Property Settlement

There is no presumption that property should be divided 50/50 when a married or de facto couple separates. Instead, the law assesses the following factors:

  • Identify all of the current assets and liabilities of the parties. Assets include the family home, investments, bank accounts, vehicles, business assets, superannuation and the like. Liabilities include the mortgage, personal loans, credit cards, hire purchase debts, taxation liabilities and such. Regardless of whether you or your ex-spouse is the registered owner of the asset, it is all included for purposes of property settlement.
  • Identify the contributions that each person has made to the growth of the parties’ current assets. Contributions can be both financial and non-financial. Contributions to the welfare of the family are relevant. Contributions made at the start of the relationship are factored in, e.g. one person owned a house at the start and sold it to pay for the deposit on the family home. Contributions during the relationship are also considered, e.g. an inheritance. Sometimes contributions after you have separated are also relevant, e.g. one person has maintained the family home and made all of the mortgage payments.
  • Consider whether either person has greater future needs based on their age, health, primary care of children, income earning capacity or financial resources. In terms of what the law considers to be “fair”, these factors will often warrant an adjustment of property division to the person who has greater future needs.
  • Based on the particular circumstances of the parties in terms of their contributions to the asset pool and the parties’ comparable future needs, what is a fair division of the current assets and liabilities?

There are three ways to have a legally binding property settlement. All three options will allow you to receive an exemption from paying stamp duty if you are wanting to transfer the family home into your own name as part of the property settlement. All three options will also allow you to split superannuation from or to your ex-spouse:

  • Consent Orders are usually the cheapest and quickest way to finalise property settlement. Consent Orders are made by a Registrar of the Family Court ‘on the papers’, meaning that you don’t have to go to court in person. You will need to complete an Application for Consent Orders, which details both parties’ information, the proposed division of property and which briefly addresses the parties’ relative contributions to the net asset pool and the parties’ future needs (these are known as ‘justice and equity’ factors in legal-speak). You will also need to complete Minutes of Consent, which are the formal orders you are asking the court to make. Neither person needs to have a lawyer to make Consent Orders. Usually though, one person will have a lawyer to draft the Applicant and Minutes of Consent, which can be difficult for a non-lawyer to write correctly. Provided the Registrar is satisfied that the documents are correct and that the proposed division of property is just and equitable (i.e. fair) the Consent Orders should be approved by the court and can then be implemented.
  • A Financial Agreement is essentially a contract between you and your ex-spouse, where you agree to opt-out of the court’s jurisdiction for your property settlement. Some people also call it a Binding Financial Agreement or BFA – it’s one and the same thing. The terms of property settlement do not need to be ‘fair’. In fact, this is one reason why lawyers will propose a Financial Agreement over Consent Orders – because the proposed settlement manifestly favours one person and Consent Orders on the same terms would not likely be approved by the court. Because you are opting out of the court’s jurisdiction, both parties must receive independent, specific legal advice prior to signing the agreement, and each person’s lawyer must sign a certificate that to that effect. If you don’t have this, the agreement will not be considered valid and binding.
  • If you and your ex-spouse are not able to agree as to property settlement, your available option is to make an Initiating Application in the Federal Circuit Court stating the property orders that you are asking the court to make. You are essentially asking a judge to decide on your case, based on the law. This can be a lengthy and costly process, however the vast majority of applications started in court settle before going to a final hearing. Usually, having to meet the court’s imposed timeframe and process can provide enough motivation for people to reach agreement along the way. Such agreement can then be documented in Consent Orders.
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