Most couples dread property settlements. It is usually a time-consuming and expensive process. The good news is that there are quicker and less expensive ways to achieve your property settlement goals.
In this article, we aim to give you the knowledge and guidance to choose the best path for your circumstances. We will first discuss the property settlement approach by answering a few common questions. We will then continue to discuss the different options to achieve your goal.
Your goal is simple. You want to protect your future with a legally enforceable property settlement agreement. Achieving this goal is not always that simple. Many couples make the mistake of immediately involving lawyers in their separation process. Couples often forget that the end result will be the same. It doesn’t matter if you privately agree on a settlement, or the Court imposes an agreement on you.
The end result is a legally binding property settlement. Unfortunately, many people don’t have the knowledge to choose the most effective way to achieve their goal.
If you were in a marriage or a de facto relationship, you are entitled to a property settlement agreement. Marriage is usually self-explanatory. However, it is not always that clear if you were in a de facto relationship. In simple terms, Australian law defines a de facto relationship as partners living together on a “genuine domestic basis”. You must not be married or related to each other. You can be of the same or opposite sex.
Take note: The Family Law Act 1975 does not apply to de facto relationships in Western Australia.
The Family Law Act stipulates deadlines for making property settlements.
The good news is that you can finalise a property settlement as soon as you and your partner decide to separate. You can even settle while still living under the same roof. You do not have to be “physically separated” to be “legally separated”.
No, you do not have to be divorced to finalise a property settlement. If you are filing for divorce, you don’t have to wait the required 12 months for the divorce either. The sooner you can sort out arrangements, the better. Asset values change all the time. It is therefore recommended that valuations be done as close as possible to your separation date.
Anything defined as “property” can be divided. The Family Court’s definition is broad and includes assets and liabilities. It doesn’t matter who bought the item or in whose name it is under. The property can be owned individually, jointly or by a family trust or company.
Property can include any of the following:
Take note: Debts are also classified as property. It can also be divided. It is irrelevant who incurred the debt. You need to decide who will pay off which debts. The law requires both parties to make an honest disclosure of their complete financial circumstances. Failure to do so carries severe consequences.
Valuation depends on the type of property. You can use any of the following recommendations.
Lawyers and the Court use the following 4-step process to determine what percentage you and your partner get.
It must be fair and equitable to both of you.
Now that you have more information on what you can divide and when you can reach a settlement, we can discuss the different paths you can take to achieve a legally binding settlement.
The Family Law Act recognises 4 options. All 4 achieve the same goal and are legally binding. However, there are major differences regarding costs, time and stress.
A court-imposed settlement is expensive, stressful and time-consuming. This should be your last resort. Even the Family Court/Federal Circuit Court’s website points out the advantages of reaching an agreement between yourselves. You will save time and money. You will know exactly what you will get instead of the Court deciding for you. Court proceedings can be drawn out and will add to your stress.
If however you and your partner cannot reach an agreement, you can file an application with the Court for an Order. You need to file within 12 months of your divorce becoming final. The Court will then decide after the Court Hearing.
Consent orders are written agreements (between you and your partner) that are formalised and approved by the Court.
You and your partner can agree on all your property settlements, including:
Once you have a formal written agreement, you can apply to the Court for a Consent Order. The court will approve your agreement if it is properly drafted and the terms are “just and equitable”. You do not have to attend Court.
This option still requires a court application process and the court’s approval.
Lawyers prepare a Binding financial agreement. The differences between a Binding Financial Agreement and a Consent Order are:
1. Your research and choose separate lawyers
2. Have an initial appointment
3. You need to discuss asset/liabilities, future expenses/income, and what is that you want to achieve. Your goals
4. Followed by several lawyer negotiation meetings
5. The lawyers will finalise the agreement.
6. The Family Law Act requires that you each see an independent lawyer in the process.
The most time-consuming part of the “lawyer path” is the negotiation part. If you and your partner can do your own negotiations, you will save lots of time and money. You also avoid ending up with a one-sided agreement drawn up by the “strongest” lawyer.