Property settlement is the arrangement made between two parties to divide all assets and property following a separation. Whether it is a marriage or de-facto relationship, all financial ties between these parties must be finalised. Every situation and relationship is different, so there is no one straight answer for how property settlement after separation should be dealt with. However, some answers to the most common questions may help and guide you for your unique case. Here are our most frequently asked questions surrounding property settlement.
What is Property?
‘Property’ refers to all assets owned by either or both parties and includes almost anything of value, such as real estate, business interests, shares, vehicles, superannuation and artwork.
Property settlement after separation is not limited to property acquired during the relationship or marriage. It is possible to include property owned before the relationship.
Liabilities and debts are also regarded as property and will be divided regardless if they are held jointly or individually.
Do All Separating Couples Need to Have a Property Settlement?
Yes, definitely. It is important to finalise all financial ties with your ex-partner as soon as possible to avoid either party making any claims for Property Settlement later down the track.
If you choose to leave your property settlement to a later date, the court will look at all property available for distribution at the date of the proceedings rather than the date of separation. This means that all additional property and debt gained after the separation will be considered.
An example of assets acquired after separation includes one party winning the lottery. If a large sum of money is won post-separation, this will be considered by the court when making property settlement decisions.
Issues regarding each party’s financial responsibilities after separation also need to settled if there are things like mortgage or personal loan repayments still outstanding.
How Does the Court Determine Who Gets What in a Property Settlement After Separation?
Following a separation, Section 79 of the Family Law Act 1975 asks a few questions in order to determine the division of assets. Here is the four-step process:
- Determine the net assets, including liabilities and superannuation of the parties.
- Look at the financial contributions of each party to the married or de-facto relationship.
- Financial contributions include wages and lotto winnings.
- Parental contributions are the duties performed by the parents including raising the children, dropping them off to school and helping with their homework.
- Homemaker contributions are the domestic duties performed in the relationship, for example, cooking dinner. The quality of the homemaker contribution is irrelevant to the court.
- Non-financial contributions are contributions that have resulted in the increased size of the net asset pool. An example would be renovations to a house.
03. The party’s future needs, including any health issues and the ability to earn money.
04. The overall outcome is just and equitable. The court will look to see if the proposed settlement is fair and takes into account the contributions made by both parties and their current and future needs.
Are There Time Limits for Property Settlement?
A property settlement after separation does come with some time limits. A married couple must apply for a property settlement within 12 months of a divorce finalisation, whereas a de-facto couple must apply within two years of separation.
Couples who fail to commence property settlement proceedings within these time limits may lose their ability to apply to the court. However, it is possible to seek the court’s permission to apply for a property settlement “out of time”. This is not guaranteed and can be quite costly.
How is a Property Settlement Formalised?
If both parties have reached an agreement, the best way to finalise and formalise a property settlement after separation is through Consent Orders. A consent order is a written agreement that is approved by a court. In property matters, the Court must be satisfied that the settlement is just and equitable.
Another option to formalise a property settlement is through a binding financial agreement. This agreement does not require the court’s approval, however, it does require legal advice, preferably from an independent law firm like Emerson Family Law, prior to execution.
What About Superannuation?
Under PART VIIIB of the Family Law Act 1975, Superannuation is considered property. However, it is a different type of property because it is an asset held in trust. Superannuation splitting laws in Queensland allow separating couples to value their superannuation and split payments, however, this process is not mandatory. There are three options for splitting superannuation:
1. A formal written agreement to split superannuation;
2. Consent orders to split superannuation; or
3. A court order to split superannuation (only if you cannot reach an agreement with your ex-partner)
Have More Questions About Property Settlement After Separation?
If we have not covered one of your questions regarding property settlement after separation, we welcome you to contact us. Our team of experienced family lawyers can also help you with any questions or concerns related to divorce or separation, children’s matters and property law.