FAMILY PROPERTY AND FINANCIAL AGREEMENTS

A property settlement refers to the process of dividing the assets and liabilities between the parties to a relationship. This can include real estate, bank accounts, motor vehicles, superannuation, and even debts like loans or credit card bills. It’s not just about splitting up tangible things but also determining who is responsible for any shared financial obligations.

It’s important to note that property settlements don’t happen automatically. Just because you separate doesn’t mean the property is automatically divided — you need to actively reach an agreement or have a court decide on the matter.

How is Property Divided? 

Under Australian family law, property settlements are based on the principle of fairness, taking into account various factors to determine how property should be divided. The law does not simply split everything 50/50. Instead, the division aims to be just and equitable, which means it considers your individual circumstances.

The Steps Involved in a Property Settlement

1. Identify and Value the Property

The first step in a property settlement is identifying all the assets and liabilities that need to be divided. This can include:

• The family home (or homes)
• Motor vehicles, furniture, and personal possessions
• Bank accounts, investments, and shares
• Any business a party has an interest in
• Superannuation (which is often a significant asset)
• Debts, including loans, credit cards, and mortgages

Once the property has been identified, it must be valued. This can sometimes involve getting professional valuations for things like real estate or business interests.

2. Assess the Contributions of Each Party

The next step is to assess the contributions made by each party to the relationship. These contributions are not just financial — they can also include non-financial contributions, such as caring for children, homemaking, and supporting the family in other ways. The law considers:

• Financial contributions: This includes money earned, property brought into the relationship, and investments made.
• Non-financial contributions: These include caring for children, maintaining the household, and supporting the other party’s career or business.
• Contributions after separation: Contributions made after separation, such as maintaining or improving the family home or paying off debts, are also considered.

3. Consider Future Needs

After assessing contributions, the court will look at the future needs of each party. This involves considering various factors, including:

• The age and health of each person
• The income and earning capacity of each party
• The care of any children or dependents
• The financial resources available to each party after the settlement

For example, if one person has a higher earning capacity or if one person is the primary carer of children, they may be entitled to a larger share of the property.

4. Reach an Agreement or Apply to the Court

Once all the information has been gathered and the contributions and needs have been assessed, the next step is to reach an agreement. This can be done in several ways:

• Negotiation: You and your former partner may be able to agree on how to divide the property between you without involving lawyers or the court.
• Mediation: If direct negotiations are difficult, you can engage in mediation. A neutral third party, like a mediator, can help you both reach a fair settlement.
• Consent Orders: If you reach an agreement, you can formalise it through consent orders — legally binding agreements submitted to the court. This makes the agreement enforceable.
• Court Orders: If an agreement cannot be reached, either party can apply to the Family Court or Federal Circuit Court for a property settlement order. The court will make a decision based on the factors we’ve discussed above.

When Should You Finalise Your Property Settlement?

It’s important to note that there are time limits on when you can apply for a property settlement. In New South Wales, you must apply to the court for a property settlement:

• Within 12 months of your divorce becoming final (for married couples)
• Within 2 years of separation (for de facto couples)

If you miss these deadlines, you may not be able to apply to the court for a property settlement unless there are exceptional circumstances.

Can You Change the Property Settlement Later?

Once a property settlement has been reached and finalised, it is generally binding. However, there are limited circumstances where a settlement can be changed, such as if there is new information that wasn’t available at the time of the settlement, or if a person’s financial position changes dramatically after the settlement is made.

Why Seek Legal Advice?

The property settlement process can be complex, especially when there are significant assets or debts, or if there are disagreements. It’s a good idea to seek advice from a family lawyer to ensure that you understand your rights and obligations. A lawyer can help you negotiate, represent you in court, or assist in drafting consent orders to make sure the settlement is fair and legally binding.