When you get married or enter into a de-facto relationship, you generally do so because you expect to be spending your lives together. You begin to merge bank accounts, superannuation, you might buy a car together, pets, and a home.
Unfortunately, relationships are not always rose coloured, and breakdowns certainly occur. If that happens, you need to then decide on what is going to happen to that house, those funds and other assets you share. In terms of the house, you could be intending to sell the house outright, you want to sell your half to your former partner, or you want to buy them out. For your other assets, you might be unsure how to divide them up. Essentially, you need to ensure you have the legalities in order and the best way to do that is to hire a lawyer to assist.
First though, you need to understand a little more about how property settlement works. There’s no doubt it can be a stressful time, so the following guide is designed to help get you on the right track.
What Does “Property” Refer To?
We’re not just talking about houses, land and buildings, but rather a “property pool” - all assets you and your former partner may have, including:
- The family home
- Investment properties
- Family trusts
- Business interests
- Bank accounts
- Cars, boats, trucks, bikes
- Insurance policies
Is Property Settlement Necessary?
Quite simply, yes. When ending a relationship, the last thing you want is something that is going to tie you down together into the future. For example, if you own property together, your best option is to sell the property and release yourselves of the financial ties. Keep in mind that getting a divorce is not the same thing, and you can divvy up your property as soon as you separate, rather than waiting the 12 months it takes to apply for divorce.
The Property Settlement Process
It’s better if you start this as soon as you can after separation. The longer you leave it, the harder it can get. To start the process, your lawyer will advise you of any entitlements you may be eligible for. From there, a letter will be sent to your former partner, attempting to reach an agreement without having to take the matter to court. If an agreement can’t be reached, mediation may be recommended. Common disputes for home ownership include who lives in the house before the settlement is completed, who pays the mortgage, and the other assets that are involved.
Why Do You Need A Lawyer?
Although there are some things you might be able to settle without assistance, when it comes to large assets such as homes, superannuation and vehicles, it’s best that you have legal assistance. This guarantees that your rights to those assets are protected. It might be that you don’t want your ex-partner to have access to a valuable item of jewellery that belonged to your grandmother, or that you worked hard to pay off an expensive car yourself and you don’t want your ex to get any of the rewards of that. A lawyer can give you the right advice and assistance to settle all property matters.
Timing Is Crucial
As mentioned, it’s best that you deal with property settlement as soon as you can after separation, but you don’t want to settle for less than you’re entitled. Keep in mind there is a property settlement time limit. Once you are divorced, you need to start settlement within 12 months; and for a de-facto couple, within two years. If you don’t do this within time, it could mean you lose rights to your part of the settlement.
How Is It Calculated?
To make this easier, the Family Law Act and the Courts have come up with a process that determines what each party is entitled to. There are four steps – to start with, it considers all assets and liabilities. Next, it looks at the initial contributions from each party, then what each party contributed to the property during the relationship, and finally, post-separation.
So, It’s Not 50-50?
This is a common misconception – that when you split, all property is split 50-50. In fact, there are many factors taken into consideration to determine how assets are split, including the value of the net asset pool, the length of your relationship, age and earning capacities, health and ongoing care of children, among other things.
Do You Need To Disclose Everything?
Whether you are negotiating a settlement or proceeding to court, you have to disclose your full finances, including tax returns, super and bank statements. Non disclosure can have significant consequences so it’s important to seek advice about what disclosure needs to be made.
If The Other Party Doesn’t Want To Sell…
This refers to selling your home. If you’ve decided that you want to sell the house, or you want to buy your partner out, but they’re refusing to sell – you’re going to need legal assistance. Your lawyer will contact their lawyer to suggest a negotiation. If they refuse to do this, an Application for Property Settlement is lodged, and both parties need to go to court. The court will generally arrange mediation at this point and this usually results in an agreed settlement, without it having to go further in court.
Once Agreement Is Reached…
There are two things you can do. Firstly, file terms of Settlement with the Family Court of Australia; and second, enter into a Binding Financial Agreement. For both of these, talk to your lawyer for assistance.
Contact The Professionals
Divorce property settlement can be stressful and emotional and there’s a lot that goes into a separation, particularly when you’ve been together for a number of years. Don’t leave any stones unturned and avoid leaving yourself open to losing everything. Contact the family law property settlement experts at AJB Stevens today to find out your rights, and how we can help ensure you get a fair deal.