Property Settlement

When Separated Couples Agree on Property Settlement

In some cases, separated couples can come to an agreement on how to divide their assets. If this is the case, it’s common to enter into a binding financial agreement (BFA) or obtain consent orders. A BFA is a cost-effective and time-effective way of formalising the division of assets, including property, superannuation, and spousal maintenance. Consent orders, on the other hand, require a more detailed assessment of the assets and debts, as well as the future needs and financial circumstances of the separating couple. Both require independent legal advice for each party to be legally binding.

What if There’s No Agreement on Property Settlement?

If the separating couple cannot agree on how to divide their assets, legal advice can help determine what each party may be entitled to. It’s important to note that preliminary assessments often reveal a more positive picture than what clients may initially think, and can be a stark contrast to what the other party is suggesting. In these cases, the first step is for the family lawyer to write to the other party or their solicitor, if legally represented, and set out the client’s position. Once correspondence has begun, an agreement can be worked towards or reached and then drafted by a family lawyer to make sure that it is legally binding.

Is Going to Court Inevitable?

Going to court for a property settlement is not inevitable, and depends on the other party, and what, if anything, you are each willing to compromise on. 

While going to the Federal Circuit and Family Court is not always necessary, legal proceedings may be commenced if there is a vast disagreement about how the asset pool should be divided, or if the amount of money involved is significant. Legal proceedings can also be commenced if the other party refuses to engage constructively or promptly, and it becomes the only practical way of moving forward. In these cases, legal proceedings have the effect of requiring the other party to engage properly in settlement discussions.

What Happens If the Matter Goes to Court?

If the matter goes to court, the division of assets must be assessed and determined to be “just and equitable.” It’s essential to remember that what one party sees as fair may not be how a court sees it. Therefore, it’s smart to assess, at the start, what the likely division of assets awarded by a court may be and use that as a basis for providing advice as to what is a likely outcome. If possible, other avenues such as negotiation and mediation are used to achieve that outcome with minimal, or in some cases, no court involvement.

The 4 Legal Criteria Used to Determine How Assets Are Divided

When it comes to determining a party’s claim to financial assets in Australia, there are four main criteria that are taken into consideration. 

1. The first one is the identification of the value of the “pool” of assets, which includes all real estate, shares, trust assets, businesses, cars, boats, tools, jewelry, cash, and any other asset that the parties own, regardless of whose name they are registered in. Even incidental items, such as personal effects, may still have value and be included in the asset pool. It is important to note that the Family Law Act in Australia cuts across all legal entities and captures everything in which the parties have an interest, including assets that are not in either party’s name.
2. The second criteria is the contributions of each party, both financial and non-financial, during the relationship and to the property of the relationship. The law acknowledges that different parties bring different amounts of money and other assets to a relationship, and this factor is considered when assessing the entitlements of each party. The longer the parties are together, the less relevant the assets that the parties owned prior to the relationship become.
3. The third criteria is future needs adjustments. This is where adjustments are made based on future needs and often has a significant impact on how the pool of assets will be divided. Relevant factors include a person’s earning capacity compared to the other party, age, health, the primary care of children, and a person’s ability to generate an income, especially if one of the parties has sacrificed the opportunity for career advancement or skill development during the relationship. These are known as the “future needs factors” and must be carefully evaluated.
4. The fourth and final criteria is that the deal must be “just and equitable.” This is an overarching principle that is weighed by the court having regard to the particular varying circumstances of the particular facts before it. The court takes into consideration the individual needs of each party, such as the need for immediate funds or assets that may be required later on. The court also assesses the extent to which each party has contributed to the relationship, both financially and non-financially, and determines a fair and reasonable division of assets based on these factors.

Overall, when determining how assets are divided, it is important to seek the advice of a professional property settlement lawyer who can help you navigate through the complex legal process and help you achieve the best possible outcome for your circumstances.

Get Help from a Family Lawyer

If you are going through a separation or divorce and need assistance with your property settlement, seeking legal advice from an experienced family lawyer is crucial to getting the best result and what you are entitled to.

Our team at Shane McClure’s Law Firm has helped many people through their property settlement following a divorce or separation. We understand the nuances of both simpler and more complex asset divisions and can help you understand the lens the court may apply to your individual circumstances.

Whether you have a simple asset division or have family businesses and more complex asset structures, we can provide the highest quality family law advice. To discuss your particular circumstances or if you need help sorting out how to split your property following your separation, contact us, and we will respond to you promptly. All enquiries are treated as confidential.