As families navigate the complexities of separation and divorce, one critical aspect often at the forefront is property settlement. The division of assets and liabilities following the breakdown of a relationship can be a daunting prospect, with implications for both parties’ financial futures.
Georgia Spencer, Solicitor at Orbell Family Lawyers, delves into the intricacies of property settlement in family law, shedding light on the factors the court considers and the methods of formalising agreements.
Property settlement marks the culmination of financial arrangements following a marriage or relationship breakdown. In Australia, the Family Law Act governs this process to ensure a ‘just and equitable’ division of assets and liabilities. The Court has wide discretionary powers, meaning that there is no set formula for determining how parties’ assets are to be divided; however, the Court will assess an outcome based on a four-step approach.
Step 1: Identify and Value
The first important step is identifying the assets, liabilities, superannuation, and financial resources each party holds an interest in and putting a value on each.
No assets or gifts are exempt from consideration; every asset, whether acquired prior to or during the relationship, and every gift received by either party, is taken into account during the family law property settlement process. Similarly, liabilities such as mortgages, personal loans, credit card debts, vehicle finance, and any outstanding child support obligations are also assessed as part of the property settlement process.
Superannuation, often a significant asset, is treated as an asset that can be divided. Even assets held within family trusts are considered.
In an increasingly globalised world, overseas assets are becoming more common. These assets are not exempt and must be identified and valued for inclusion in the settlement. International couples should seek legal advice to navigate the complexities, including potential legal and taxation implications, and to ensure their international assets are also dealt with overseas to protect ‘double dipping’ from the other party.
Step 2: Contributions
This stage delves into the nature of the relationship by evaluating the contributions made by each party, including financial, non-financial, parenting, and homemaker contributions. The contributions are assessed at the beginning of the relationship, during the relationship, and even after separation.
Step 3: Future Needs of each party
The next thing to be assessed is whether either person has any significant future needs, which may mean they require an additional adjustment in their favour. Things such as age, health, earning capacity, and caregiving responsibilities are carefully considered to ensure a sustainable settlement that accommodates the parties’ ongoing requirements.
Step 4: What is Just and Equitable?
The foremost consideration is assessing whether the Orders you and your ex-spouse are seeking are fair or ‘just and equitable’. This principle underpins the entire process, and even in circumstances where you and your ex-spouse have come to an agreement about how your assets are to be divided if the court is not satisfied that the outcome is just and equitable, then they may well refuse to make the Orders.
Formalising a Property Settlement
Whether you are experiencing the breakdown of a marriage or a de-facto relationship, it is essential that you formalise your property settlement to offer protection from any future claim by the other party. There are two ways that this can be done:
- Financial Agreement – This document is not required to be filed with the Court. However, it is a legally binding agreement that requires both parties to be represented by a solicitor.
- Consent Orders – This document is filed with the Court, and neither party is required to be represented by a solicitor; however, it may be in your best interests to seek legal advice, as, if the Orders are not drafted in such a way that they are enforceable, they may be rejected by the Court.
What else do I need to know?
There are strict time limits for commencing property settlement proceedings:
- Two years after the breakdown of a de facto relationship
- Twelve months after divorce
Exceeding these deadlines necessitates seeking leave from the Court (or asking permission), where you will also need to show the Court that if leave was not granted, it would result in hardship to you (and/or your children). Unfortunately, the threshold for assessing hardship is notoriously quite high, so it is very important you finalise your property settlement within the stipulated time frame. The cost of such an application to the Court is also a prohibitive factor to consider.
Navigating property settlement in family law matters requires a comprehensive understanding of the legal framework and diligent preparation. Seeking legal guidance early ensures that all relevant factors are considered, leading to a just and equitable resolution for all parties involved.
If you would like further information regarding this article or your family law matter in general, please contact us.
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Website: www.orbellfamilylawyers.com.au
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The information contained in this article is provided for information purposes only and should not be construed as legal advice.
