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  • Writer's pictureSianne Way

PROPERTY SETTLEMENT

Updated: Nov 3, 2022


Authored by: Sianne Way SENIOR ASSOCIATE | +61 0431 276 197 | sianne.w@juluislawyers.com.au


Introduction


The law for both married couples and those who were in a de facto relationship is set out in the Family Law Act 1975. Due to the many complexities and considerations surrounding property settlements, parties to a former relationship often require the expertise of a lawyer specialising in this field.


In Australia, divorce is a separate process to financial proceedings.


What is Property Settlement?


Property settlement is an arrangement made between parties to divide assets, liabilities, and financial resources when parties to a relationship separate. There is no presumption that property will be divided equally between the parties to a relationship. Each case is determined on the parties’ individual circumstances.


A de facto couple has 24 months (2 years) from the date of separation to make a property settlement. A married couple has 12 months (1 year) from the time their divorce is finalised to make a property settlement. Whilst rare, the Court may grant an extension of time in exceptional circumstances, for example, where there would be hardship to the party or a child of the relationship.


Parties have four options, when splitting their property and finance.


1. a non-legal arrangement

2. a binding financial agreement

3. consent orders

4. litigation


Deciding between these options is a matter for the parties, and the best course of action will depend on what the parties want to achieve and their individual circumstances.

Before any application to the Court is considered, the parties to the relationship must provide each other with full financial disclosure and make reasonable attempts to resolve the matter.


A non-legal arrangement

Where separation has been amicable and there is confidence that the parties will maintain a constructive relationship, making an agreement without the Court’s assistance will save time and money. Parties may also be able to preserve some sort of relationship with each other which limit any further disputes. That said, it may be beneficial seeking advice from a lawyer, to ensure the parties interests are best catered for and that any arrangements are “fair and equitable” which is what the Court will consider if the parties want the arrangement finalised in a Consent Order.


Consent Orders

Again, where there is an agreement, it is possible to apply to the Court for Consent Orders. To obtain consent orders from the Court, the parties must file an application and a draft of the orders they seek. The application lengthy document which must include detailed information about the parties’ finances in order inform the registrar what the agreement is all about. The actual orders must be clear, precise, not open to misinterpretation and are capable of being implemented.


Further, before any order is made, the Court must be satisfied that the agreement reached is “fair and equitable” to both parties, failing which requisitions made be made.


Binding Financial Agreement

A BFA is a private deed or a private contract that parties may enter which does not need to be approved by a Court. For a BFA to be valid, it must comply with certain formalities and each party must obtain independent legal advice from a solicitor and each solicitor will be required to sign a statement to this effect.



What is “property?”


“Property” is defined in the Family Law Act 1975 as being:


(a) in relation to the parties to a marriage, means property to which those parties are, or that party is entitled, whether in possession or reversion; or


(b) in relation to the parties to a de facto relationship means property to which those parties are, or that party is entitled, whether in possession or reversion”.


Property, such as a home or motor vehicle, is easily identified. However, other types of interests may be more difficult to categorise, such as long service leave entitlements of an employee or the interests of a beneficiary of a trust.


Whilst the Family Law Act 1975 requires the court to alter the interests of the parties in the property, it also requires the Court to consider (among other factors), the parties’ financial resources. Interestingly, however “financial resources” is not defined in the Family Law Act 1975.


The Court has consistently applied a broad practical test in determining what is property for the purpose of the Family Law Act 1975 when making decisions as to property settlement.


How does the Court make decisions about property settlement?


There are 2 possible judicial approaches to the assessment of the entitlement of the parties to property under the Family Law Act 1975 — the global approach and the asset-by-asset approach.


  • The global approach involves the division of the parties’ assets on an overall proportion of the global view of the total assets.

  • The asset-by-asset approach involves a determination of the parties’ interests in individual items of property.


The Court cannot make a property settlement unless it is satisfied that, in all the circumstances, it is “just and equitable” to make the order. When hearing a case about property matters, and when deciding if an agreement reached outside of Court by parties to a relationship is fair, the Court will:

  • Identify and value the net property (legal and equitable) interests of each party; and

  • Consider the direct and indirect, financial, and non-financial contributions (such as salary, care of children and homemaking) made by or on behalf of each of the parties; and

  • Consider whether an adjustment should be made when considering the future needs of the parties (such as, care of children, health, financial resources, ability to earn); and

  • Consider whether the result reached is a just and equitable in all the circumstances.

Summary

Property Settlements can be complex; LGee & Julius Lawyers can provide advice and prepare your property settlement.

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