Going through a divorce or separation usually involves a property settlement. The Family Law Act sets out how property is divided when a marriage or de facto relationship has broken down. The process is complicated, but essentially involves the identification and valuation of the relationship property (which is broadly defined) and then a determination of the appropriate “percentage division” between the couple. The percentages are determined by considering the contributions that have been made by each spouse (including initial, financial and non-financial) and each spouse’s ongoing “future needs”.
Property Settlement Process
A property settlement can be done at any time after separation, however time to make an Application to the Court runs out, for married couples, 12 months after a Divorce order is made.
If an Application to the Court for property settlement in a de facto relationship is to be made that must be filed in Court within 2 years after the date the relationship ended.
Determining A Property Settlement Agreement
The Court has the right to say how property is divided when a marriage or de facto relationship has broken up.
The Court takes the following steps to work out how property will be divided:
- The Court takes an inventory of all assets and liabilities that existed at the time of separation;
- A current value is put on the assets and liabilities (this includes superannuation);
- The Court must then work out a percentage division of the property by considering the financial and non-financial contributions both parties made during the relationship.
When deciding how the assets will be divided the Court also has to consider each party’s ‘future needs’. This includes:
- future obligations;
- financial situation and
- the cost of caring for any children from the relationship.
It is essential that any property settlement agreement is documented and finalised correctly.
Documenting An Agreement
Where parties can reach an agreement in relations to property settlement, there are 2 ways of documenting the agreement under the Act, specifically:-
- By incorporating the agreement in orders which are made by the Family Court with the consent of both parties (Consent Orders); or
- By incorporating the agreement in a Financial Agreement, which deals with property settlement and which does not require the approval of the Court to be binding on both parties.
Q. Can I still apply for a property settlement even if everything is in my former partner’s name?
A. Yes, when identifying all relevant property to be considered in a property settlement it is irrelevant whether the property is owned in joint names or owned by one party only. There may also be relevant property owned by trusts, companies, partnerships or other corporate entities.
Q. What if my former partner wants to sell the property but I don’t?
A. If the property is held jointly in your and your spouse’s name then both of you need to agree to its sale or how else to deal with the property. The Court does however have the power to order that property be sold if it determines a sale is necessary.
Q. What happens if my partner moves out of the property and stops paying their share of the mortgage?
A. If your spouse is named on the mortgage of a property then they continue to be liable to pay the mortgage despite no longer living in the property until their name is removed from the mortgage which may be part of the property settlement agreed on between you.
Most separated spouses reach agreement about the continued payment of these expenses until final agreement on severing their financial relationship can be reached.
If your spouse refuses to contribute to these expenses please seek family law advice as soon as possible.
Q. Are domestic tasks considered a contribution towards property?
A. Yes. In assessing the contributions each party has made to the acquisition, conservation and improvement of the pool of property, the financial, non-financial and family welfare contributions such as homemaker and parent contributions made by each party are considered, as are the timing and significance of those contributions. Each contribution will not be considered in isolation and must be weighed and considered overall to reach an outcome or agreement.
Q. If my spouse acquires property following our separation, am I entitled to any of it?
A. The relevant pool of property is the property that the parties hold jointly, individually or with another person, or that is held by a trust, company, partnership etc. at the time of the parties reaching agreement or when the Court decides the matter. So if your spouse acquires property after separation, that property may be included in the pool of property for consideration, however, the contribution of that post-separation property may be viewed as a contribution solely by them, and an adjustment may be made in their favour in the overall property settlement between you.
You can learn more about divorce settlements by reading our booklet The Guide To Family Law.
We hope this information is helpful. Contact us for your own advice by phoning (07) 3221 4300 for a fixed-cost ($330 inc GST) no obligation 1 hour appointment with a family law expert. We can meet with you in person, by phone or by SKYPE.