Negotiating and finalising the division of assets, commonly called property settlement, can happen at any time after separation and the law is almost the same whether you’re married or separating from your de facto partner. There are time limits that do apply so it’s important to get advice early to protect your interests.
We encourage out of Court settlements and often when things are amicable, agreement can be reached directly with your partner and simply formalised/made legal by your lawyer. While not always possible this is the most cost-effective settlement method. Mediation is also common along with lawyer-assisted negotiations. Sometimes, however, it will be necessary to go to Court.
In all cases, it’s important to get advice early. Knowing where you stand and what your entitlements are can put you in a good position to negotiate with your partner and help you to make good decisions early.
Contrary to some myth in the community, property is not automatically divided 50:50 upon separation. The following approach is commonly adopted when looking at how property should be divided.
Property can include:
An asset does not have to be in joint names to be an asset of the relationship. For example, if your former partner has a personal bank account, any money accumulated during the relationship will usually be regarded as joint savings.
The relevant liabilities are debts incurred during the relationship, and sometimes before the relationship and after separation. The most common liabilities are credit card debts, mortgages and other loans and tax debts. Most liabilities are also regarded as ‘joint’.
Financial resources are actual or potential entitlements which may have a value but cannot be distributed. Examples of financial resources can include an entitlement to an inheritance at some point in the future. Financial resources will not form part of the pool of assets available for distribution, but these resources can be taken into account when deciding how property should be distributed.
Contributions can be:
Contributions prior to the relationship and after the relationship has ended can also be considered when assessing the property pool for distribution.
Things like inheritances, gifts and compensation payments are often referred to as ‘special contributions’. They are treated differently and are usually attributed solely to the person who received them. They are not excluded from the property pool, however, the recipient will get extra credit for them.
Sometimes an adjustment is made to the property distribution to take into account future needs of a party.
Some of the relevant considerations for future needs include:
Generally, the party who will be financially disadvantaged in the future due to any of the above factors should receive a greater share of the assets.
After that time an application to the Court for a financial settlement can only be made with the consent of the parties or with permission from the Court if certain grounds are satisfied.
A party to a de facto relationship can only bring an application for a financial settlement under the Family Law Act within 2 years after separation. After that time an application for a financial settlement can only be made with the consent of the parties or with permission from the Court if certain grounds are satisfied.
It is important to get advice about any agreement reached about your property settlement and to make sure that the agreement is made legal.
If the agreement is not formalised in the right way then it remains open for either party to make a claim for property settlement against the other in the future, even after a time limit has expired.
Remember, getting legal advice does not have to mean that you will spend thousands of dollars or end up in a Court battle with your former partner. It’s about being prepared, making sure the agreement reached is fair and making sure both parties are protected from future claims.