After separation, in the majority of cases, parties need to divide their assets and liabilities, so that each can be financially independent of the other. The Division of property after a relationship breakdown (either marriage or de facto) is commonly called a ‘property settlement’.
How long after separation can we divide our property?
Sometimes, because of the nature of the assets to be divided, this process may take some time. A common example is the family home, which may need to be sold for each party to receive their entitlements.
Coordinating those arrangements and preparing the property for sale may take a while, which means even if parties agree, there may be some delays because of the practicalities involved in realising the value of particular assets.
How is the property divided after separation?
Under the Family Law Act 1975 (Cth), the Family Law Courts have a broad discretion to adjust the ownership of property between the separated parties.
The approach to be taken towards resolving property interests between the parties is described as having 4 steps:
Determining the assets and liabilities of the parties, including superannuation;
Examining each party's contributions, which includes financial as well as other contributions;
Considering each party's future needs such as age, health, earning capacity and the care of children; and
Considering whether the actual division of assets is just, equitable and fair.
Does the division of property start with an equal division?
Under the Family Law Act, when parties separate, as a starting point, each has a right to an adjustment of property. There is no presumption under Australian law that parties have a right to an equal settlement of property.
Instead, the Family Law Act provides that each party's entitlements to a property settlement is based on their contributions to the property of the relationship together with any relevant future needs of each party.
Understanding what sort of contributions and future needs are taken into account and how these affect your entitlements, is advice you need from a specialist family lawyer.
Are there any time limits for dividing property?
For married parties, there are no time limits for the division of property unless the parties obtain a divorce. Once parties are divorced, they have 12 months only from the date the Divorce Order is granted, to apply for a property settlement.
For de-facto couples, a time limit of two years from the date of separation applies. This means parties must reach agreement and have the agreement documented within two years from the date of separation.
As that time frame is critical, it is essential that the date of separation be recorded and, hopefully, agreed with your partner. You ought to record the date in writing and also record any details which may separately identify the date (such as, 'I remember that was the date as it was the day after my birthday.')
If no agreement can be reached, then proceedings should be filed at court within the prescribed time limits.
If we have agreed on division of property, what do we do then?
If you have already reached agreement about how your property should be divided, there are sound reasons why that agreement should be formally documented.
Two important examples include:
Superannuation - this can only be divided by having a formal property settlement;
Stamp Duty - some relief from stamp duty is available if assets are transferred between parties to a marriage/de-facto relationship by way of a formal property settlement
There are advantages and disadvantages to each of these options. Neither of these options require you or your former spouse/partner to go to court or appear before a Judge. You should speak to a lawyer for advice about which of these options best suits your needs and budget.
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