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Property Settlements

When trying to reach a fair property settlement agreement, it can be daunting trying to go it alone.

What is a Property Settlement?

A property settlement is a complicated area of law determining how property should be split between two parties after a relationship. It’s often described in percentages, for e.g. 50/50 or 60/40. In Australia, there is no requirement of a 50/50 split. A skilled family lawyer will, except in exceptional cases, be able to advise you of a fair settlement based on the order a court might make within a tolerance of about 10%.

Know your worth

Cudmore Legal works to ensure you understand all of your options including the advantages and disadvantages of any property settlement before you sign it.

What is the four step process?

The four-step process describes how parties should approach a property settlement based on how a court would decide the matter.

Click on each of the below steps to learn more

Step one – identify and value the net property

The first step is to determine the property pool. What do you own? What do they own? What do they own together? Are there any companies or family trusts? This might include cars, houses, shares, superannuation and valuable property.

Then look at your liabilities, do you have credit cards, personal loans, mortgages?

Also consider if one party has wasted or spent money on such things as gambling or the purchase of gifts for third parties this money may be added back into the pool of assets.

It is good to look at tax implications at this stage, including CGT or GST.

Step two – identify the contributions

Contributions can be made initially when the parties first get together, during the relationship or post separation.

They aren’t just financial; a contribution can include non-financial contributions like work performed on the house or even being an artist’s muse. Other contributions include care of the family including home maker or parent will also be taken into account and weighed appropriately.

Step three – section 75(2) factors

The court will look at the parties needs after the relationship finishes. The court will particularly look at how the parties will support themselves and whether the marriage or relationship has affected them getting work. Some of those factors are listed below:
(a) Age and health;
(b) Income, property and financial resources and physical and mental capacity for
employment;
(c) Whether party has care and control of children;
(d) Financial commitments necessary for support;
(e) Responsibility to support any other person;
(f) Eligibility for pension or superannuation;
(g) The standard of living reasonable in the circumstances;
(h) How maintenance might increase earning capacity;
(i) Effect of order on creditor’s ability to recover;
(j) Contribution to income and property;
(k) Effect of duration of marriage on earning capacity;
(l) Protecting a party who wishes to continue the role of parent;
(m) The financial circumstances relating to cohabitation with another person;
(n) The effect of the terms of an order proposed under s 79;
(na) Child support commitments or receipt;
(o) Any fact that justice dictates be taken into account;
(p) and (q) The terms of a financial agreement.

Step four – just and equitable outcome

Most parties having a sense of a fairness and the majority of property settlements occur either without formal agreement or with readily negotiated consent orders.

It is not uncommon, however, for a party to be excessively generous out of guilt or a party feeling wronged to be unreasonable. It’s for both parties benefit that they feel the settlement is fair, unfairness will likely result in resentment which can hurt relationships with children or leave one party feeling bitterness over the result which can make it hard for either party to move on.

Are there any time limits?

Time limits do apply in property settlements. For de facto relationships, proceedings must be instituted within 2 years of separation. If the parties are married they must serve any application within 12 months from the time a divorce order becomes absolute. There are exceptions to the time limits including seeking leave from a court or having both parties to a marriage consent.

What is property?

Property includes assets and liabilities that are owned individually, with another person or by a family trust or family company.  Generally, the courts view as property anything that is a financial resource.

What happens with smaller items?

Smaller items can make up the property pool if both parties agree on the value. If the parties do not agree on the value then an independent valuation can be sought, however this is usually reserved for items of significant value. The court is generally not interested in entertaining about items of little or no value.

What if everything is in my former partner’s name?

It will still form part of a property pool regardless of whether the property is owned in joint names or owned by one party only. It may also form part of the property pool in certain occasions if it is owned by trusts, companies, partnerships or other corporate entities.

What is a property settlement?

A property settlement describes the process of determining who gets what in the property pool. Once that has been decided you can choose to enter into a Binding Financial Agreement or Consent Orders.

What if we haven’t been together for very long?

If you have only been together for a short time but still meet the requirements of marriage or de facto relationship status. It might be best to look at the property on an asset by asset basis rather than a pool.

Can one party sell the house even if the other party doesn’t agree?

If the house is owned jointly you will need both parties to consent to the sale, the only way a party can be forced to sell is through court order. If a house is solely owned you should be careful the other party doesn’t sell it secretly. You may need to put a caveat on the property.

What if everything is held in a company or trust?

Often families will have a family trust or hold assets in a company name. This does not mean they aren’t considered part of the property pool. Certain rules exist as to when property held by a trust or company may be transferred to the other party. These rules are complex and it’s best to seek legal advice early.

What is a Financial Agreement?

Financial Agreements can be made under the Family Law Act and deal with all aspects of division of the parties’ property including superannuation interests. You can make a Financial Agreement before you are married, while you are married or after you get divorced. A number of formal requirements need to be met in order for it to be a valid and binding Financial Agreement.

What are Consent Orders?

A Consent Order is no different to an order made by a judge but is done with the consent of the court and all parties involved. The parties may not need to attend court if they file an Application for Consent Orders.

For an Application for Consent Orders to be approved, the court must be satisfied that the orders are just and equitable. In some cases, it may then be necessary to file further information setting out why parties have agreed to the terms as they appear.

Should you choose a Financial Agreement or Consent Orders?

Whether you should have a Financial Agreement or a Consent Order depends on your situation.

There are a number of reasons you might choose a Financial Agreement. You might be out of time, the agreement might not be just and equitable or you might simply want the agreement to be confidential between the parties.

Both Consent Orders and Financial Agreements that meet the requirements of the Family Law Act are binding on the parties. However, it is much easier to enforce Consent Orders than it is a Financial Agreement. Breaching court orders can have serious consequences.

It is best to discuss with your lawyer what is right for you.

How is superannuation dealt with in family law?

Superannuation is treated as property it can be divided between the parties after the breakdown of a marriage or the breakdown of a de facto relationship. Superannuation interests can be divided via:  court order; or  a superannuation agreement (either stand-alone or part of a financial agreement).

What if we have already agreed?

If you have already reached an agreement before seeing a lawyer, the lawyer will have a role to property formalise your agreement, or help you conduct transfers of superannuation or property.

In these cases, the best way to formalise the agreement is usually by way of consent orders filed in the closest registry of the Family Court or Local Court but the parties can also enter into a financial agreement if they choose to.

It’s important to note that the application for Consent Orders requires parties to swear they “have no interest in property, superannuation, or a financial resource which is not described in the application.

Financial agreements also require disclosure and a financial agreement may be set aside if there was non-disclosure of a material matter.

It is important to always make full financial disclosure in a family law property matter.

What are some options for dividing individual assets?

A property settlement will outline how the property is being divided up amongst you. There are a number of options for dividing your assets including:

Buyout

One partner can pay the other for his or her share of an asset. Usually this happens with the family home. One party can pays the other for an agreed-upon percentage of the value of the equity of the home and continues living in the house.

Selling the assets

One partner can pay the other for his or her share of an asset. Usually this happens with the family home. One party can pays the other for an agreed-upon percentage of the value of the equity of the home and continues living in the house.

Divide the assets

This works where one party values certain assets much more than the other. One party may keep the family home, the other may agree to keep an investment property.

How is a property settlement matter run?

It’s important to try and keep the property settlement out of court. Litigation is expensive and can be harmful to the relationships around the parties. However it is best to comply with pre-action procedures even if you have no intention of taking the matter to court.

What are pre-action procedures?

They are procedures which set out what parties should do before taking the matter to court, it is considered best practice to follow them as it control costs and if possible resolve disputes quickly.

These are the pre-action steps to be taken:

Step 1

Invite the other parties to participate in dispute resolution. This may include participating in negotiation, conciliation, arbitration and counselling. It is here where most matters are resolved.

Step 2

If the mater does not resolve or one party refuses to participate in dispute resolution. Then you can give the other person written notice of intention to start a case in court. This written notice should set out the issues in dispute, an offer and a nominated time to reply.

Step 3

The other party must reply to the notice of claim within the nominated time. If there is no reply the obligation to follow pre-action procedures is now completed. The reply should include a genuine counter offer to resolve the dispute.

Step 4

If an agreement cannot be reached after reasonable attempts to resolve it then either party can commence proceeding by filing an Initiating Application in either the Family Court or in the Federal Circuit Court.

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Summary
Property Settlement
User Rating
5 based on 1 votes
Service Type
Property Settlement
Provider Name
Cudmore Legal,
Level 5, Toowong Tower, 9 Sherwood Rd,TOOWONG,Brisbane-4066,
Telephone No.(07) 3317 8346
Area
Brisbane
Description
Cudmore Legal is a boutique Brisbane family law firm with offices in the Brisbane area at Toowong and Aspley.