Separation and Divorce in Australia – Who Gets What?
In Australia after a divorce or separation, you are entitled to get:
- Division of assets – your ‘fair’ share of the property pool, the property pool might include:
- Superannuation;
- Real property such as houses or units;
- Bank accounts;
- Stocks or shares;
- Bitcoins or other cryptocurrency;
- Businesses;
- Furniture; or
- Any other assets/ financial resources
- Full and frank disclosure of what is in the property pool (see for eg duty of disclosure);
- Other financial support if applicable such as:
- child support;
- spousal maintenance; and/or
- adult child maintenance.
Safety, peace and wellbeing, from emotional, physical and financial abuse (see for eg domestic violence applications).
Who Gets What In A Divorce Settlement Australia – What is in this article
- Fair separation or divorce settlement flow chart
- How much am I entitled to get in a divorce or separation?
- Will previous agreements be considered in the property settlement?
- What about specific terms of the binding financial agreement?
- What is the Australian family courts 5 Step approach when determining what you are entitled to get in a divorce or separation?
- What is a fair property settlement after separation?
- What is included in the total separation property pool that I am entitled to get?
- What were the contributions of each family law party?
- Should there be any adjustments for future needs?
- Overall, is it practical + just and equitable to effect the proposed divorce or separation property settlement?
- How to work out what you are entitled to get in a divorce settlement
- Property Settlement Calculator
- Separation and Divorce Property Settlement Examples
What is property settlement in divorce or separation?
Property settlement in divorce or separation in Australia refers to the process of dividing the assets, liabilities, and financial resources between the parties involved. In simple terms, a property settlement determines ‘who gets what’ in a separation or divorce. This process aims to reach a fair and equitable distribution of the couple’s property after their relationship ends. Property settlements are governed by the Family Law Act 1975 and can be resolved through mutual agreement or by a court decision if necessary.
Methods of Reaching a Property Settlement
- Mutual Agreement:
- Negotiation: The parties negotiate and agree on how to divide their property.
- Mediation: A neutral third party (mediator) helps the parties reach an agreement.
- Collaborative Law: Both parties and their lawyers agree to work together to settle the matter outside of court.
- Consent Orders:
- If an agreement is reached, it can be formalised through Consent Orders, which are approved by the Family Court or the Federal Circuit Court. These orders make the agreement legally binding and enforceable.
- Binding Financial Agreements (BFA):
- The parties can enter into a Binding Financial Agreement that outlines the division of property. This agreement is legally binding and requires independent legal advice for both parties.
- Court Decision:
- If the parties cannot agree, they can apply to the Family Court or the Federal Circuit Court to decide the property settlement. The court will consider all relevant factors and make a decision based on what is just and equitable.
Factors Considered by the Court
When determining a property settlement, the court considers:
- Justice and Equity
- The Assets and Liabilities: Identification and valuation of all property.
- Contributions: Both financial and non-financial contributions by each party.
- Future Needs: Considerations such as age, health, income, earning capacity, and care of children.
- Fairness and Equity: The overall goal is to achieve a fair and equitable distribution of property.
Time Limits for Property Settlement
- Married Couples: Applications for property settlement must be made within 12 months of the divorce becoming final.
- De Facto Couples: Applications must be made within two years of the date of separation.
What am I entitled to in a separation property settlement or divorce in Australia?
There is no cut-and-dried answer for how much of the property pool you can get when it comes to divorce and property settlement in Australia. You are entitled to what is “fair” or what is “just” and “equitable”.
To work out exactly what you’re entitled to in divorce settlements Australia-wide as well as what is just, fair and equitable, the family court adopts what is commonly known as the 5 step approach.
What is a Marriage Separation Agreement? (Australia)
In Australia, a marriage separation agreement is known as a Binding Financial Agreement (BFA). This legal documentation outlines the financial arrangements between separating or divorcing spouses, ensuring clarity and fairness in the division of assets, liabilities, and other financial matters. The agreement can cover both the period of separation and the eventual divorce.
Key Features of a Binding Financial Agreement (BFA)
- Division of Assets and Liabilities:
- Specifies divorce entitlements/ separation entitlements and how the couple’s assets and liabilities will be divided.
- Can include property, bank accounts, investments, debts, and other financial resources.
- Spousal Maintenance:
- Outlines whether one spouse will provide financial support to the other.
- Details the amount, frequency, and duration of spousal maintenance payments.
- Superannuation Splitting:
- Includes provisions for dividing superannuation (retirement savings) between the spouses.
- Child Support and Custody:
- Although BFAs can address child support, these matters are typically handled through the Child Support Agency.
- Child custody arrangements and visitation schedules are often dealt with separately through Parenting Plans or Consent Orders.
How to Get A Separation Agreement – Legal Requirements for a Binding Financial Agreement
To ensure that a Binding Financial Agreement is legally enforceable in Australia, the following requirements must be met:
- Independent Legal Advice:
- Both parties must receive independent legal advice from a qualified lawyer.
- The family lawyer must provide a statement confirming that the advice was given regarding the effect of the agreement on the rights of the party and the advantages and disadvantages of entering into the agreement.
- Written Agreement:
- The agreement must be in writing and signed by both parties.
- Disclosure:
- Both parties must make full and frank disclosure of their financial circumstances.
- Execution:
- The agreement must be executed (signed) by both parties.
Types of Binding Financial Agreements
There are several types of BFAs depending on the timing of the agreement:
- Before Marriage (Prenuptial Agreement):
- An agreement made before the couple gets married, outlining how assets and liabilities will be divided if the marriage ends.
- During Marriage (Postnuptial Agreement):
- An agreement made during the marriage but before separation.
- After Separation:
- An agreement made after the couple has separated, detailing the division of assets and liabilities.
- After Divorce:
- An agreement made after the couple has divorced.
Benefits of a Binding Financial Agreement
- Clarity and Certainty: Provides clear guidelines on the division of assets and financial arrangements, reducing disputes.
- Control: Allows couples to determine their own financial arrangements without court intervention.
- Protection: Protects both parties’ financial interests and ensures fair treatment.
Legal Considerations
- Enforceability: If a BFA is found to be unfair, made under duress, or not compliant with legal requirements, a court can set it aside.
- Changes in Circumstances: If circumstances change significantly, such as a drastic change in financial situation, either party can apply to have the BFA reviewed or set aside.
Will Binding Financial Agreements be considered a property settlement?
For an agreement to be considered in a property settlement after divorce or separation, it must be a binding financial agreement made under the Family Law Act (the act under which separation law is governed). A binding financial agreement will overwrite the court’s authority on determining a property settlement.
What about specific terms of the binding financial agreement?
It is important to note that even in the cases where the binding financial agreement is valid, it is possible for specific terms of the divorce agreement/ separation agreement QLD wide to be found void without ruling out the entire agreement (to allow for this the agreement wording should be precise). In Guild v Stasiuk, the court considered whether a financial agreement was effective in excluding the court’s jurisdiction to consider a claim for spousal maintenance.
The agreement included a clause that stated:
The wife) agrees that in the event of the event occurring (and relevantly, the event is the permanent separation), that she will make no claim for maintenance for herself and will accept the provisions of this agreement in full and final settlement of any claim for maintenance that she might otherwise have had.
The agreement also expressly stated that it was a financial agreement under section 90B of the Family Law Act and in all other manners and form complied with the requirements of a financial agreement except for the clause about spousal maintenance. As section 90E (or section 90UH for de facto) states that clauses regarding spousal maintenance are void if they fail to specify how much or whom for spousal the maintenance is. The wife argued that with no inclusion of how much the spousal maintenance is then the provision was void and the court agreed. The court found that for a financial agreement to properly exclude the court’s jurisdiction to make an award of spousal maintenance it needs either an actual amount stated or the value of the portion of the property that might be considered spousal maintenance stated in the agreement. A mere promise to not make a claim is not enough to bar the court from assessing spousal maintenance.
The lesson here is that it is essential to be aware of specific clauses, not just the general validity requirements of binding financial agreements.
How does property settlement work in divorce or separation?
The Australian family courts 5 Step approach when determining what you are entitled to in a property settlement after separation or divorce.
The Australian family court uses what is known as the 5 or 4 step approach when determining what you are entitled to when dividing property after separation (based on previous case law).
Step 1 – Is it just and equitable for a separation/divorce property settlement agreement to take place?
In some circumstances, the court may determine that it is not “just and equitable” for a property settlement in divorce or separation to occur. The court has the discretion to decide this and considers each case based on the facts and circumstances.
In circumstances where the court determines that it is not just and equitable for a property settlement to occur, the property “lies where it falls”, and each party walks away from the relationship with the assets and liabilities currently in their sole name or possession.
Step 2 – What is the property pool?
“Property pool” means the assets and liabilities of the parties and includes assets and liabilities in sole and joint names. Examples of assets and financial resources include:
- Real property (house/townhouse/unit, block of land, investment property),
- A business
- Motor vehicle/motorbike, caravan/camper trailer/boat,
- Bank account, cryptocurrency, shares and superannuation.
Examples of liabilities include:
- Loans (mortgage, personal loan, business loan)
- Credit card
- Debt to Centrelink
- Debt to the Australian Taxation Office.
What about property obtained after the date of separation or divorce?
The date final documents are filed with the court, not as at the date of separation is when the court calculates the property pool.
What about property that has been disposed of after divorce or separation?
If a party sells a property after separation, it gets added back into the pool. Therefore, it is best to determine a property settlement with your former partner/spouse as close to the time of separation as possible, and before either party purchases or disposes of any property.
Step 3 – What were the contributions of each family law party?
Once the property pool is determined, the next step is to determine the financial and non-financial contributions of each party, specifically:
- Financial contributions that each party made to the acquisition, conservation and improvement of property including:
- Initial contributions (i.e. what each party brought to the relationship); and
- Contributions during the relationship (i.e. earnings of the parties during the relationship, contributions of each party to mortgage repayments and living expenses); and
- Contributions made post-separation (i.e. what each party has paid for since the date of separation, mortgage repayments, credit card repayments and school fees).
Step 4 – Should there be any adjustments for future needs?
The next step is to assess the “future needs” of each party. Future needs include age, health, income earning capacity and care of a child/children. If the age, health, income earning capacity and care of a child/children is the same for each party, then adjustments for future needs may not be appropriate.
Step 5 – Overall, is it practical + just and equitable to effect the proposed property settlement?
Finally, the court will consider the practical effect of proposed property settlements, and whether it is just and equitable for a property settlement to occur. A solicitor will be able to assist you in determining whether your proposed or agreed property settlement is practical. In most cases, the court finds that it is just and equitable for a property settlement to occur.
Calculate how to get a fair divorce settlement
- Make a list of assets and liabilities
- Assess the initial contributions of each party
- Consider the length of the relationship
- Determine whether or not any assets or liabilities should go together or in separate pools
- Deduct the liabilities from the assets to get the total property pool
- Assess the post-relationship and post-separation contributions of each party
- Asses the future needs of each party
- Based on the above you should be able to get a rough %
What is an asset?
An asset could include real estate, cars, stocks or shares, cash accounts and anything that has value.
What is a liability?
A liability is any loans or debts that you must pay.
Separation and Divorce – Who Gets What?
Calculate the property settlement
Using the spreadsheet available here, once you have the property pool (the total of the assets minus the liabilities) multiply that by the percentage share you expect and that will calculate how much you expect to get in a property settlement.
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Divorce and Separation – Who Gets What? – FAQs
How much am I entitled to in a separation?
There is no fixed formula for determining entitlements in a separation. The court considers various factors, including the length of the relationship, contributions (financial and non-financial) by each party, and future needs. The aim is to reach a fair and equitable distribution of the property pool.
Is there stamp duty on divorce property settlement matters?
In Australia, the transfer of property between separating spouses as part of a divorce settlement is generally exempt from stamp duty. However, it is essential to ensure that the transfer is formalised correctly through court orders or a binding financial agreement to qualify for the exemption.
Who gets the house in divorce settlement?
In a divorce settlement, a house is considered part of the property pool. This means it is subject to division between the parties based on what is deemed fair and equitable by the court. The value of the house, along with other assets, will be assessed to determine each party’s entitlement.
How much does it cost to get a separation agreement?
The cost of obtaining a separation agreement can vary widely depending on the complexity of the case and the fees charged by the solicitors involved. On average, you might expect to pay between $3,000 and $10,000. It’s advisable to seek quotes from several family law solicitors to get a better idea of the potential costs.
What is the legal separation cost in Australia?
Legal separation costs can include court filing fees, legal advice, and mediation costs. These can range from a few hundred to several thousand dollars, depending on whether the separation is contested and the level of legal assistance required.
What are my rights to property after separation?
After separation, you have the right to a fair share of the property pool. This includes all assets and liabilities accumulated during the relationship. Both parties must disclose all financial information to ensure a just division of property.
What is a spouse entitled to in a divorce?
A spouse is entitled to a fair and equitable share of the property pool. This includes assets such as homes, investments, superannuation, and personal property. The court also considers each spouse’s contributions and future needs when determining entitlements.
What is my husband entitled to in divorce?
In a divorce, your husband is entitled to a share of the property pool based on contributions and future needs. This can include assets acquired during the marriage and may involve spousal maintenance if required to support his future needs.
Divorce – what are you entitled to?
In a divorce, you are entitled to a fair and equitable share of the property pool, which may include homes, savings, superannuation, investments, and personal property. The court aims to ensure that both parties receive a just share based on their contributions and future requirements.
In a divorce, what is the wife entitled to?
In a divorce, the wife is entitled to a share of the property pool that reflects her contributions (both financial and non-financial) and future needs. This may include the family home, superannuation, and possibly spousal maintenance, depending on the circumstances.
How is an investment property handled in a divorce settlement?
An investment property is part of the property pool and is subject to division like other assets. The value of the investment property is assessed, and it may be sold or transferred to one party as part of the settlement, depending on what is deemed fair and equitable. To learn more about investment property/ divorce settlement matters, contact Cudmore legal today
What is involved in the transfer of property in a divorce settlement?
The transfer of property in a divorce settlement involves legal processes to transfer ownership from one party to another. This process is typically formalised through court orders or a binding financial agreement to ensure the transfer is legally recognised and exempt from stamp duty.
What is a divorce property agreement?
A divorce property agreement is a legal document that outlines how property and assets will be divided between the parties in a divorce. This agreement can be formalised through consent orders or a binding financial agreement to make it legally binding and enforceable.
How is property division handled after divorce in Australia?
Property division after divorce Australia-wide is handled by assessing the total property pool, considering the contributions of each party, and evaluating their future needs. The court or agreed-upon settlement aims to achieve a fair and equitable distribution of assets and liabilities.
