Dividing your property after separating – what to expect

When partners separate, they will need to sort out how to divide their assets
and liabilities.
Property Settlement Avenues
There are three avenues through which a property settlement may be effected,

  1. Parties can agree on how the property should be divided without any
    court involvement by way of a Binding Financial Agreement;
  2. If parties agree on arrangements, they can formalise their agreement by
    applying to the court for consent orders; or
  3. If parties cannot agree on arrangements, they can apply to court for
    financial orders, including orders relating to the division of property and
    spousal/de facto partner maintenance.
    Time Limits
    If parties were married, applications for property adjustment must be made
    within 12 months of divorce becoming final.
    If parties were in a de facto relationship, applications for property adjustment
    must be made within 2 years of the breakdown of the de facto relationship.
    If applications are not made within this time limit, parties will need special
    permission of a court which may not always be granted.
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    The Court Process: How Does A Court Make Financial Orders to Divide Assets
    and Debts?
    The court will firstly hear all the evidence before making a financial order based
    on the unique facts of each case. The court will use a 5-step process to make
    financial orders:
  4. The court will firstly consider whether it is just and equitable to make a
    financial order;
  5. The court will identify the value of the net asset pool;
  6. The court will assess the contributions of each party;
  7. The court will consider factors based on the future needs of each party;
  8. The court will then make a financial order that is just and equitable.
    Are Overseas Properties Included in Property Settlements?
    Both the Federal Circuit Court and Family Court of Australia have the jurisdiction
    to make orders in relation to overseas assets of the parties and overseas assets
    will generally be considered in any property settlement between parties.
    Although Australian Family Law Courts may make orders in relation to property
    in overseas jurisdictions, these orders may not be automatically recognised and
    enforceable in the overseas jurisdiction. As such, property settlements involving
    overseas assets can be difficult as problems may be experienced in enforcing
    orders internationally.
    The Court’s Approach to Property Settlements Involving Overseas Assets
    The best course of action that Australian Family Law Courts will take will depend
    on a number of factors such as what the overall asset pool comprises of, the
    parties’ approach to proceedings, the likelihood of compliance and the ability to
    enforce orders in Australia against other property.
    A court may avoid issues of enforcing orders involving overseas assets by
    adjusting the ownership and value of the Australian assets between parties
    within their overall settlement. In this case, a just and equitable outcome that
    considers the overseas assets may be reached without having to actually deal
    with overseas assets. For example, a court may order that the party owning the
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    overseas property will retain the overseas property and that the other party will
    receive Australian assets in respect to their entitlement of the asset pool.
    Pre-Marital Property
    Property brought in before the start of the relationship are considered initial
    contributions made by the contributing party. Unless the length of a relationship
    is very short, there is little chance that the value of pre-marital property will be
    returned to the contributing party on a dollar-for-dollar basis. Pre-marital
    property will be considered by its impact on the value of the net asset pool and
    will be assessed against the impact of other contributions made by both parties
    during the relationship. As such, the value of the pre-marital property can
    “erode” depending on factors such as:
  • the initial difference in contributions;
  • the use made of the assets;
  • the change in value over time;
  • the length of the relationship; and
  • other later contributions.
    Financial Assistance from Parents
    The Court will treat a gift of property or cash from a party’s parent as a
    contribution made by that party, unless there is evidence that it was a gift to
    both parties jointly. If the gift was made to both parties jointly, it will then be
    considered as a contribution by both parties equally.
    Lottery Wins
    The winnings of a lottery ticket will constitute part of the parties’ property pool.
    To determine the contributions each party made to the purchase of the winning
    ticket, the court will consider the nature of the relationship at the time the
    winning ticket was purchased. If a winning lottery ticket was purchased by either
    party during the relationship, it will most likely be perceived as a joint
    contribution by both parties. However, if the parties lived financially separate
    lives during the relationship and more importantly at the time the winning
    lottery ticket was purchased, then the lottery winnings would most likely be
    considered as a sole contribution by the party who purchased the winning ticket.
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    Additionally, winning lottery tickets purchased post-separation are most likely
    considered to be a sole contribution by the party who purchased the winning
    RN LEGAL has assisted many clients by resolving their property dispute. RN
    LEGAL has the experience, expertise, and resources to help you through your
    property settlement.
    Contact us on (02) 9191 9293 or mail@rnlegal.org if you require advice in
    relation to your property dispute