Family Law – Property Settlements
What is a property settlement?
A property settlement finalises and separates your financial affairs when a married or de facto relationship breaks down, so that you and your former partner can each move forward into your new and separate chapter of your lives. It determines who is to receive and retain what, and allows each person peace of mind that what happens from them on is their own.
A property settlement is intended to fairly reflect the contributions that each of you made during your relationship, adjusted to take into account the length of your relationship and your future needs.
This is definitely a complex and nuanced area of family law, and it is important that get advice specific to you and your circumstances.
Is there a Time Limit for our property settlement?
If you were married, there is no time limit until you are divorced. Once you are divorced, you then only have 12 months to apply 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.
These are firm timeframes, and you can lose your rights if you miss these deadlines.
When do we need to do our property settlement?
Experience has shown us that in most circumstances early action is simpler and less expensive. There is no “too soon” rules with a property settlement.
Things often become more complicated over time, as you and your former spouse will make more changes in your lives, including potentially entering new relationships, making new purchases and changing employment arrangements. One example we see often is that if you were to save diligently since your separation, you 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.
How do we work out what is fair?
The first step is to create a list of all of the assets and debts of both parties.
This list isn’t just the “joint” assets and debts. This includes superannuation interests of each party. The list should include everything in your name, everything in your former spouse’s name and everything in the name of any company or trust that you or your former spouse control. It should include the full position of both parties, even if you have agreed not to divide a particular asset. It is important that this list includes everything, because it is only with full knowledge of real financial position that you can make decisions about the overall outcome.
The next step is to consider what lawyers and the Court call the contributions. This is a review of how you got to the financial position you are in. The longer your relationship, the less direct impact these issues have. This is because over time, there are so many decisions that have been made along the way that it is unlikely that any asset has been truly kept separate during a long relationship.
The usual review includes:
- 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)
- the contributions that have been made since separation by each party.
The final step is an assessment of the future needs of both parties. This involves the review of a long list of factors set out in the Family Law Act, which are broadly speaking, assessing a comparison of earning capacity.