For many separated couples, property settlement is an emotive and contentious topic.
Some couples will agree on their own on how to split assets and liabilities while others will use a mediator or lawyers to help them reach agreement or a court to decide for them.
Often interim decisions on finances need to be made long before the property settlement takes place, e.g.
- Who will remain in the home or whether both parties will continue to live under the same roof?
- Who will pay the mortgage loan installments, land and water rates, utility bills and other expenses?
- The need for one party to be financially supported by the other party
Again, some parties will agree on their own on how to deal with finances in the interim before the property settlement takes place while others will use a mediator or lawyers to help them reach agreement or a court to decide for them.
What does Property Settlement Include?
Property settlement refers to the division of assets (not just real estate) and liabilities. The assets and liabilities may be in one party's name only or be in both parties' names or be held together with a third party.
Depending on the circumstances, the assets and liabilities may include:
- Residential and commercial property
- Motor vehicles & boats
- Household items
- Personal items
- Family Trusts
- Shares and other investments
- Mortgage loans
- Motor vehicle and boat loans
- Personal loans
- Credit Card debts
- Overdraft facilities
- ATO debts
- Debts to family members and other persons
#1 There is a Time Limit to Complete Property Settlement After Divorce or Separation
Many people don’t realise that there are time limits to making a Court application for property settlement following separation or divorce. The following time limits apply for making a Court application for property division.
- If you were married, you have 12 months from your divorce being finalised
- If you were in a de facto relationship, you have 24 months from the date of separation
Failing to make a Court application within these time limits will require you to apply for special permission of the Court to make the application out of time. The Court will then decide whether to grant permission or not.
To ensure your property settlement goes through, and you receive the share you are entitled to, it would be best to adhere to the time limits for making a Court application.
#2 How to Maximise your Entitlements With Detailed Documentation
To ensure you receive a fair entitlement, you may need to take action before you separate or soon after you separate.
If you are worried about your ex-partner or spouse acquiring or increasing debt, overspending or disposing of assets or removing or destroying documents, you may need urgent legal advice or action to protect your interests.
You should start identifying your assets and liabilities and make a list of all assets and liabilities. If possible, retain documents related to the assets and liabilities or make copies of the documents. This will be important when it comes to determining what the assets and liabilities are and who gets what in the separation.
Ensure that documents showing financial contributions made by each of you do not disappear. If possible, retain the documents or make copies and keep records of all expenses you continue to pay during the period of separation. This will be very important in helping to determine what you are entitled to in a property settlement.
Keep the documents up to date and ensure that all documents are kept in a safe place. It may be some time before the documents are needed for the property settlement. Offer to share copies of the documents with your ex-partner or spouse.
#3 How Assets and Liabilities are Divided After Separation
Many myths surround who gets what in relationship or marriage breakdowns. There is no truth to the common belief that most settlements are a 60/40 or any other split. Every property settlement is treated as an individual case and is based on the circumstances of the individual case. There is no general rule of thumb on what the split is.
So how do you know what you are entitled to in a separation?
The process of dividing assets and liabilities includes:
- Identification of all assets and liabilities;
- An assessment being made of the contribution of each party financially, non-financially (through improvement and maintenance of assets) and as parent and homemaker;
- Consideration of each party’s future needs taking into account factors like, age, health, future income earning ability, a party having the care of a child or children below 18, financial commitments, child support, a party living with a new partner and other relevant circumstances;
- Using the above information, a decision is made on how assets and liabilities should be split to achieve a just and equitable property settlement for both parties.
Do you have more questions about property settlement in a divorce or separation? Book a consultation with us now on (08) 9364 2588 or contact us.