to value and may require a financial expert to accurately calculate the value of superannuation entitlements.
- Business valuation: Valuing a business involves assessing the company’s assets, liabilities, revenue, and potential for future growth. This often requires the expertise of a business valuer or accountant.
- Personal property valuation: High-value personal items, such as jewellery or art, may need to be appraised by specialists to determine their current market value.
Full disclosure of all assets, liabilities, and financial resources is a legal requirement in property settlement proceedings. Both parties are obligated to provide complete and accurate information. Failure to disclose assets or liabilities can lead to penalties, and any settlement reached may be set aside if it’s found that information was withheld.
Given the complexities involved in identifying and valuing assets, liabilities, and financial resources, it’s advisable to seek professional advice. A family lawyer can guide you through the process, ensuring that everything is accounted for and accurately valued. Additionally, financial experts, such as valuers, accountants, and financial planners, may be necessary to assist with the valuation of complex assets.
Property settlement in family law: international and overseas assets
Dealing with international and overseas assets during property settlement adds complexity.
These assets might include real estate, bank accounts, investments, and business interests located outside Australia.
Some challenges you may face when it comes to overseas assets includes their value changing due to exchange rates, as well as potential tax obligations and legal differences that may exists depending on the country your assets are in.
When it comes to managing these types of assets, we first recommend that you seek legal advice and ensure full disclosure of all assets. There can be complications when it comes to enforcing agreements made regarding international assets, so having the support of an experienced family lawyer is extremely important.
Ways to finalise the division of property
Finalising the division of property can be done through several approaches, depending on whether both parties agree or if court intervention is necessary.
Here are the primary methods:
Mutual agreement
If both parties agree on the division, it can be formalised through consent orders. These are approved by the Family Court, making the agreement legally binding and enforceable.
Or the parties can enter into a binding financial agreement, which doesn’t require court approval, but each person must have received independent legal advice and enter into it willingly in order for it to be enforceable.
Mediation and family dispute resolution
A mediator helps both parties reach an agreement. This approach is less formal than going to court and often quicker, while also allowing for more control over the outcome.
There is also a specific form of mediation that focuses on resolving family law disputes without going to court. FDR can be a cost-effective and less adversarial option.
Court proceedings
If the parties cannot reach an agreement, the matter can be taken to court, where a judge will determine the division based on the factors discussed earlier.
The court’s decision is formalised through a court order, which is legally binding and enforceable.
Choosing the right method depends on the specifics of the situation, the level of agreement between the parties, and the complexity of the assets involved.
Property settlement in family law: financial considerations and court orders
When finalising a property settlement, financial considerations go beyond just dividing assets and liabilities. The court also looks at ongoing financial needs, like spousal maintenance, which may be necessary if there is a significant difference in earning capacities between the parties. Child support, although usually handled separately, also plays a role in the overall financial picture. Court orders may be issued to ensure these financial obligations are met, providing structure and enforceability to the settlement. These orders help to ensure that the settlement supports both parties as they move forward.
The importance of legal advice and how Unified Lawyers can help
Navigating a property settlement on your own can be overwhelming and risky. The decisions you make now will have a long-term impact on your financial future, so it’s so important to get it right. This is where expert legal advice becomes indispensable.
Understanding the intricacies of property settlement requires specialised knowledge of family law. A skilled family lawyer ensures that your rights are protected, you receive your fair share, all aspects of your financial situation are considered and that you avoid common mistakes that trip people up.
At Unified Lawyers, we understand that every property settlement is unique. Our team of the best family lawyers in Sydney is committed to providing personalised, clear, and actionable advice.
Don’t leave your future to chance. With our expertise, you can confidently handle your property settlement, knowing you have one of Sydney’s top family law teams by your side. Contact Unified Lawyers today to discuss your situation and take the first step towards securing your financial future.
Published on August 23, 2024
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