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PROPERTY & FINANCIAL SETTLEMENTS

PROPERTY & FINANCIAL SETTLEMENTS

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 assets such as 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 the children, they may be entitled to a larger share of the asset pool.


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 filed with the court. 
  • Court Orders: If an agreement cannot be reached, either party can apply to the Federal Circuit and Family Court of Australia for property orders. The court will make a decision based on the factors discussed above.


When Should You Finalise Your Property Settlement?

It is important to note that there are time limits on when you can 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)


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. Our experienced lawyers at MD Law Group can help you negotiate, represent you in court, or assist in drafting consent orders or financial agreements to make sure the settlement is fair and legally binding.

Frequently Asked Questions

Please reach us at info@mdlg.com.au if you cannot find an answer to your question.

Yes, there are strict time limits for applying for property orders after a relationship ends. If you were married, you must apply within 12 months of your divorce being finalised. If you were in a de facto relationship, you have 2 years from the date of separation.


In some cases, the court may allow applications outside these timeframes, but you will need to seek special permission and show valid reasons for the delay. It’s important to get legal advice early to make sure your rights are protected within the time limits.


When dividing property, the court follows a four-step process to reach a fair and just outcome:

  1. Identify and value the property pool – This includes all assets, liabilities, and superannuation, whether held jointly or separately.
  2. Assess contributions – The court looks at both financial and non-financial contributions made by each party during the relationship (e.g. income, homemaking, caring for children).
  3. Consider future needs – Factors such as age, health, income-earning capacity, and care of children are taken into account.
  4. Ensure the outcome is fair – The court considers whether the proposed division is just and equitable based on the overall  circumstances.


Property includes all assets and liabilities owned by either or both parties, whether held jointly or individually. This can include the family home, investment properties, vehicles, bank accounts, shares, superannuation, businesses, and personal items such as jewellery or art. Debts such as mortgages, personal loans, and credit cards are also included.


Generally, yes. Superannuation is treated as a form of property and can be split between parties through a superannuation splitting order or financial agreement. The split doesn't convert super into cash but transfers or allocates an amount to the other party’s fund.


Not necessarily. The court doesn’t work on a formula but rather what is “just and equitable” in your unique situation. Contributions (both financial and non-financial), as well as future needs (like care of children, health, and earning capacity), are considered in deciding what is fair.


Yes, and it's often encouraged. Many parties resolve property matters through negotiation, mediation, or lawyer-assisted settlement. To make the agreement legally binding, you can formalise it through Consent Orders filed with the court or a Binding Financial Agreement.


It is always best to get any agreement documented through solicitors to ensure your rights are adequately protected. 


Both parties are legally required to provide full and frank disclosure of all financial matters. If someone hides assets or fails to disclose information, the court can impose penalties or adjust the settlement to reflect the dishonesty.


Yes, inheritances can be included in the asset pool. Whether they are treated as part of the joint property pool or set aside for one party depends on when the inheritance was received and how it was used. If it significantly benefited both parties, it’s more likely to be included.


No. The court gives weight to both financial contributions (like income or property brought into the relationship) and non-financial contributions (like raising children, homemaking, or supporting a partner’s career). Both types of contributions are assessed equally.


Gifts, such as money or property from a parent, may be treated as a contribution by the person whose family gave the gift. 


Courts may also consider whether the gift was truly a gift or more of a loan. Sometimes parents provide financial support with the understanding it will be repaid. In those cases, the court may require evidence, like a loan agreement or repayments made. If it's treated as a loan, it may be included as a liability in the property pool. 


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