Both married and de facto couples now have the same legal protection, and it is good to see our laws in line with the society we live in on these issues.
As with all family law matters, the law is specified in the Family Law Act, and it is this Act that dictates which factors the Court will take into account. You can begin your homework now, by looking through property settlement sections of the Family Law Act. These sections take you through the factors that our Courts and our Judges must take into account.
What is a property settlement?
In essence, the objective for a property settlement is to finalise your joint financial affairs so that you and your former partner can each move forward into your new and separate chapter of your lives.
A relatively clear process has been determined by the Court. It will involve firstly creating a clear list of all of the assets and debts of both parties and then taking these things into account:
- the initial financial contributions that each of you made (what each of you brought to the relationship)
- the contributions you made during your relationship (both financial contributions and non-financial contributions)
- your future needs (this involves a long list of factors that are essentially assessing a comparison of each individuals future earning capacity).
A common mistake we see is to focus on “the house”. A property settlement must deal with all of your assets and debts. That means everything in your name, everything in your former spouse’s name, and everything in the name of any entity that you or your former spouse control must be disclosed and considered. Don’t forget to include superannuation entitlements.
A property settlement is intended to fairly reflect the contributions that each of you made during your relationship, adjusted to reflect your future earning capacity.
Get advice specific to you.
It is very common to require a Court Order or a Binding Financial Agreement to cement your arrangements and prevent future disputes.
Is there a Time Limit for our property settlement?
This is the one area where the law remains different for married couples and de facto couples. There is no “too soon” with a property settlement, as the Family Law Act specifically provides for agreements that take place while people are still together (think pre-nuptual agreements).
However, if you were married once you divorce you only have 12 months to bring an Application to the Court.
If you were in a de facto relationship, you only have 2 years from the date that you separate to bring any application for Court Orders.
Experience tells us that early action is simpler and less expensive.
As time passes, you and your former spouse will make more changes in your lives, including entering new relationships. One example we see often is that if you were to save diligently during your separation, you would find that you would have to disclose those savings to your former partner. The dynamics of new relationships can make negotiations more difficult and memories of important financial details fade.
We have agreed. What do we do now?
If you reach an agreement, then that agreement can be made a Consent Order or a Binding Financial Agreement. It can be difficult to predict which document will end up being the best fit, and so we usually recommend that this final decision is left until your agreement has been reached. Focus on reaching your agreement first, then worry about which type of paperwork suits your circumstances.
A Consent Order is one that is made by a Judge after considering an application that is made by paperwork only. No one goes to Court for an Application for Consent Orders. The Court will analyse each application, and will only approve the Orders if they are satisfied that they are fair and equitable, complying with the factors set out in the Family Law Act.
A Binding Financial Agreement is an alternative to a Consent Order. It allows a private agreement to be entered into between yourself and your former partner. Each of you will need to engage a lawyer and receive sufficiently detailed advice from that lawyer and have a specific legal advice certificate signed. The requirements of a Binding Financial Agreement must be precisely met.
Bring your agreement in, and we will review it with you. It is important to check that all relevant assets and debts have been dealt with.