Divorce and Separation: The Property Settlement

For many of my clients, when they first come in to see me, they use the word “divorce” as a term to describe the entire process of separating, including dividing their assets, and working out any arrangements for the children.

What they often don’t realise, is that “divorce” is only one piece of the puzzle. 

In fact, in the family law system, the word divorce only refers to the official end of a marriage.  The couple still needs to work out separately what will happen to the children and ‘who gets what’ in terms of their assets.

How the couple divides their property, cash, superannuation, family business and any other assets is known as a property settlement, and this is where the services of an experienced family lawyer can help.

A property settlement is a very important step to take after separating. 

Being able to reach an agreement on exactly who gets what, and then having a lawyer document that agreement and file it with the Court, will ensure that there is no ambiguity now, and less chance of conflict between the parties involved in the future. 

After all, even if things are amicable between you and your former partner at the time of separation, it might not stay that way in the future.  Changes in circumstances, new relationships and other major life events can all have an impact on how people see things.

One of the most important things to remember is that you don’t have to be divorced to make a property settlement.  You can do it before OR after you apply for a divorce.  Sometimes there are time limits on how long after you separate you have to finalise your property settlement.

So, what is involved in finalising a property settlement?

The first step in working out any property settlement is to understand exactly what you have to divide.  What IS in the asset pool?

Every couple and every situation is different.  Your asset pool might include a house or other properties, cars, jewellery, cash in the bank, superannuation and shares or other assets.  If you run a family business, that will also be included in the overall assets that need to be considered.

A family lawyer can help you to identify all of the various components, but it is very important that you are honest about everything you own.  In legal terms, you are required to make what is known as “full and frank disclosure” which means that you are obliged to provide open and accurate information about all of your assets.  Of course your former partner is also required to make full and frank disclosure and not attempt to hide any information. 

The second step is to make an assessment of each party’s contribution towards the asset pool.

This requires an assessment of the different things in which you or your spouse have brought in at the commencement the relationship, during and after separation.  Did one of you already own the house when you first married?  Or has a party received an inheritance somewhere along the way? 

Even if you are the primary carer of any children or a “home-maker” and don’t earn an income outside of the home, your contributions to the relationship will still be taken into account.  The fact that you stay home enables your partner to earn their income and that is important.

Once I have made an assessment on contributions, I will consider what adjustments need to be made to meet the particular needs of a party going forward.  Does a party need an adjustment to be made because they have the primary care of the children?  Does a party's health require special attention in future?

This is where the knowledge and expertise of a good family lawyer can make a big difference.  For example, when I meet with my clients, I look at their financial situation in detail and work with them to identify what their future needs might be, taking into account factors such as the age and health of the parties involved, the future earning capacity of each party, and what might be required to look after the children etc.  If you have a family business I also take that into account.

Using this information and knowledge, we can then negotiate a property settlement with your former partner.

When you have reached an agreement with your former partner, I will file the agreement with the Court to make Consent Orders.  This then becomes the official agreement that both parties will have to abide by.

It is really important to understand that before the Court ‘signs off’ on the agreement and turns it into Orders, it will check to make sure that the settlement is just and equitable.   If it is not satisfied that the agreement is fair, the Court can recommend action be taken to re-negotiate the agreement and address any issues.

Being practical and reasonable, and making an effort to get it right the first time is always the best option!

If you have separated and need advice from a family lawyer regarding a property settlement, contact me at Maclarens.  I can work with you to ensure you reach the best possible outcome.