What is a Family Law Property Settlement?
Updated: 30 September 2024 · Read time: 7 minutes
A property settlement in family law refers to dividing property and assets at the dissolution of a marriage or defacto relationship.
In simpler terms, it refers to working out exactly ‘who gets what’ at the end of a relationship.
The simplicity or complexity of the property settlement process can vary based on factors such as the duration of the relationship, its dynamics, and how the involved parties have managed their finances.
Typically, property settlement considers both monetary and non-monetary contributions as a standard practice.
Family lawyers specialise in property settlements, and negotiating to resolution on the matter.
When can you begin a property settlement?
The journey towards a property settlement can begin as soon as a relationship ends.
The end of a relationship doesn't necessarily mean a formal divorce; it can be separation from a de facto partner.
As soon as you decide to part ways and have separated, you can initiate the process of dividing your assets.
Is there a time limit for when the property settlement has to occur?
Yes, there is a time limit for property settlement. This is addressed in s44 of the Family Law Act, which states that:
Married couples have 12 months from the date of divorce to commence property settlement proceedings.
Defacto couples have 24 months from their date of separation.
Does the Family Court grant exemptions to these time limits?
In some exceptional circumstances, the Court may grant an exemption to these time limits. This typically involves demonstrating hardship or other significant reasons for the delay.
However, it is best to avoid relying on these exemptions where possible.
Is the property settlement process the same between married and de facto couples?
The property settlement process is the same for both married and de facto couples.
This means that regardless of whether you were married or in a de facto relationship, the principles and laws governing property settlement remain consistent.
How do you work out how to divide property?
Here's the typical series of steps:
- STEP 1: Begin by determining the value of the assets, liabilities, and financial resources owned by both you and your partner.
- STEP 2: Evaluate the contributions made by both you and your partner to the property pool. This encompasses financial and non-financial inputs, both direct and indirect, as well as contributions related to homemaking and parenting.
- STEP 3: Consider whether any adjustments should be made in your or your partner's favour, taking into account a future-needs assessment. Various factors, such as health, employability, dependents, and living arrangements, may warrant adjustments.
- STEP 4: Based on the outcomes of the first three steps, determine the fair distribution of property between the involved parties.
While the above simplifies the process into steps, things can become complex quickly when assets and contributions become challenging to measure.
Additionally, there can often be difficulty and emotion in the negotiation process.
If my partner and I agree on how to divide property, how do we formalise it?
When both parties agree on the property division, you have several options to formalise it.
Informal Agreement (not recommended)
You can make your own agreement that documents what you have agreed to, and both sign it, or even leave it as a spoken agreement.
The problem with this approach is that it is difficult or even impossible to enforce.
Consent Orders
Consent Orders are a way to formalise a property settlement without going to court.
They are agreements made by both parties that are submitted to the Court, after which they become legally binding and enforceable by a court of law.
Binding Financial Agreement
A Binding Financial Agreement (BFA) is a legally enforceable contract that outlines the financial arrangements between parties.
Is property always divided 50:50?
Property is not always divided 50:50.
See our article here on 50:50 Property Settlements.
The ratio division depends on several factors, such as the financial and non-financial contributions of each party, their future needs, and whether the division is ‘just and equitable’ as a whole.
While an even split may occur in some cases, it's not a rule set in stone.
What exactly is the "property" that has to be divided? Is it just our house?
"Property" in a family law context encompasses a wide range of assets and liabilities, not just your house.
It can include real estate, personal belongings, savings, investments, superannuation, debts, inheritances and more. Essentially, anything acquired or accumulated during the relationship can be considered as property subject to division.
Is Superannuation also divided?
Yes, superannuation is typically considered part of the property to be divided.
The process involves valuing the superannuation interests of both parties and making arrangements for a fair division.
Are debts and liabilities also divided?
Debts acquired during the relationship are also taken into account during property settlement. This includes mortgages, loans, credit card debts, and other financial obligations.
Like assets, debts are divided based on various factors to achieve a fair and equitable outcome.
What do we do if we cannot agree on how to divide property?
Firstly you are not alone. It is rare for couples to agree exactly on how to divide their assets.
If you and your former partner are unable to reach an agreement on property division, you may need to go through a more formal process.
This could involve negotiation, mediation, negotiation, or court proceedings.
A family lawyer can act to guide you on what is a reasonable way to divide property, one that is done in alignment with Australian Family Law. A lawyer can also serve to negotiate with your ex or their lawyers. A valuable part of what lawyers offer are their skills as negotiators.
I don't want to go to Court! Do we have to take this step?
Generally resolving a matter through the Court should be considered a last resort.
Many disputes can be resolved through negotiation, mediation, or collaborative law approaches.
However if you have exhausted all other options, then litigation may be the only avenue available to you. In this case you would be initiating a matter with the Federal Circuit and Family Court of Australia (FCFOA).
FAQs
Can spousal maintenance be part of the property settlement?
Spousal maintenance can be a part of the property settlement if one spouse can demonstrate that they are unable to support themselves financially, and the other party has the capacity to assist. This is determined on a case-by-case basis and considers factors like age, health, financial resources, and more.
How do children, parenting issues and parenting orders relate?
Parenting arrangements are dealt with separately to a property settlement, which is chiefly concerned with finances and assets. These issues may be negotiated, including via mediation or family dispute resolution (FDR) at the same time as the property or financial matters.
Where issues of child custody result with one parent will being the primary care taker of the children following on from divorce, this will be taken into consideration with regards to the future financial responsibilities.
Will my domestic tasks be taken into account?
Non-financial contributions, such as domestic tasks and child-rearing, are taken into account during property settlement. These contributions are valued and considered as part of the overall financial picture when determining a fair division of property.
I brought a house into the relationship. Can my ex claim any of it?
If you brought substantial assets into the relationship, your former spouse may still be entitled to a share of those assets, depending on the circumstances.
Contributions made before and during the relationship will be considered when determining a fair division.
My spouse gathered assets post-separation. Can I make a claim on it?
Assets acquired after separation can indeed be considered part of the property pool to be divided.
Need Assistance with a property settlement?
Navigating a family law property settlement can be a complex and emotive process.
At Movement Legal we deal with property settlements on a daily basis. If you would like a lawyer who specialises in this area, please contact us.
