When it comes to property settlements and separation, there are some key facts you should know before making any quick decisions.
When your relationship ends, it can be a stressful time, often because your finances and assets will need to be divided as part of the divorce settlement. Getting divorced legally and splitting your property are treated as separate processes and have their own timelines too.
Here’s what you need to know about property settlements when you separate.
What Is a Property Settlement?
In a nutshell, a property settlement is the legal splitting of all assets following a divorce or a breakdown in a de facto relationship.
Apart from being an extremely emotional process for both parties, it can also develop into a most complicated and sometimes hotly-contested process.
Are Property Settlements And Separation / Divorce Treated Separately?
Absolutely. Divorce means a couple are legally separated and free to remarry, where property settlement is the agreement reached between the two parties (or Orders imposed by the Court), defining the terms of the division of their property, after their relationship has broken down.
A property settlement can be drawn up at any stage of the relationship, and without even applying for a divorce.
Property settlements can also be finalised before your divorce is legally granted.
Is There a Time Limit to Commencing The Property Settlement Process?
Married couples wishing to file for a Consent Order to the Court, must do so within 12 months of the divorce being finalised.
De facto couples have to apply within 24 months from the date of separation.
All divorcing or separating couples are, however, strongly advised to sort out their property settlements as early as possible.
What Is Property?
Property is defined as all assets and liabilities owned by both parties, regardless in whose names they are registered. It could include the family home or any other property, businesses, cash, investments, shares, insurance policies, movable assets such as vehicles, jewellery, as well as inheritances, trusts and superannuation. Debt includes mortgage loans, credit card and any other personal debt.
How to Work Out Your Property Settlement After Separation
This is usually the tricky part in most divorces. If you have previously drawn up a Binding Financial Agreement (BFA) before or during your marriage or relationship, things can be so much simpler and a lot less costly.
If no BFA exists, it’s not the end of the world as both parties can still enter into discussions and negotiate a settlement, either with the help of a local divorce lawyer or through mediation.
Although there are no exact hard and fast rules as to who gets what, Australian Family Law provides certain guidelines, aiming to achieve an outcome that is fair and equitable to both parties and meets the individual needs of each family. Fair and equitable, does not necessarily mean that everything will be split on a 50-50 basis.
Whether negotiating through lawyers or mediation, both parties are urged to agree on as many issues as possible, paving the way for a smoother negotiating process, leading to a settlement that is acceptable and liveable for them both.
Is A Property Settlement Legally Binding?
There are three ways of reaching a property settlement.
The first option is an “informal agreement” which can be agreed upon by both parties without involving lawyers or mediators. That may sound to be the cheapest option, but unfortunately it’s not enforceable by the Court. This could mean that you may still end up in Court in the future, if your ex decides to renege on any point of the agreement, even though you may seem to be divorcing in relatively good terms. To avoid that from ever happening, you can apply for a Consent Order or draw up a Binding Financial Agreement.
A Consent Order can be negotiated and drawn up with the help of a family lawyer or mediator and submitted to the Court for approval. This is probably the safest and least costly way in reaching a property settlement that is enforceable by the Court, giving both parties financial peace of mind.
A Binding Financial Agreement is also enforceable by the Court, but each party will need to seek legal advice from their own lawyers, potentially making it a longer and costlier option than obtaining a Consent Order through mediation.
Using Mediation For Property Settlement
There is no doubt that striving to reach a property settlement in a divorce can be a most emotional exercise, no matter how amicable the separation may seem. Couples are faced with the daunting task of evaluating all their assets and liabilities and dealing with even more complicated matters like calculating superannuation values. All this, while trying to decide who stays in the home, who goes where, who looks after kids and who pays for what, can make the whole exercise a most stressful event for the entire family.
It therefore makes good sense for both parties to seek professional help and at least know exactly what their legal rights are. Using a mediator to negotiate a property settlement after your separation is by far the quickest, safest and least stressful and costly option for both parties.
Mediators can offer guidance to both parties, without ever taking sides or pressurising them to accept any term they do not feel comfortable with. They remain impartial, focusing only in assisting both parties to reach an amicable settlement that meets the needs of the whole family.
It may be reassuring to know that the vast majority of divorces in Australia are settled through family law mediation.
Got a question about property settlements and separation? Want to work out what split of assets you might be entitled to following your separation?
Get in touch with our family lawyers in Perth at Hickman Family Lawyers now and speak to us about your property settlements and separation.