Top 5 Questions About Property Settlements
Separation is difficult, but dividing your property, assets, superannuation and debts doesn’t have to be. Below, we address 5 of the most commonly asked questions that our experienced team of QLP family law solicitors answer every day.
1. Do both parties have to agree to separate?
Under Australian law and regardless of whether you are in a de-facto relationship or a marriage, a party does not need permission or agreement from their spouse to separate or for separation to take effect. Separation occurs when one party communicates to the other that they no longer wish to continue in the relationship. This can be verbally articulated by a party to their spouse. Alternatively, it can be communicated in writing.
Once separation has been communicated the next step is to determine the size of the asset pool.
2. What comprises an “asset pool” for the purpose of a property settlement?
All assets, liabilities and superannuation of the parties must be disclosed in property settlement matters, regardless of whether the asset is one party’s name or both. Assets held outside of Australia must also be disclosed.
After the asset pool has been determined, then it may be divided between the parties.
3. We are married so our asset pool gets divided 50/50, right?
A common understanding is that marriage creates an automatic entitlement of both parties to a 50/50 division of their asset pool. This is false. There is no automatic entitlement to a 50/50 division simply because you are (or were) married.
Many factors are taken into consideration in a property settlement, these include:
- The value of the nett asset pool;
- The length of the parties’ relationship, being from the time that the parties commenced living together and separated on a final basis;
- The financial position of the parties at the time of them commencing cohabitation, being the values of assets, superannuation and liabilities contributed by each party to the relationship;
- The financial contributions made by each party during the relationship, such as the income earned, inheritances and payouts received;
- The non- financial contributions made by each party during the relationship, such as duties around the home including cooking and cleaning and care responsibilities for children;
- The ages of the parties;
- The individual health needs currently of the parties and the anticipated impact of those needs to a party in the foreseeable future;
- The earning capacities of each party;
- The ongoing care arrangements for the children; and
- Any trust structures or overseas assets that provide a financial benefit to either party.
4. How long do we have to wait to divide our assets?
The process of negotiating and formalising of agreements relating to the division of property can occur immediately upon separation. There is no requirement for you to delay arrangement of a property settlement.
However, it is important to note that there are time limitations within which you must seek a property settlement. They are as follows:
For a defacto relationship: You have 2 years from the date of your separation; and
For a marriage: You have 1 year from the date that a divorce is granted
Within these time limitations, it is best practice to have either:
- Formalised your agreement in a legally binding manner (such as an order or a Binding Financial Agreement); or
- To have commenced proceedings in the family courts for a property settlement.
If you do not comply with these time limitations, you need to the permission of a judge of the family courts to allow you to proceed with an application to seek a property settlement from your spouse.
5. I have told my partner that I want to separate. What’s next?
Communicate your separation to a third party.
Although there is no formal requirement for you to tell a third party that you have separated from your spouse. If you are not ready to tell a friend or family member, create a diary entry detailing the discussion between you and your partner.
Take copies of and collate important financial documents.
It is quite common for one party in the relationship to have primary control of the finances and for the other party to have little to no knowledge of the parties’ financial position. Under the Family Law Act, both parties have an obligation to provide “full and frank” disclosure to the other of their financial positions. This means that each party must provide to the other details of their finances such as:
- The balances of bank accounts in their sole or joint names;
- The balances of any superannuation accounts in their names;
- Evidence of any debts or liabilities in their sole or joint names;
- Details of any vehicles, boats, motorcycles in their sole or joint names;
- Insurance policies in their sole or joint names.
Although both parties have this obligation upon separation, if you are considering separation or have decided to separate, it is prudent to familiarise yourself as best you can with your joint finances to gain a better understanding of your financial position.
The types of financial documents that are important to family law matters include but are not limited to:
- Bank valuations of residential or commercial properties;
- Taxation documents including Individual Tax Returns and Notices of Assessments;
- Bank statements;
- Superannuation statements;
- Credit card statements;
- Personal loans;
- Share portfolios;
- Registration documents that include year, make and model of vehicles;
- Insurance policies;
- Documents that relate to what each party owned at the time of the parties commencing to live together; and
- Documents that relate to any inheritances or payouts received by either party.
If you have access to this documentation, take copies of the documents and keep them in a safe location.
If you do not have access to any financial documentation, there are other ways you can obtain information, such as:
- If you are unaware of the mortgage owing on your property and you are a borrower on the loan, contact your bank lender to help you to understand the values and structures of your loans.
- Contact a local real estate agent to obtain an appraisal of the market value of your property.
- Write off to your spouse’s superannuation fund under the Family Law Act using a Form 6 and Superannuation Information Request Form to obtain a valuation of their superannuation balance. You could also do this to obtain a valuation of your own superannuation account.
- Keep an eye on the post and make note of any financial institutions sending correspondence to you or your partner. You cannot open any mail that is not addressed to you, but you can keep a journal of the different banks or financial institutions writing to your partner.
Make an appointment with a solicitor who specialises in family law for preliminary advice.
Discussions about the division of assets and household bills often occur shortly after separation. It therefore important that you are informed about the processes and your likely entitlements under the Family Law Act so that you can make informed decisions when negotiating with your spouse about such matters.
We recommend that you obtain independent legal advice from a solicitor that specialises in family law as soon as possible after separation, even if you remain amicable with your spouse. Your appointment with a solicitor is confidential and there is no obligation for you to seek further advice or assistance thereafter. Our experienced team at Queensland Law Practice – Family Law division has the necessary skill set and experience to guide you through the ‘sometimes complicated’ Property Settlement and Asset division process. We also offer discount rates on initial consultations to help identify where you are in the process and help you get to where you need to be.
Our experienced team at Queensland Law Practice – Family Law division has the skill set and experience to guide you through the ‘sometimes complicated’ Property Settlement and Asset division process. We also offer discount rates on initial consultations to help identify where you are in the process and help you get to where you need to be.