Ending a marriage or de facto relationship has many consequences – emotional and financial – and the process of asset division is often both.
Dividing assets is a key step in the process after a separation, and it can be complex, particularly where there are financial orders for one party to pay child support or spousal maintenance payments.
The Family Law Act calls for “just and equitable” property division, and the solution will depend on your financial circumstances. To minimise stress while navigating the legal processes involved in dividing assets and making financial arrangements, it’s wise to seek legal advice from family law experts.Below, we’ll outline the key legal steps involved in the process of divorce property division so that you and your former spouse can divide assets equitably without undue stress or insurmountable legal fees.
Key takeaways (TL;DR)
- The Family Law Act sets out the requirement for equitable property and asset division after a separation or no-fault divorce.
- Beyond direct financial contributions, the division of assets and financial resources should take into account non-financial contributions such as child rearing and homemaking.
- When it comes to property division, making financial arrangements, and drawing up financial documents, it’s wise to seek legal advice from an experienced family lawyer, particularly if the matter escalates from mediation to arbitration and beyond.
Understanding Property Settlement
What is property settlement?
In short, property settlement is a process that facilitates the division of assets and liabilities between separating partners.
In any de facto or divorce settlement, the goal is to reach an equitable division of assets that considers factors such as financial contributions made by each party as well as future needs.
When does property settlement take place?
It’s a common misconception that property settlement must take place immediately after separation.
In Queensland, married couples have 12 months from the date the divorce is finalised to apply for property settlement, whereas couples in a de facto relationship have two years to apply.
Why is legal advice essential?
Most couples going through separation or divorce seek legal advice from a family lawyer to understand their individual rights throughout the process of dividing property.
As each case is unique, no one can tell you and your former spouse how to divide assets. Seeking independent legal advice as early as possible will help with the asset division process and potentially make it possible to resolve the matter without going through the family court system.
Step-by-Step Guide to Property Settlement
Full financial disclosure
In property settlement cases, both parties involved must disclose all the assets owned, as well as liabilities and financial resources.
While a summary of all the assets in a marriage must cover all personal property and financial resources, liabilities include business loans, credit card debt and any other debts.
As this step is crucial to fair property settlements, penalties may apply for non-disclosure.
Identifying and valuing assets
During the property valuation process, assets can be classified into a number of categories:
Real estate
It goes without saying that the family home is one of the largest assets divided in a divorce, and the most significant focus in property settlements.
Where the division of assets like the family home are concerned, a third-party valuation can help to ensure that all financial contributions are accounted for.
Superannuation
Beyond the marital property, superannuation benefits are likely amongst the most significant assets divided in a divorce settlement.
This is particularly important in cases where one party had greater earning capacity than the other party, often as a result of being the primary caregiver of children, particularly when it comes to assessing future needs.
Financial investments
For the purposes of asset division, the asset pool also includes financial contributions to businesses, stock investments, or other similar assets that must be divided in a divorce.
Personal Property
In a marriage, personal property often becomes community property, and must be divided in the divorce settlement process.
Considering contributions
You and your former partner both contributed to your relationship in a number of ways, whether through direct financial contributions, non-financial contributions, or a combination, and it’s important that this is recognised appropriately.
Financial contributions include assets such as property and income, whereas non-financial contributions include unpaid work like homemaking and child-rearing, which often impact earning capacity.
The family court assesses these contributions carefully to determine a fair division of assets.
Assessing future needs
A fair legal property settlement should consider each spouse’s financial circumstances and future needs; for example, their age, health, earning capacity, and financial responsibilities, such as primary caregiving for children.
In a divorce settlement, whether the matter goes to court or not, the asset pool may be adjusted in accordance with these needs.
Negotiation and mediation
In many cases, family law matters can be resolved without going to court through processes such as mediation, collaborative law, or arbitration.
Mediation is a structured negotiation process run by a mediator. In a similar vein, collaboration law involves working with a team of professionals outside of the immediate legal team to reach the best outcome
In cases where mediation proves ineffective, arbitration presents an alternative solution, in which an arbitrator decides an outcome to the dispute.
In any case, methods of negotiation and mediation can help to shorten the divorce settlement process, saving time, stress, and legal fees.
Going to court
Navigating divorce settlements can be a messy process, particularly where there are multiple assets involved, from the family home to investment properties and mutual funds in shared bank accounts.
If you have attempted mediation outside of court and been unable to reach an agreement, the next step is to begin a period of separation and apply for a divorce.
If the application is successful, you may engage a divorce lawyer and go to family court.
The court has power to impose a settlement, including legally binding financial agreement or consent order.
Generally, once the outcome has been decided, family lawyers draw up legal documentation to finalise divorce settlements.
Common Questions About Property Settlement
How long does property settlement take?
The usual timeline for property settlement is anywhere from a few weeks to a few months.
There are several factors that can extend this timeline, such as asset complexity, which affects how the asset pool is to be divided in a divorce. It will also take longer if there are disputes between former partners.
Will we have to go to court?
Many settlements can be resolved amicably, without court intervention, through negotiation or mediation. However, if you cannot reach an agreement on the division of financial resources, the next step is to speak to a family law specialist, a road which may lead to family court.
Freedom Family Law CEO Suzanne Stannett says the most important role of a family law specialist is to consider all the circumstances at play in the dissolution of the relationship before taking the matter to Family Court.
“When we’re dealing with complicated asset division matters, understanding all aspects of the financial relationship is critical. This ensures that in a divorce settlement, we see financial agreements enacted and assets divided in a way that respects both parties’ financial and non-financial contributions.”
How is superannuation handled?
Superannuation benefits are a key asset which is often considered separately from the general asset pool.
In Australia, superannuation can only be split by court order or with a binding financial agreement from both parties, and each party must receive an equal share.
Superannuation benefits can also be included; however, if one party has superannuation overseas, it is considered a financial resource.
What happens if my ex-partner hides assets?
If one party attempts to conceal assets, including personal property, there are various legal routes available to you.
For example, you may opt to have your divorce lawyer investigate financial documents or arrange a property adjustment to achieve a more equitable division of assets.
If your ex-partner is hiding other assets, legal consequences may include a re-evaluation of property settlement or a variety of penalties or fines.
Do we need a binding financial agreement?
A binding financial agreement (BFA) is a legally binding document that outlines the division of assets in the event of a relationship ending.
Binding financial agreements are recommended in relationships in which one party has more money, property or assets than the other party to ensure that the division of assets is equitable under Australian law.
However, like most financial orders, a BFA is most effective in protecting your financial resources when enacted at the beginning of a relationship.
Final Thoughts
Even in a no-fault divorce under civil circumstances, property division can present a challenge.
Having an experienced family lawyer to help navigate the legal processes and ensure that you and your former partner are able to divide assets and financial resources equitably.
When you’re ready to consult a divorce lawyer, the team at Freedom Family Law is on hand to offer support throughout the financial settlement process, and to ensure that all significant assets considered marital property are divided in a way that recognises direct and indirect financial contributions.
As divorce law experts, our family lawyers understand that every marriage and de facto relationship is unique, demanding tailored legal assistance, including independent legal advice and a considered financial separation process.
To find out more about how we can help you navigate the process of financial separation and have your assets divided equitably, give us a call on 1300 365 108.