Previously, we discussed that you could do a property settlement before you were eligible for divorce (i.e. within the first 12 months of being separated). But when are you “out of time” to finalise your financial matters?
How long do you have to do a property settlement?
The answer to this question will vary depending on whether you were in a de facto relationship or were married.
Type of relationship
Time to do property settlement
24 months from the date of separation to finalised your financial matters
12 months from the date of divorce
What if you cannot reach a property settlement?
If you cannot finalise your financial matters within these time frames then you must commence proceedings in either the Federal Circuit Court of Australia or the Family Court of Australia (or Western Australia) before this 24 or 12 month period expires to protect your interest in any property of the relationship whether held jointly or solely (by yourself or your partner).
What if you do not commence proceedings in time?
If you do not commence proceedings or come to an agreement within the relevant timeframe this complicates your matter but does not mean you are not without relief. For this reason it is very important that you and your partner are clear on the date at which you separated.
Outside time frame but reached an agreement
If you are outside of the relevant timeframes but have reached an agreement by consent then you are still able to formalise this agreement with the Court provided that both you and your ex-partner or ex-spouse consent to the Court’s jurisdiction in spite of the matter being out of time. This requirement is met by including the relevant clause in your Minute of Consent Orders which yourself and your ex-partner/spouse subsequently sign together with an Application for Consent Orders before filing in the Court. Up until last year, this option was only open to couples who were married. Thankfully, as a result of recent amendments to the Family Law Act, this option is now available to de facto couples as well.
How to settle out of court?
There are options available to both you and your ex-partner to facilitate an out of court settlement. The benefits of settling out of court are immense, not only is it the quickest and cheapest way to resolve your family law matter, it is also far less stressful as you do not have to endure the procedural technicalities and delays that come with protracted legal proceedings.
You can settle your property out of court in a number of ways, including:
1. Private negotiations: this is, preferably, your starting position when it comes to attempting to settle out of court. At this stage you and your ex-partner sit down together and discuss possible divisions of assets and liabilities. These proposals should be fair and balanced. However, for negotiations to be effective a person cannot outright reject a proposal and instead, must respond constructively with why it is rejected and provide a counter-proposal they find more favourable. If you or your ex-partner are unable to do this then it is likely your matter will not settle, at least at this stage.
2. Negotiations through legal representatives: If you and your ex-partner have attempted to settle the matter privately and have been unsuccessful, or if there are circumstances of domestic violence or if you otherwise do not feel comfortable negotiating on your own, then negotiations can occur between the parties solicitors. This can be done in a number of forms including exchanging written correspondence, organising a roundtable conference (where the legal representatives and the parties sit down together to discuss the matter and potential divisions) and by attending mediation.
3. Arbitration: Even if the above negotiation attempts have not been successful, there are still options available to the parties to avoid court including opting into the Arbitration process. Arbitration is a voluntary Alternative Dispute Resolution process. This means that unless both you and your ex-partner/spouse are agreeable to participating in the Arbitration process it cannot proceed. This process involves the parties appointing an Arbitrator, whom is generally a senior Barrister or a retired Judge. The Arbitrator considers your matter, the evidence you present and the competing offers and makes a decision. This decision is binding on both parties, and by opting into Arbitration the parties agree to accept whatever decision the Arbitrator makes. The most well-known example of Arbitration is the television show, Judge Judy.
When you are negotiating a property settlement there are things that you should absolutely consider, and other issues that cannot be included in a property settlement, including:
1. Your property agreement should deal with:
a. all assets and liabilities, irrespective of whether or not they are held jointly or solely, and irrespective of whether or not their legal ownership will be changing as a result of this agreement. All assets and liabilities should be mentioned in your agreement;
b. superannuation, including any superannuation splits (transfers of interest) if applicable; and
c. severing your entire financial relationship. The idea of a property settlement is to protect you from future claims from your ex-partner (for example if you inherit a sum of money, you can receive your inheritance without fear that your ex will ask you for a portion of it) and to achieve this you must not have any assets or liabilities left in your joint names at the end of this process. That means joint property must either be transferred into a person’s sole name or sold and family trust must be dealt with accordingly. If you still have assets or liabilities in joint names at the end of your property settlement negotiations then you have not finalised your financial relationship.
2. Your property agreement cannot deal with:
a. Child Support payments (although they can be agreed to and formalised in a way that the Child Support Agency no longer garnishes a parent’s wage);
b. Spousal maintenance payments (although, again this can be formalised in another way); and
c. amendments to your Will or other testamentary documents, this must be done separately.
Outside time frame but have not reached an agreement
But what if you are out of time and do not have an agreement? You are still able to commence court proceedings and have your matter determined by the court however you have an additional hurdle to get over now. If you are out of time, you must first prove to the Court that you or a child of your relationship will (or is) suffering financial hardship in the absence of a property settlement, you must also include a reason as to why your matter was not brought before the Court within time limitations set by the Family Court Act. Although it is not impossible to finalise your financial relationship with your ex-partner even if your matter is out of time it is more complicated, meaning it will cost you more time and money. It is, therefore, always preferable that you finalise your property matter or commence property proceedings within the relevant timeframe.
If you have any concerns regarding the time limitations and your financial matters it is best to discuss the matter with a family law solicitor to determine your options and receive advice regarding the best way forward.