Property Settlement After Divorce or Separation
Divorce and separation are never easy. These delicate matters are often intertwined with a significant emotional load that makes the thought of rebuilding enough to send you into a spin.
The thought of property settlement and the process of dividing assets, can certainly seem like tricky terrain when you consider all the assets and liabilities accumulated before and during a marriage or de facto relationship. However, when navigated skillfully, these essential processes help to ensure a fair and comprehensive settlement that safeguards the rights of each individual in light of contributions and future needs.
You might feel over stimulated from settlement horror stories or, under prepared to move forward. Just remember, no two situations are the same and progress starts by putting one foot in front of the other.
In our opinion, property settlement after divorce or separation is easier to navigate with an understanding of:
the basics
the factors affecting property division
the steps in the property settlement process and,
The importance of legal representation
Join us as we clarify the confusion, inspire a plan of action and illuminate your path towards a safe and stable future.
The Basics
When your marriage or de facto relationship comes to an end, there comes a point where all of the property that you and your former partner own needs to be divided. You might be familiar with terms like, ‘divorce asset split’ or ‘dividing assets’, which basically refers to the fair division of property.
Property settlement after divorce or property settlement after separation, will encompass property that was brought into the relationship, acquired during the relationship and obtained after separation by each of you.
While the definition of ‘property’ is fairly extensive, it’s worth noting that it includes things such as houses and dwellings, investment properties, land, superannuation, vehicles, bank accounts, cash, businesses, shares, inheritances, trusts, gifts, insurance policies, furniture and household items.
Liabilities in the form of loans, debts and credit cards are also classified as property.
The Family Law Act 1975 (Cth) governs property division in Australia. It covers all separating couples in marriage or de facto relationships (including same sex couples).
The Family Law Act provides a framework for family law property settlement. Irrespective of whether your matter is heard in court, this framework provides a good approach for reaching just, fair and equitable outcomes.
The Factors Affecting Property Division
Generally speaking, the Family Law Act requires you to attempt to reach an agreement by using dispute resolution such as mediation, before you can apply to the Court for property orders (excluding situations such as domestic violence or cases of urgency).
Whether your matter is handled through the Court, mediation or otherwise, the general principles of the Family Law Act should be considered to finalise property settlement. While there is no set formula for dividing assets, the four factors below will be considered in order to reach a final legal outcome:
· The Property Pool – all items of property available for division between the parties.
· Contributions – those made by both parties prior to, during and after the relationship.
· Future Needs – factors influencing whether one party has greater future needs than the other.
· The Final Result – is it just and equitable?
Remember, when it comes to property settlement, every case is unique. From relationship duration to individual financial agreements (we’re looking at you “pre nups”), there are different factors that affect every outcome. While divorce and separation are not uncommon, your situation (and your result) will be different to others you may know. Let’s explore the considerations within each of the above factors and how they may impact the process of dividing assets.
THE PROPERTY POOL
As we touched on above, the “Property pool” refers to the relevant assets and liabilities, either in sole or joint names or owned by a business, company or trust. A review of the property pool and its total value is required to understand what is available for division between the parties. Documents may need to be exchanged and valuations undertaken as part of this process.
While our above list of property covers some of the more common items, know that your circumstances may require other items to be included or excluded.
CONTRIBUTIONS
Property settlement after divorce and property settlement after separation will warrant a review of the financial and non-financial contributions made by each party during the relationship. This will take into account the contributions made when entering into the relationship, during the relationship and after the relationship. These include, but are not limited to income, property, investments, homemaking, parenting and inheritances.
Family law property settlement will always review each matter holistically. In situations where contribution capacity was limited due to factors like domestic violence, the victim’s circumstances may be considered. Issues with wasting assets such as through gambling or addiction may also be considered.
FUTURE NEEDS
Weighing up the future needs of each party is important in divorce settlements and property settlements. This evaluation will take into account factors such as age, health, financial responsibilities, caregiving requirements and the ability to earn an income.
Family law property settlements will look at whether one party has greater future needs than the other. When it comes to dividing assets, these needs factors can warrant adjustment to the division of the property pool. If the factors are the same for each party, future needs adjustments may not be required.
THE FINAL RESULT
With property, contributions and future needs taken into account, it’s time to finalise the property settlement. This process involves great consideration - contrary to popular opinion, the baseline is not a 50/50 split.
Family law property settlements involve careful review of all factors to assess what division of the property pool is just and equitable in light of the circumstances. At Seacliff Family Law, we are committed to considering the practical implications of the proposed property settlement, to guide you towards a fair and reasonable outcome.
The Steps in The Property Settlement Process
We’ve been involved in enough family law property settlements to realise that it’s uncharted territory for most people. Knowledge is power and knowing the best steps in the property settlement process makes it a smoother, and often swifter one. Below are some of the crucial steps to get you started:
Identify the property pool
Once you get a sense of what is available for division, you can start formulating clear ideas about what you would like to retain or receive.
2. Get professional advice
Even in the most amicable situations, expert legal advice from a family lawyer at the earliest possible opportunity is invaluable. This support and guidance will allow you to ask questions, formulate discussion points and crystalise what a fair outcome looks like for you, before you commence negotiations.
3. Tackle the immediate issues
If it is safe to do so, you and your former partner will need to make some immediate decisions in regards to children and/or your assets and liabilities. Considering living arrangements, parenting arrangements and the payment of debts and expenses, will help to finalise an immediate plan of action so that everyone is on the same page.
While this might require some courageous conversations, it can help in reaching a temporary agreement.
4. Start dividing assets
It’s important to recognise that many people do not need to go to Court to finalise Property settlement after separation or divorce. Court proceedings should be a last resort for property settlement.
Ideally, an agreement with your former spouse or partner will help you to avoid the time, stress and cost of Court action. Of course, it is recommended that you do this alongside legal representatives.
That said, there are various avenues for property settlement after divorce or separation:
If arrangements are agreed upon, you can proceed to formalise your agreement by applying for consent orders or making a financial agreement.
If arrangements cannot be agreed upon, you can seek dispute resolution services or mediation to help work through the issues and finalise the arrangements.
If there is no progress with dispute resolution, you can apply to the Court for help dividing assets. This includes financial orders and payment of spouse or de facto maintenance. It’s important to note that in this scenario, the court has ultimate discretion in the assessment of your matter and the formulation of an outcome.
Importance of Legal Representation
Regardless of the avenue for property settlement, a family lawyers is a wise first step in gaining accurate advice and information, negotiating between parties and providing proactive mediation.
Family lawyers can help in ensuring a fair division of property – facilitating constructive conversation and determining whether your proposed or agreed settlement is just and practical.
A trusted advisor during the separation process, a family lawyer can help you to reach legal settlement, avoiding the need for stressful and costly litigation.
Understandably, property settlement involves careful consideration and evaluation of contributions, future needs, finances and familial implications. Therefore, it’s important to seek professional guidance to untangle the complexities and provide clarity. Seeking professional advice ensures that your rights are protected during this challenging time. With the right support, you can confidently navigate property settlement after separation or divorce and concentrate on crafting a new and hopeful future.
If you or someone you know is going through a separation and unsure about the property settlement process, contact our experienced legal team for guidance. Your peace of mind is our priority.