Key Takeaways:
- The property settlement process can be one of the most contentious parts of ending a relationship.
- The asset pool that needs to be divided when a relationship ends includes assets that you may not realise are considered property, like superannuation and inheritance.
- A wide variety of factors can influence the outcome of a property settlement including each person’s age, earning capacity and future needs.
The end of a relationship involves a lot of changes and difficult tasks. Whether it’s a marriage or a long-term relationship, like a de facto relationship, you’re faced with figuring out various things like where you’re going to live, how you’re going to parent (if you had children together) and who is going to get what in terms of your assets and property.
Working out who gets what in a break-up is known as a property settlement and is sometimes also referred to as the division of assets. It’s also one of the most difficult and contentious parts of a breakup or divorce and can sometimes be an extremely tedious process.
In this article, we’re going to talk about property settlement in Australia. We’ll talk about what is involved in the property settlement process, and who is entitled to a property settlement, and answer a lot of the questions our family law and property settlement lawyers are asked.
Keep reading to get up to date with property settlement under Australia’s family law system.
What is a property settlement?
A property settlement is a final agreement made between parties that outlines how the property, assets and liabilities of the parties will be divided between them after their marriage or de facto relationship has ended.
The property settlement agreement essentially ends the financial relationship between the parties after the relationship has ended. During a relationship, it’s very common for finances and property to become intertwined, with both parties often having ownership of assets together.
A property settlement is commonly mistaken as being a divorce, however, a divorce is actually the legal acknowledgement of the marriage ending and a property settlement is a consequence of a divorce.
For some people, figuring out how they will split their assets is easy or they may have made agreements in the early stages of their relationship or before their marriage via a binding financial agreement or prenuptial agreement. For many people, dividing assets can be a really difficult process and requires negotiation, mediation, or even court intervention.
Who is entitled to a property settlement?
Under the Family Law Act 1975 – which is the legislation governing the family law system in Australia – both married and separated de facto couples have certain rights to a property settlement.
Couples who have been or are married and have separated are eligible for a property settlement. Separated de facto couples are also eligible for property settlements as long as they meet at least one of the below criteria:
- The de facto relationship had a duration of at least 2 years; or
- The couple had a child together; or
- The relationship was or is registered in the relevant state or territory; or
- One party to the de facto relationship made significant contributions to the relationship.
If you’re not sure that your de facto relationship meets any of the above criteria we highly recommend seeking legal advice from an experienced family lawyer.
It’s also important to note that same-sex couples, whether in de facto relationships or married, have the same rights as everyone else in regard to property settlements in Australia.
Is a de facto property settlement different to a property settlement of a married couple?
Under the Australian Family Law Act, a de facto relationship is treated almost identically to a marriage. This includes when it comes to property settlements.
It’s not uncommon for people to think that just because you didn’t get married, it means that your girlfriend, boyfriend or partner has no entitlements to your property and assets. Declining marriage in an attempt to protect assets will not necessarily work as a property settlement outcome is dependent on a variety of different factors – which we will discuss shortly.
What can be divided in a property settlement?
Property refers to basically anything of value, including assets that you own as well as liabilities that you owe money on. Some of the most common property that can be or may need to be divided during a property settlement include:
- Land or property
- Buildings
- Investments
- Cars and vehicles
- Jewellery
- Cryptocurrency
- Money
- Superannuation
- Inheritance
- Shares and stocks
- Mortgages
- Loans
- Credit cards
These are only some of the potential assets and liabilities that you and/or your partner may own. Even things such as pets are technically considered property.
It’s important to note that it doesn’t matter who owns or bought the property nor does it matter who incurred the debt. When working out your asset pool for a property settlement everything should be accounted for.
How are assets divided in a property settlement?
The way assets can be divided after a separation can happen in numerous ways, what worked for your friend and their former partner may be entirely different to what is best in your situation.
While there are many different outcomes that can occur, it’s common for a 4 step process to be used in Australian family law to help to determine a fair property division. Using this process allows you to use a structured approach to the property settlement process and can be used in many different situations to find a just and equitable outcome.
The 4 step process includes the following:
1. Identification of assets and liabilities
Understanding ALL assets and liabilities is extremely important so the first step is to create a list or record of every asset, piece of the property owned, and liability that each person has individually and jointly.
If you don’t know what you’re working with it can make it easier for disputes to arise and an unfair settlement to occur.
2. Understand all contributions of each party
A contribution to the relationship can be either through direct financial contributions or non-financial contributions and can include things like income and caring of children.
Contributions come in many different forms and while it’s common to only think that tangible things like money and physical items matter, it takes a lot of small and less direct contributions to make a relationship work.
3. Work out your future needs
A variety of factors can influence what you need in the future. A person’s age, their health, their occupation and ability to earn and income and parenting responsibilities all play a role in what a person will need in the future.
4. Is the agreement fair
A final step is to ensure that the proposed agreement is actually fair and has really taken all of the above factors into consideration.
It’s highly recommended that you work with a family lawyer to review a property settlement agreement before making anything formal – this way you can ensure that you’ve considered all potential factors.
How can you actually work through a property settlement?
When it comes to actually making a property settlement agreement, you have a few different options for how you will manage the process.
You can come to an agreement together, you can engage the services of a lawyer to help negotiate a fair outcome, or you can apply for a property settlement Court order. Below is some more detail about each of these options.
Making a property settlement agreement together
For some separated couples, it’s possible and sometimes even easy to come to an agreement as to how they will divide their property and assets. Under the Australian family law system, working out a property settlement – and various other arrangements that need to be made when a relationship ends – outside of the court is encouraged. This is because having to go through the court system to divide property, can be costly and take a long time, and ultimately be a stressful process.
If you are able to come to an agreement together (or even with advice from a lawyer), the agreement can be informal or formal. However, to make an agreement formal and thus legally binding, you will need to create a binding financial agreement or apply for a consent order. Each of these options has certain requirements – for example, a consent order for a proposed property settlement requires an application to the courts that still needs to be approved by them and a binding financial agreement requires that each party receives independent legal advice so that they are aware of the agreement they are making.
Negotiation and mediation with lawyers
Even when a separated couple gets along and can communicate well when it comes to matters like property settlements, disputes can and will arise. Seeking the intervention of family lawyers can help here.
A family lawyer can advise, negotiate and even mediate in situations where you can’t come to an agreement. They can often make it easier to understand and find a way to resolve a dispute without needing to go to court.
Mediation is usually required before you can apply to the court for a property settlement and the aim is to allow both parties to still be able to negotiate their own settlement instead of having the Court make the decision for them.
Apply to the Court for property settlement orders
If every other avenue has failed and you’re still unable to come to an agreement, then going through the court for your property settlement is the final option. This option means that the court decides a “just and equitable” property settlement based on the information provided.
While for some people it may sound good that someone else is sorting out the dispute, you essentially relinquish control of the situation. The court will make orders that are legally binding and very difficult to change, which is one of the reasons this option is seen as a last resort.
Whether you can come to an agreement about how your assets will be divided or if you need court intervention, we highly recommend working with a family lawyer. This can help you in making informed decisions, where you know all of your options and that you’ve considered all relevant factors.
Should a property settlement be a 50-50 split of everything?
No, not necessarily. A property settlement is rarely a 50-50 split. This is because of all the factors that need to be considered – contributions to the relationship and future needs of each party are very important to determine.
While splitting everything in half may seem like the easiest way to go about it, it doesn’t take these factors into consideration.
What if I don’t disclose all of my assets during the property settlement process?
In Australia, during a property settlement process, both parties have a legal duty to provide full and frank disclosure of all their assets, liabilities, and financial resources. This duty of disclosure is essential to ensure fairness and transparency in reaching a just and equitable property settlement.
If you fail to disclose all of your assets intentionally or make false or misleading statements about your financial situation, it can have serious consequences. The court may view such behaviour as a breach of your duty of disclosure, which can undermine the integrity of the proceedings.
If the court later discovers that you have intentionally concealed assets, it can affect the overall property settlement. The court has the power to set aside any property settlement orders or financial agreements based on incomplete or false information. The court may also order penalties against the party who failed to disclose assets, including payment of legal costs, fines, or other appropriate remedies.
If you’re involved in a property settlement now and you’re not sure whether something counts as property or if the other party has provided accurate information, it’s important to seek legal advice. This way you can ensure that you’re meeting your legal requirements.
How can I protect myself and my assets?
It is possible to protect your assets through agreements like prenuptial agreements and binding financial agreements.
These agreements outline how assets will be divided in the event of separation or divorce and can help to provide legal certainty. They also allow you to customise property division according to your preferences.
These types of agreements are usually enforceable but it’s important to note that prenuptial agreements and binding financial agreements can potentially be overturned under certain circumstances.
The Court has the discretion to set them aside if certain conditions are met. Some factors that may lead to the overturning of an agreement include:
- Non-compliance with legal requirements;
- Lack of independent legal advice;
- Unconscionable or unjust provisions;
- Fraud, duress, or undue influence.
It’s important to note that the court’s decision to set aside or uphold an agreement depends on the specific circumstances of each case. Seeking legal advice from a qualified family lawyer is crucial when drafting or challenging a prenuptial agreement or binding financial agreement to ensure compliance with the law and increase the likelihood of its enforceability.
How long does a property settlement take?
The time a property settlement takes will be dependent on a few different factors and there is no exact set amount of time that a property settlement will take.
The complexity of the assets, the cooperation of the parties and whether the property settlement needs to go to Court to be resolved are all very big factors that can impact the time a property settlement takes.
If the parties can agree or end up agreeing during mediation, this is usually significantly quicker than if the matter goes to court. A property settlement can take a few months or a few years.
Are there any time limits when it comes to property settlements?
Both de facto and married couples who separate and are seeking a property settlement have certain time frames that need to be adhered to.
Married couples have 12 months after the date of the divorce and de facto couples have 24 months after the date of separation to commence property settlement proceedings. As the family law system encourages people to make these agreements themselves outside of court, it means that you need to have made a reasonable attempt to resolve your property settlement matter and still allow time to apply to the courts for property settlement orders (if you can’t come to an agreement) within this time limit.
It is possible that you may be able to apply for property settlement outside of these time limits but this is usually only allowed in exceptional circumstances and you will likely require legal advice before being able to do so.
Can we sort out our property settlement before we’re divorced?
Yes, this is possible. If you’ve decided to separate you can sort out your property settlement at any time before you’re legally divorced – you do not need to wait.
When a married couple separates, before they can get divorced they need to be separated for at least 12 months before applying for divorce. You can work through your property settlement during this period and it allows you more time to sort out your agreement.
Do you need a lawyer to work out a property settlement in Australia?
No, it’s not mandatory to use a lawyer for a property settlement in Australia, however, it is highly recommended to seek legal advice from a qualified family lawyer.
Family law can be complex and often when you’re involved in a family law matter, it’s likely that you’re going through one of the worst times of your life. Having a lawyer on your side can help ensure that your rights and interests are protected throughout the process and can make the process a lot easier.
Some of the ways a family property settlement lawyer could help include:
- Understanding your rights and entitlements under Australian family law.
- Assessing the value of assets and liabilities.
- Negotiating with the other party or their legal representation.
- Drafting or reviewing legal documents, such as the settlement agreement.
- Explaining the potential implications and consequences of various settlement options.
- Representing you in court proceedings if necessary.
While legal representation may involve costs, it is often considered a worthwhile investment to have professional guidance and support throughout the property settlement process.
Are you looking for a property settlement lawyer in Australia?
If you’ve recently separated and need to work out your property settlement or you’re already in the process and have hit a snag, it’s not too late (or too early) to seek legal advice.
Here at Unified Lawyers, we’re experienced family lawyers whose priority is to make these difficult times a lot easier to manage and our property settlement lawyers can help you understand all of your options, negotiate on your behalf, represent you where required, and overall, ensure that you can make the best decisions for you and your family.
Our services are available Australia-wide and we have offices in Sydney, Brisbane and Melbourne. If you need a family lawyer, you need Unified Lawyers.
Call us on 1300 667 461 or book a free consultation using the button below.
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