Property Settlement

Property settlements between married couples and between de facto couples are virtually the same. Given the law provides a broad discretion to the Courts on how property is to be divided, and each couple is different, getting early advice to know your entitlements and how best to reach a negotiated agreement (or where necessary, through the Courts) is vital.

Formalising a property settlement (that is, signing a formal document as to how the property is to be divided) is vitally important to ensure the end of the financial relationship between parties, to protect from future claims and to provide certainty in moving forward.

How the Courts determine property settlement

The Court will consider the following factors when determining property settlement after separation:

1. Is it just and equitable for there to be a property division?
2. What is the property of the parties to be divided (or what is the value of the asset pool)?
3. What contributions have the parties made to the asset pool?
4. What are each parties’ future needs?

1. Is it just and equitable?

Whether it is just and equitable for there to be a division of property depends on each case. Usually long relationships, relationships where there are children or intermingling of finances will mean that it is just and equitable to divide assets.

There may, however, be other factors to consider and if you feel property settlement negotiations you are having are not just and equitable in the first place, you should seek legal advice early.

2. What is “property of the parties”?

Under the law, there is no difference between “company” or “relationship” property or other categories. The Court considers all the property of the parties, even if it is not in joint names.

Property can include real estate, cars, money in the bank, debts, companies, shares, cryptocurrencies, trusts and superannuation.

Sometimes a party may have a beneficial entitlement in an asset. This means they do not have legal ownership (i.e. the property is not registered in their name) but have an interest in that particular asset. This interest may be considered as part of the asset pool available for distribution or as a party’s financial resource (for example, employment entitlements, the right to sue for damages, etc). Getting legal advice about what is considered part of the asset pool or a party’s financial resource will help you know your entitlements.

Importantly, property is valued at the time of the agreement between the parties or at the date the Court determines the division – not what and how much existed at the date of separation.

The date and how property was obtained is relevant to the assessment of contributions and future needs (explained further below).

If parties cannot agree on what value a particular property has, then it may be necessary to have the property formally valued by an expert such as a property valuer or accountant.

3. What contributions have the parties made?

The Court will assess the following types of contributions:

• Direct and indirect financial contributions (for example, income, purchase of a property, initial contributions of property, inheritances or gifts);
• Direct and indirect non-financial contributions (for example, painting a house, unpaid work done in a business or performing renovations); and
• Contributions as homemaker and parent.

It is not a mathematical exercise, and the timing of the contribution will be relevant. For example, if one party owned property before the relationship that was later sold and the proceeds used to buy the matrimonial home, the Court may consider this as an initial contribution. There can also be post-separation contributions that need to be considered.

4. What are each parties’ future needs?

Once the Court has determined the parties’ percentage contribution, the Court will look at each party separately and consider their specific position, including:

• their age and state of health;
• their income, property and any financial resources;
• responsibility for the care of any children under the age of 18;
• their standard of living;
• the length of the relationship and the effect of this on a party’s income earning capacity.

Usually, the party in the financially weaker position will be given an extra percentage adjustment of the asset pool.

Time limits for formalising property settlement after separation

One difference between married couples and de facto couples is the time limit in which they can apply to the Courts (or reach an agreement by Consent Orders) to formalise a property division.

Married couples can apply at any time after separation and before divorce. After divorce, married couples have only one (1) year from the date the divorce order becomes final to bring an application to have a property settlement. In exceptional cases, property proceedings can be brought during a marriage and before separation.

De facto couples can apply within two (2) years from the date of separation. It is therefore very important to get advice early in case there is a dispute about the date of separation and whether an application is “brought within time”.

Time limits can be extended by agreement between parties or by applying to the Courts for permission. The Court has a discretion to grant an extension of time if certain grounds are met.

How we can help

It is not uncommon for a party to have limited knowledge of the assets and liabilities of a relationship. We can assist you from the outset to obtain this information and provide advice as to what your entitlements or obligations may be and the best strategy to adopt to resolve your matter in a timely and cost-effective manner.

Click our phone number or email address in the banner below to speak with a team member about your property settlement needs.