If you have separated, or plan to do so, you will need to finalise financial matters between you.
Sometimes the separation or divorce is amicable and the parties agree on the division of assets quickly. Usually, however, the parties cannot agree – and this is understandable as these matters are complex and most will want to obtain legal advice.
Working out the asset pool is complex in itself and it may be that you are unsure of what you are entitled to or you may feel that the split is not fair. Either way, getting the right legal advice from a professional property settlement lawyers is crucial to getting the best result and what you are entitled to.
If you agree on how your family property is to be divided, it is common for parties to either enter into a binding financial agreement or obtain consent orders.
To do nothing, may mean that both former partners are left open to a later claim by the other. This can be especially problematic if a party diminishes the assets, or increases debts, in the asset pool. Hence it is always best to address the financial issues promptly post-separation.
A binding financial agreement, BFA, is an agreement which covers the division of property, superannuation and if required, spousal maintenance. A binding financial agreement is an agreement which covers the division of property, superannuation and if required, spousal maintenance. This can be a very cost effective and time effective method of formalising how the parties divide the assets. Consent orders require a more detailed assessment of the assets and debts and the future needs and financial circumstances of the separating couple. As a general rule, they have a higher degree of enforceability.
In any case, if you have been in a de-facto relationship at the time of separation, you need to address these matters within two years of separation. If you have been married, you must do so within 12 months after your divorce. BFAs require independent legal advice for each party for it to be legally binding.
Legal advice can help you determine what you might be entitled to. Sometimes our clients are surprised when they first meet with us and we make a preliminary assessment of their position – that is, the picture is often a lot more positive than they thought. This can be in stark contrast to how much their former partner or spouse is suggesting they should agree to.
The first step is for your family lawyer to write to the other party or their solicitor, if legally represented, and set out your position. This would include what you think a fair settlement would be. Sometimes, clients come to us having received a letter along these lines already and your lawyer would respond to that.
Once correspondence has begun between the parties an agreement can be worked towards or reached. It is then drafted by a family lawyer to make sure that it is legally binding.
By no means is Court inevitable. Most cases can resolve without legal proceedings or through a formal mediation. This really just depends as to “how far” away the parties are from each other in terms of reaching agreement. If the disagreement about how the asset pool should be divided is vast, and the amount of money involved is significant, this is typically when legal proceedings are commenced.
The other reason that settings are commenced in relation to property matters when the other party refuses to engage constructively or promptly and it just becomes the only practical way of moving forward. Legal proceedings will have the effect of acquiring the other party to engage properly in settlement discussions.
If the matter goes to Court, the division of assets must be assessed and determined to be “just and equitable”. It is important to remember that what one sees as fair, may not be how a court sees it. Hence, we consider that it is smart to assess at the start what may be the likely division of assets awarded by a court and use that as a basis for providing advice as to what is a likely outcome. If possible we try to achieve that outcome with minimal, or in some cases, no court involvement using other avenues such as negotiation and mediation.
The criteria in Australia that will determine a party’s claim to financial assets are as follows:
The asset pool will be comprised of everything that the parties own. All real estate, shares, trust assets, businesses, cars, boats, tools, jewellery, cash etc will form part of the asset pool. Some things are incidental, such as personal effects, but even these things may still have a value and are therefore included.
It does not matter whose name these assets are in. The Family Law Act cuts across all legal entities and captures everything in which the parties have an interest. Other interests, for example where the “asset” is not in either party’s name but in which each person has a beneficial interest in the asset (also known as constructive trust) may also be included. Sometimes when clients first come to see us, they are worried that “nothing is in their name”. However, it is irrelevant as to whose name in which the asset is registered all the assets are scooped up into the property pool and grouped together. This is not to that stay the steps can – and in some cases need to – be taken to prevent the registered owner of those assets (if they are the sole registered owner) from selling or otherwise disposing of those assets without your consent. We deal with this issue regularly.
Both financial and non-financial contributions during the relationship and the property of the relationship are relevant. The law acknowledges that different parties bring different amounts of money and other assets to a relationship. As a general rule, the longer the parties are together, the less relevant the assets that the parties owned prior to the relationship becomes. For couples who have been together for 10 years or more, it is in most cases practically irrelevant.
A usual factor that is considered is who has earned income and the extent to which that income has been applied to looking after the family. However, contributions like looking after the family by raising children and home duties are also just as relevant. On this basis, there is usually not much adjustment either way – with notable exceptions in short term relationships, where there are no children or if one party had substantial assets by comparison when entering into the relationship. All these factors will need to be weighed in the balance.
Adjustments based on future needs will often have a significant impact on how the pool of assets will be divided.
Some factors that the law considers relevant are:
These are known as the “future needs factors”.
These matters must be carefully evaluated. For instance, if one party has an illness, injury or other reason why his or her earning capacity is less likely to be as strong as the other party’s earning potential after the separation, there will probably be an entitlement to a decent adjustment in the favour of the person with less opportunity. Earning ability is one aspect in the division of property and there are different perspectives as to how these things can be assessed. Careful legal argument from your lawyer can be useful in pressing or opposing such a viewpoint on these matters.
This is an overarching principle which will be weighed by a Court having regard to the particular varying circumstances of the particular facts before it. One party may realistically need more funds immediately, while for another party (such as a party with a strong earning capacity) that party may appropriately receive assets later. Current assets could, for example, mean proceeds of the sale of a property. An example of a deferred asset of superannuation.
To discuss your particular circumstances, or if you just need help sorting out how to split your property following your separation,
Our family lawyers have helped many people through their property settlement following a divorce or separation. We understand the nuances in simpler and more complex asset divisions and can help you understand the lens the court may apply to your individual circumstances. This will help you assess you situation and resolve the matter faster.
Whether you have a simple asset division or have family businesses and more complex assets structures we can provide the highest quality family law advice.
To speak to a family lawyer call us on 1300 907 335 or, alternatively please complete the enquiry form on this page and we will respond to you promptly. All enquiries are treated as confidential.
Having a property dispute with your former partner is complicated. There may not only be children and the family home to deal with but also your business, family trusts or third party claims. Knowing the process and your rights under the Family Law Act is the important first step so that you have a full knowledge of what is needed moving forward.
While most cases will generally involve the former matrimonial home and superannuation there are often scenario’s where there is much more that needs to be considered.
PCL Lawyers is a full-service law firm and we have solicitors with expertise in commercial disputes, property disputes and leasing issues – in addition as well as family law matters. This nexus gives us a competitive advantage over purely family law firms as we can give you advice about all aspects of your case.
As a simple example, we have previously acted on behalf of a client who had a property portfolio and also a business that would be responsible for the purchase and development of land. We were able to consider not only the family law aspect of the client’s case but also point the client to an accountant who could assist in dealing with the various capital gains taxation issues arising from the sale of investment properties, held by the family trust.
No one matter is the same and our role is to assist you moving forward and helping you obtain the best outcome.