A Guide To Property Settlement After Separation or Divorce

Ever since the Family Law Act allowing for no-fault divorce was introduced in 1975, the Australian divorce rate has been reduced by over half. But unfortunately, there is still an average of 2 divorces per 1000 people in Australia per annum.

The breakdown of a marriage or de facto relationship can be an emotional, confusing, and traumatic experience for couples, which causes feelings of disappointment, stress, and even anger. It doesn’t help that divorce proceedings are also the first interaction many people have with the legal system. So, while the process of separating from a life partner is difficult enough, there are also legal matters to consider.

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Time Limits For Property Settlement    

One of the most important things to be aware of is that Australian law does not require you to be divorced before separation property settlement can be finalised. So, exactly how long after separation can you do property settlement? Technically, there’s no legal reason why family property settlement can’t be completed the day after a couple has made the decision to split up.

It’s actually a good idea to take care of all the financial and property matters as soon as possible. Because if you are unable to come to an agreement once a divorce has been granted, there is a strict time limit for the initiation of court proceedings for property division.

When the Federal Circuit Court finalises your marriage, they will issue a Divorce Certificate dated exactly one month after your court date. Because this makes it official, you will then only be able to bring court proceedings regarding property settlement after divorce for the next 12 months. Alternatively, couples breaking up after de facto relationships have until exactly 2 years after the date they separated for them to file a court application.

Dividing Property

What Is A Property Agreement?

A property agreement refers to a document that instructs the division of finances, property, and other holdings from a couple’s marriage or de facto relationship. Basically, spouses who are separating and planning for divorce and property settlement, come to an agreement on how they will divide their assets between them so that they are equally looked after, allowing them to move on individually with their lives.

What Counts As Property?

While property may commonly be thought of as ownership of the family home, property agreements actually extend much further, including all assets owned or controlled by both parties in the relationship. In fact, the total property pool usually incorporates all assets that are jointly owned by the couple like cars, businesses, shares, trusts, interest, superannuation, real estate, investment portfolios, and bank accounts. Other valuable possessions or investments commonly divided up in property agreements include boats, artwork, jewellery, antiques, as well as any debts or liabilities such as mortgages, loans, credit cards, and hire purchases.

While a property agreement will cover all finances and liabilities in a relationship in the name of both parties, other resources that are only under one spouse’s name can often also be included as part of the total asset pool. For example, some might include financial assets that are currently only in one person’s name, such as family trusts, interests in deceased estates, and other funds or entitlements.

Does Being Parents Affect Property Division & Agreement?

Whether you have your own children together or you have a blended family with children from previous relationships, they have no impact at all on your ability to finalise a property agreement. Just remember that if the relationship does have children involved, the best course of action following a separation is to ensure minimal disruption to their lives.

How Should You Negotiate A Property Agreement?

If you’re able to successfully negotiate with each other and create your own property agreement, it will go on to become the main document that helps you both move forward financially. Besides, avoiding the court process is the fastest way to resolve the matter, which means you’ll both save money on legal costs as well as having the least emotional impact on your children.

If you’re unable to negotiate the agreement terms together, there are other options available that provide you with more support. The next best method for negotiation would be to utilise available resources like family dispute resolution services combined with advice from lawyers as well as financial planners when required. Finally, the only resolution for some property agreement negotiation between couples may be through litigation, especially when there are feelings of bitterness or even hatred involved.

Whether you work together until you both agree on your own private arrangement, or the Courts impose the divorce settlement agreement for you, the end result will ultimately be the same. You’ll both receive a legally enforceable settlement document for property and asset division.

What Is The Process?

While the Family Law Act states that property division for divorce settlement Australia must be ‘equitable’ and ‘just’, there are no specific mathematical formulas that are used to decide who gets what. Understanding this fact from the start is important, as many make the incorrect assumption that property will be split in half and divided equally.

Because relationships are all uniquely different, the process for each property agreement must also be dealt with individually. Some will successfully negotiate between both parties, others will go through dispute resolution, and the rest will have a family court property settlement.

One of the best ways to ensure the whole process is carried out as fairly as possible is by considering things like the current age, health, income, and employment, as well as the past incomes and starting assets for each spouse. Then, when all of the circumstantial information for each has been discussed, most people would then identify all their assets and then begin discussing how they believe it should be divided fairly between them.

After the negotiations are complete and both parties are happy with the redistribution of their wealth, their agreement is formalised into a property settlement. Together they can then apply for consent orders through their lawyers, which is a pretty straight forward legal procedure. Once the consent orders property settlement have been made, their property agreement is legally binding, enforceable, and possibly eligible for certain tax breaks.

 Why Do You Need A Lawyer?

It is especially important that both parties receive proper and unbiased legal advice from their own separate lawyers regarding the whole property agreement process. Even if you’ve negotiated a property agreement that you’re both happy with together, your lawyers will still need to review all of the details before ordering a consent order or a financial agreement making it binding and legally enforceable. Remember you’d be taking a pretty big risk if your property agreement isn’t legally finalised because your former partner could decide to change their mind at any time and demand more property than you originally agreed upon.

Can Property Division Be Finalised When Living Together After Separation?

While most people would rather not live together once they’ve made the decision to separate, there are some couples who continue living in the family house in a divorce settlement, only ceasing the intimate aspect of their relationship. While it is possible and some would actually find it easier to live separately in the same house, especially when there are children involved, one partner usually decides to move out as soon as they can in the vast majority of cases.

For those separated couples who are living together under the same roof, the good news is you can still attend family dispute resolutions, discuss matters with your lawyer, and finalise property agreements during this period of cohabitation.

How Can Separation Affect Your Will?

Wills created during a serious relationship will commonly state that if the testator were to suddenly die, their entire estate would be given wholly to their partner. While a divorce usually renders any existing will automatically invalid, separation after both marriage and de facto relationships has no effect, so the will is a completely legal and enforceable document.

If you have a currently valid will from before your separation, it will remain legitimate until the finalisation of your divorce, or either cancelled or updated. It also means that if you were to die suddenly before any changes are made, your former partner would still receive everything as stated in your will.

That’s why it is a particularly good idea to make an appointment with an estate planning lawyer as soon as your property agreement has been finalised. That way, your beneficiaries are amended to suit your new situation, and you can rest easy knowing your estate would be dealt with according to your updated instructions.

Family Dispute Resolution & Property Agreement

What Is An FDR?

The legal term for alternative services such as mediation, Family Dispute Resolution or FDR can be accessed by separating couples for assistance during negotiations or when sorting out disputes. The main role of an FDR is to help couples going to court come to an agreement regarding family law property settlement cases, as well as for divorce problems, instead of going through the court system.

Because they are readily accessible during any period of a relationship, FDR services are available for couples before, during, and after separation, or even after the case has already begun in court. Ultimately, an impartial and fully qualified FDR consultant can help couples reach an agreement about property division, in particular, that is mutually acceptable to both parties.

What Is The Process?

The whole process of an FDR is designed specifically to aid the negotiation process by meeting the needs of all parties involved. An FDR provides each party with the opportunity to speak their mind without any interruption, as well as allowing them to provide responses to any other matters that have been put forward by the other party.

But if you are unable to reach an agreement using FDR, the work you have done in mediation to identify key issues can still be used in a legal setting. In fact, the experience can improve the chances of successful negotiation with your family lawyers.

Why Do You Need A Lawyer?

Division of property and assets after a separation can be complex, so it’s in the best interest of both parties to consult independent family lawyers. Not only will a lawyer who specialises in family law understand the appropriate interpretation of the 1975 Family Law Act, but they will also be fully aware of applicable circumstances and precedents that were set by historical court cases so you can stay informed about your legal rights.

To ensure you receive everything you’re entitled to after a separation, not only will a qualified family lawyer provide you with accurate legal advice regarding separation financial settlements, but they can also help to simplify and streamline the entire process for you. Your lawyer will be by your side during mediation so that the division of assets is just and equitable, as well as helping you deal with any emotional stress or pressure caused by the process.

What Are The Do’s & Don’ts During FDR?

How you treat your former partner during the process of FDR will ultimately have an important impact on its success. So, as long as you’re completely honest and open at all times, the FDR mediator will provide you with the most meaningful and comprehensive mediation process possible.

Just like in any other legal setting, providing complete and full disclosure regarding all financial information is not only expected, it’s essential. Otherwise, when financial information is withheld and is later deemed to be relevant, any property agreements that were lodged with the Family Court may no longer be enforceable.

Basically, here are a few basic rules for what you should and shouldn’t do during Family Dispute Resolution services:

Do:

  •       Have a mediation summary prepared in advance;
  •       Be prepared to listen to everyone when they speak;
  •       Treat the mediator and your former partner with respect;
  •       Be open to negotiations, other perspectives, and alternative resolutions.

Don’t:

  •       Interrupt anyone else, especially your former partner;
  •       Maintain a stubborn or fixed position;
  •       Use highly emotional questions or statements;
  •       Antagonise or provoke your former partner.

 

How Are Property Agreements Finalised?

So that you can protect your financial future with a divorce and property settlement that is completely legal, you will need to get a consent order, a binding financial agreement, or a settlement imposed by the court. Any property settlement that isn’t one of these options is only an informal agreement, which is not legally binding.

What Are Consent Orders?

Once both parties involved agree on the terms of their asset negotiations, a written direction drafted by a solicitor called a consent order is usually the easiest way to get the property agreement formalised. Consent Orders are also quite versatile as they can also be used to legalise other matters such as family law property settlement, arrangements regarding parenting, and spousal maintenance.

When the Family Court considers a consent application for a settlement of property order, it must be completely satisfied that it is equally fair to both parties involved. Then, as soon as family court consent orders have been approved, they become just as legally binding as any court order after a hearing.

What Are Binding Financial Agreements?

Another option for formalising a property agreement is a written document called a Binding Financial Agreement, which is often thought of as a Prenuptial Agreement or Prenup. The main difference between them though is that a BFA can be legally entered into at any time before or during a marriage, as well as after the order for a divorce property settlement has been made.

For a BFA to be legally binding, both parties are required to seek their own independent legal advice to ensure they understand how the agreement will affect their rights, including any advantages or disadvantages. And because there have been many instances of a BFA being overturned by the courts, you should be wary of anyone offering fast or cheap agreements. That’s why it’s extremely important that any BFA is prepared extremely carefully by a family lawyer before being signed off correctly.

Alternatives To Dispute Resolution

If an agreement cannot be reached after Family Dispute Resolution, there are some alternative options available to you. These can include arbitration outside the courts, resolving the issue between yourselves with an informal agreement, or instructing the property settlement lawyers for both parties to negotiate the property agreement on your behalf.

Informal Agreements

Some couples who are separating amicably may believe they have no chance of things turning ugly between each other. If they are able to easily negotiate and agree to an arrangement regarding their property agreement, informal agreements made only through conversation may work for them.

But even in the absolute best of break up situations, it is imperative to understand that an informal agreement is in no way legally binding, which means it is not enforceable by the courts. That’s why it is strongly recommended to take the time required to legalise an informal agreement, which can be done extremely easily without the need for either of you to see the inside of a courtroom.

Arbitration

In the simplest of terms, arbitration is a form of dispute resolution involving a private trial that’s held outside of the court system. An independent body or person is officially appointed to be an arbitrator who helps settle the dispute by listening to each side present their case.

Not only must both parties concur when taking part in arbitration, but the choice of arbitrator must also be agreed upon by both sides. Because the preference of one party to go through arbitration is actually superseded by choice of the other party to take the matter to court, arbitration must always be a joint decision.

Instruct Lawyers To Negotiate The Agreement

If you have been unsuccessful in negotiating a property agreement using family dispute resolution services, you may decide to engage both of your lawyers to negotiate for you both. Ultimately, your lawyer would negotiate the terms directly with the lawyer who represents your former partner, ensuring the dispute can be resolved without going through a federal circuit court property settlement.

Because collaborative law is a more non-adversarial approach towards resolving these kinds of disputes, all parties involved should be able to agree to a formal agreement that focuses on the settlement, not litigation.

Court Ordered Property Settlement

If you are still unable to agree on all the terms for property division after attempting both Family Dispute Resolution and lawyer-assisted negotiation, a court-ordered property settlement law may be the only option left for you both.

Not only are court-ordered property settlement agreements quite often a costly process, but it can also end up lowering the total value of your combined property. Unfortunately, if your former partner is unwilling to participate in dispute resolution at all, or any other type of civil discussion for that matter, this option is most likely completely unavoidable. 

If you need further advice, get in touch today.

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