A Family Law property settlement is an arrangement between parties of a relationship to divide their assets, liabilities, and financial resources when they separate. This process, if done properly, ends the parties’ financial responsibilities to one another and protects both parties from a claim on current or future assets such as an inheritance, subsequent purchase or business endeavour.
Our specialised family law team focuses on helping you achieve the best possible outcome for you and your family. We aim to avoid taking your matter to court where possible, and we do this by utilising our extensive expertise in negotiation, mediation, and collaborative practice. However, if your matter requires the court’s involvement, you will be well supported by our team of experienced and effective advocates.
Our Family Law team has over 50 years of family law experience and is guided by one of South Australia’s only Accredited Family Law Specialists. Our expertise includes matters involving: family business, farming properties, intergenerational finances, Family and Discretionary Trusts, Self-Managed Superannuation Funds, and Corporations.
How is property divided after separation?
After the breakdown of a relationship, a property settlement can be formally resolved by consent orders, financial agreement, or court proceedings pursuant to the Family Law Act 1975 (Cth). Separated couples are encouraged to settle property disputes as amicably as possible, which is particularly beneficial where both parties continue to be involved in the care of their children. Unnecessary delays and difficulty can lead to further stress and depletion of the parties’ assets during what is already a challenging time.
Do I have to be divorced to split property?
As soon as you have separated you can make arrangements to split your property and debts between you and your ex-partner, you do not have to wait until you are divorced.
However married couples have a time limit of 12 months from the date of a divorce to bring an application to the Court. De-facto couples have two years from the date of their separation to bring an application.
Do we have to go to Court?
No, not at all. If you have already agreed on how your property will be divided, your lawyer can prepare documents to finalise these arrangements, and then carry out the legal processes to divide and transfer your assets without the need to attend Court.
We can advise on the most suitable way to finalise your property affairs in your circumstances and prepare the necessary documents for you. We will attempt to make the process as simple and cost-effective as possible whilst ensuring your rights are protected and that you receive a fair and reasonable distribution.
Consent Orders are the preferred way of settling financial matters and can also include arrangements with respect to parenting. Consent Orders have the advantage of being enforceable by the Court if one party does not comply with the orders at a later time.
The process of preparing consent Orders involves exchanging financial disclosure by both parties so that the Court may review the proposed orders and consider whether they are “just and equitable” in the eyes of the Court. The test for what is just and equitable is a wide discretion, and we can advise if your agreement is likely to meet this test.
The parties do not usually need to attend Court, and the orders will be approved procedurally. If attendance is required, then we can attend Court on your behalf.
Binding Financial Agreements (BFA)
In some circumstances, it may be appropriate to enter into a Binding Financial Agreement instead of Consent Orders.
To be legally enforceable, specific requirements and formalities must be met. The parties must each receive independent legal advice from a lawyer and sign an acknowledgement that they are aware of their rights and obligations under the agreement.
The benefit of these documents is that they do not need to meet the same just and equitable test. A Binding Financal Agreement can be created at any time and does not require a separation of the parties. These documents are often used before marriage as a pre-nuptial agreement.
Generally, one party’s lawyer will prepare a draft agreement based on the negotiations, which is sent to the other party’s lawyer. Once any amendments are made and the agreement settled, they are signed with the appropriate acknowledgements by each party and their respective legal representatives.
We are careful in our approach to a financial agreement to ensure that you are provided with the best protection possible for you under the present law. We generally recommend entering into Consent Orders, if appropriate, however we can discuss with you whether a Binding Financial Agreement may suit your circumstances.
What if we can’t agree?
There are many processes available to parties to assist them in reaching an out of Court agreement, such as Mediation, Collaborative Family Law and Arbitration. We can discuss these options with you.
When the Court’s involvement is required, there is an established process of how the property of a relationship should be divided.
First, the Court needs to be satisfied that you have attempted to reach an agreement, and to this end, you will be required to participate in dispute resolution (mediation). If this doesn’t resolve the matter, an application for property orders may be filed with the Court. This application must be made within 12 months of your divorce becoming final or 24 months from the date of separation for de facto couples.
The matter will be set down for a number of court dates and if no agreement is reached, then a legally binding decision will be made by the Court. At any stage, the parties can exit the court system and avoid a trial by reaching an agreement and submitting this agreement to the Court.
How does the Court decide?
The Court will apply a well established 4-step process for determining Family Law property disputes.
- The Court will calculate the total assets owned by both parties, including property, shares, cars, jewellery, savings, furniture, superannuation, etc. This includes items you brought into the relationship, those acquired during the relationship and also those purchased after the commencement of the relationship, whether that property is in your joint names or not.
- The Court will weigh up the contributions from both parties, including financial, non-financial, and other contributions such as inheritances, gifts from family and other assets brought into the relationship by either party or on their behalf, directly or indirectly;
- The Court will then look at both parties’ future needs and financial resources, including factors such as the capacity to earn money, their health, and any parental responsibilities;
- Lastly, the Court will make any further adjustments and decide a final outcome based on what it considers is just and equitable to both parties.
Why is it important to legally formalise a property settlement?
Ex-partners who remain on good terms may choose to make informal arrangements regarding the division of their property. However, failing to legally document a property settlement is unwise. An informal property settlement is not legally recognised as bringing the couples’ financial affairs to finality. This may leave the parties exposed to potential issues in the future, like subsequent claims by either party on the remaining asset pool after one party’s share has been expended or further claims on post-separation assets, income and inheritances.
A formal family law property settlement can also address the following important matters.
- Stamp duty concessions – the transfer of certain property such as real estate is generally liable to stamp duty. However, exemptions or concessions from duty can be granted for transactions that are documented in a complying consent order or binding financial agreement. Informal arrangements will not meet the prescribed requirements to access these
- Taxation implications – understanding the tax implications of a proposed property settlement and structuring the division of assets accordingly can have a significant impact on the net result for both parties. A family lawyer can flag potential tax implications like Capital Gains and Division 7 A Tax and may recommend working with an accountant to ensure a property settlement delivers the most viable results and wherever possible, does not trigger unexpected tax liabilities.
- The unwinding of business and Trusts – a formal agreement can deal with the change of members positions in companies, partnerships and Trusts. It can also apportion any outstanding liabilities and grant indemnities for the parties exiting the business or
- Provision for 3rd party debts – formal agreement can apportion outstanding formal and informal debts to third parties, including families and the ATO and provide the necessary indemnities to the party who are exiting this.
We can help
Dealing with the complexities of property settlement is stressful, but the consequences of not doing it properly can impact the rest of your life. We are experienced negotiators and strive for the best possible outcome for all our clients.
Our team has extensive experience in complex family law property settlement matters and litigation involving family trusts, companies and substantial asset pools. We have also had significant success in Property Settlement Appeals to what was the Full Court of the Family Court of Australia and is now the Federal Circuit and Family Court of Australia.
Contact us to discuss your situation with one of our experienced family lawyers. In many cases, we are able to provide immediate financial assistance such as the delayed payment of your legal costs until the conclusion of your matter, when you are likely to receive payment from your property settlement, or from the sale of real property.
If you need any assistance, contact one of our lawyers at [email protected] or call 08 8443 4888 for a free telephone discussion. Alternatively, contact us and book a time for a face-to-face consultation at our Mile End or Norwood offices or over video conference.