Fact or fiction – top 5 myths about family law property settlements

Most people know someone who has been affected by a family breakup. It is usually a
very stressful and emotional time where people are anxious about the divorce, the
property settlement and the emotional wellbeing and care arrangements for children.
Unfortunately this is reflected in a great quantity of inaccurate statements, often
regarded as fact by those, in the community.
Every family law situation is different and it is important that people get the right advice
and are able to make informed decisions about their family and their own future before
entering into any agreement or going to court.
In this article we have identified the top 5 issues where myths exist and we have set the
record straight.
Myth 1: You need to be divorced before you can divide your property
There is no provision that requires a divorce to be finalised before a financial settlement
can be negotiated.
You are only entitled to a divorce after 12 months of separation, once you become
separated you can immediately start negotiating a financial settlement.
In fact, if you have not finalised your property settlement by the time of your divorce you
should do so within 12 months because there is a time limit of 12 months to start Court
proceedings after you are divorced.
Myth 2: I owned it before we got together, so it’s mine if we separate
A person will not necessarily be able to keep those things in their own name that they
brought into the relationship or that were paid for individually during the relationship.
The factors which must be taken into account when the Family Law Courts consider how
property is to be divided is set out in the Family Law Act. There is no universal equation
applied, property settlement is based on all of the information provided including the
various contributions made by both parties to the accumulation of the assets and the
Court will then use its discretion in deciding the matter.
The Family Law Courts may give greater weight to the individual contributions of one
party in a very short relationship which may result in that party being awarded an asset
that they brought into the relationship.
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A lawyer practicing in family law can advise you exactly what is taken into consideration
by the Court when providing detailed and specific advice to clients about their individual
Myth 3: Property will always be split 50/50 in a property settlement
This is usually the most common myth in family law. There is no rule or presumption that
parties have to divide their assets equally when they separate.
As outlined above there is no universal equation applied, property settlement is based
on all of the information provided and the discretion of the Court in deciding the matter.
The percentage outcome depends on many factors, which include:
• The length of the relationship;
• The financial contributions of each person;
• The non-financial contributions of each person; and
• The current and future needs of each person.
The longer the relationship, the more likely it is that the Courts will consider the
contributions and future needs of the parties as being equal, all factors need to be
considered. The reality is that an exact 50/50 split is very rare.
Myth 4: The assets are held by a company or trust, so they are excluded from a
property settlement
When a marriage or de facto relationship breaks down property can be divided between
the parties.
The definition of “property” is very broad under the Family Law Act. In the case of assets
owned by a company or trust the Courts will look at who has control over the company
or trust. Even if a person is not a director, if the entity is under the control of one of the
parties the Court has the power to deal with the assets as an asset of the marriage.
Usually, assets held by a company or trusts will come within the definition of property
Myth 5: Pre-nuptial agreements are only used in the USA
The use of Pre-nuptial agreements or “pre-nups”, as they are often known, has been
popularised, sometimes sensationalised by their use in the USA. There have been
plenty of newspaper stories and even movie storylines about them and their
So, do we have them in Australia?
In fact, we do. In Australia they are known by the somewhat less sensational name of
Binding Financial Agreements or BFA’s.
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A BFA is often used as an asset protection mechanism by people going into a new
relationship or marriage allowing a couple to agree in advance on an acceptable division
of assets. After a relationship breaks down, a BFA can reduce the financial stress of a
separation and allow the couple to amicably separate without the need for costly, timeconsuming and stressful court action.
BFA’s must be properly drafted and executed to ensure the agreed property distribution
is enforceable, so it is sensible to discuss this with your lawyer to ensure your assets are
No two family law cases are the same and urban myths don’t usually apply. The Courts
will always take into account the individual circumstances of each case before applying
their wide discretion to make decisions.
It is important to obtain independent legal advice from experienced family law solicitors
who will help you to understand the processes involved concerning your particular
If you know someone who may need assistance or advice on how to proceed please call
on 02 9191 9293 or email us mail@rnlegal.or