Four Important Facts You Need to Know About Settlement

Courtney Barton 1. What is a Property Settlement?

When a marriage or a de facto relationship ends, the parties should always finalise their financial ties with one another.  This may involve the transfer of ownership of real estate, cash, superannuation or other property from one party to another.  For example, if the matrimonial home is in joint names the parties may agree that the house be sold and the proceeds divided. Alternatively, the parties may agree that one party receives the house and makes a cash payment of some nature to the other party to ‘buy out’ their interest.

When you are separating, it is important to obtain legal advice from a Solicitor specialising in family law, in order to determine your entitlements.

2. How do I formalise our property settlement?

Any agreement reached between you and your former partner should always be formalised (recorded legally).

There are two ways of recording a property settlement agreement between two separated parties:

  1. A Consent Order; or a
  2. Binding Financial Agreement.

A Consent Order is an Order which both parties have agreed to and the Family Court approves before making the Order, to ensure it is just and equitable.

A Binding Financial Agreement is an agreement between parties which has not been scrutinised by a Court to ensure it is just and equitable however the parties must consult with a Solicitor to make the agreement valid.

You should talk to your Solicitor about which form of agreement is right for you.

3. Why is it important to formalise your property settlement?

There are several reasons:

  • A Consent Order & Binding Financial Agreement are legally binding. This means that if the other party does not comply with the agreement, you have recourse to the Court to enforce compliance of the agreement.
  •  It finalises your financial relationship with your former partner. This means that your former partner cannot make a further property settlement claim against you.

4. Why is it important to do your property settlement promptly after you separate?

If you do not finalise your property settlement promptly after separation, this means your financial ties with one another have not been severed and you leave yourself open to a property settlement claim being made against you in the future, subject to relevant time limitations.

The value of the asset pool is not the date of separation it is when you make an agreement or when a Judge determines your matter.

This means that if your super interest increases, or you acquire a new asset or you improve the value of an asset post separation, but prior to a property settlement, it forms part of the property pool to be split between you and your former partner.

You should not leave yourself open to your improved superannuation entitlements,  or assets acquired/improved by you post separation,  forming part of your  property settlement.

Alternatively, if your former partner sells an asset or wastes away funds in the property pool, post separation, and applies the income for his/her own benefit, the property pool is reduced therefore reducing your entitlements. This is because the Court cannot deal with assets that no longer exist.

The only caveat to the above is that the Court has discretion to take into account financial contributions of the parties or wastage of matrimonial assets post separation.

It  is in your interests to formalise your property settlement sooner rather than later so that you can re-establish your financial position without a potential property settlement application hanging over your head in the future depending on time limitations.

Protecting your property

Leisa Toomey Leisa Toomey, Practice Group Leader of STOLaw, part of the Slater and Gordon Group explains the importance of engaging a lawyer when separating and that not all matters will end up in court if all appropriate avenues and steps are been taken.

Q1. Why is it important to engage a lawyer in the early stages of separation?  To understand your rights and obligations and to ensure you make an informed decision on matters regarding children and property settlement.

Q2. How can a lawyer assist someone going through a separation? By providing relevant advice and guide them through those things that have to be considered to ensure a fair and just outcome for them.

Q3. What is the most important factor/s to consider when separating? Seeking out skilled and informative advice from a lawyer that specialises in this type of work to understand what options are open to you to resolve your matters.

Q4. There is a common misconception that seeing a lawyer will mean you will have to go to court. Is that correct? No, this is not correct. Lawyers in this area of law should always investigate settlement prospects through mediation to avoid unnecessary expense and the wasting of valuable time for the client.

Dividing property

shutterstock_150556397If your relationship breaks down, you may need to divide your property which includes yours assets (being things you own), liabilities (money you owe) and consider who gets what property.

Coming to an agreement about property is great, however seeking legal and financial advice is also recommended to ensure everything is settled. Most cases the law says it is favourable to resolve a dispute before having to go to court. If a decision cannot be made and the dispute cannot be resolved then you should seek assistance from family services.

We are here to help if you need assistance. Call our family lawyers today on 1300 STOLAW or visit our website