A separation is not just taxing emotionally, but can also take a toll on your financial wellness. We understand you build asset and property with hard work over time. Most couples opting for separation find it challenging to come to a consensus on the division of property amongst each other. The property, for the purposes of the Family Law Act, includes things such as the family home, any investment properties, shares, cars, furnishings and superannuation.
Following separation, there will often be issues to work out between the separated persons concerning property settlement. The complexity involved in property settlements is high. There is no straightforward mathematical formula for property division. It is essential that you obtain legal advice from experts. We can help you make an informed decision on what you and the partner are entitled to when dividing your asset and property.
An equitable division of asset and property may be the rule, but this never practically happens. Unfortunately, a rule of thumb or a straightforward guideline does not exist to the division of asset and property in cases of the settlement. Each case has its facts that determine the specific outcomes.
For couples who were married and for De Facto couples whose relationship ended on or after the 1st of March 2009, there are three options available to you to create a property settlement:
- By informal agreement between the two of you
- By formal agreement, Consent Orders or a financial agreement
- By Order of the Court
These types of agreements are reached between two parties without being finalised legally. Often this approach is taken because there may be a chance of reconciliation and the arrangements are intended to be only temporary, or in some cases the parties simply do not wish to pay legal fees to obtain a formal agreement
It is important that before there is any division of property you speak to your solicitor first, as there may be implications in the future if the agreement is not formalised and you do not divorce. Any informal agreements made between two parties are often referred to as “around the kitchen table”. Except in cases where there are little or no assets, we do not recommend this course of action, but certainly speak to us before any division occurs.
By Formal Agreement
Where parties are able to reach an agreement in respect to property settlement there are then two options available to make the agreement legally binding.
The first is by way of Consent Orders. This is essentially a document that is drafted by a solicitor and filed with the court. Both parties sign the agreement and then send it into the court for filing.
The Registrar approves the Orders and seals them, and then sends the Orders to the parties by mail. In cases where Consent Orders are approved by the Court, Orders are made without the need for either party to actually attend at court.
In our practice, this is by far the largest amount of work we undertake in this area and we charge an all inclusive lump sum fee to assist parties to work out the ongoing costs in their matter. Please read the fee section of our website, www.rafton.com.au, for more information.
In cases where an agreement is reached, a solicitor can draft a document similar to other types of contracts, that sets out the agreement. Each party signs this in the presence of a solicitor, after obtaining legal advice. Once the document is exchanged between the parties it is legally binding.
Please ask your solicitor if you have any queries about this method of property agreements.
By Order of the Court
In some cases, parties are unable to reach an agreement concerning property settlement, or an element of urgency arises, and a Court application is then required.
In cases where there is no urgency, the court encourages the parties, and their solicitors, to attend a mediation, called a conciliation conference, which is conducted at the court by a Registrar.
We find that this type of conference is very effective in reaching an agreement. If an agreement is reached and Orders are drafted and signed, the Registrar then has the power to make the Orders by consent on the same day as the conference. This avoids the need for further court attendances.
If no agreement can be reached and it is left up to the court, the court will determine the property settlement by following a five step approach, set out below:
- Identifying the existing legal and equitable interests that each party has in property and, having regard to those interests, whether it is “just and equitable” to make an Order adjusting those interests
- Identification and valuation of the assets, liabilities and the financial resources of both parties. Full disclosure of all the assets and liabilities by both the parties is mandated, this will set the parameters of the dispute. The court identifies all the liabilities including outstanding mortgages, loans, credit card bills etc.
- An evaluation or assessment of the various financial and non-financial contributions that each party has made in the relationship, from the date of cohabitation to now. This achieves a “contributions based” division of assets, on a percentage entitlement basis out of, in total terms, 100%
- An assessment of the various “economic factors” under Section 75(2) of the Family Law Act being a consideration of what is sometimes called your “future needs.” This allows the court to then adjust the percentage entitlements of either party (at Step 2) either upwards or downwards depending on the weight given to each of the Section 75(2) factors
- An overall consideration as to whether the Orders are “just and equitable”. Just and equitable does not imply an equal distribution. The count takes into consideration many other aspects, like did one partner lose some years of making their career shouldering more responsibly for child care.
There is a time limit in which to make applications for property adjustment. Any application for property adjustment must be brought within two years of the relationship terminating for De Facto couples and one year from the date your Divorce is finalised for couples who were married. We advise our clients to be proactive and come up with property settlement without delays.
If a claim is not brought within the time limit then it is necessary for the court’s leave (or permission) to be sought before proceedings can be instituted. Leave is not granted automatically and may be refused.
Many couples can resolve matters and come to a settlement without going to court. The procedure can be quicker, saving money, time and effort. We have in the past helped many couples reach a consensus, with mediation and negotiations. Once the separating couple agrees on the asset and property division, we help formalise the division seamlessly. Discuss your case with us, to identify what is in your best interest and act accordingly.