How to Handle Family Law Property Settlements: A Step-by-Step Guide

As we have reflected on in a recent post comprehensive and detailed disclosure of your complete financial picture is a requirement when you are dealing with Family Law property settlement, whether that is through the Court or via a negotiated or mediated process.

The question often arises: If you separated some time ago, why do you need to provide current valuations And why do you need to keep updating them?

There are several reasons, but 2 of the more critical are that the Court needs to make orders, or as solicitors, we need to prepare a Binding Financial Agreement that reflects the position as it is now. The Family Law Act says we should look to achieve a clean break. That means dealing with all of the assets and severing all financial ties. This is especially important if assets have been disposed of since separation or the value of assets has decreased. The Court will only make orders possible to implement, and if the values are up to date, that becomes a risk.

The Court also must consider the interests of creditors—people you owe money to. The Court can only correctly consider those interests if provided with up-to-date values. A similar consideration for us is whether there are any possible tax consequences that we may need to consider, and again, date values are essential in this area.

We understand and appreciate that providing up-to-date values for your financial circumstances can be frustrating and sometimes seem unfair when you may have separated months or even years ago. It can feel intrusive, especially if your life has moved on. However, it is an important issue, and there are good reasons why up-to-date valuations are necessary.

What Does the Term “Property” Mean in a Family Law Property Settlement?

In a family law property settlement, ‘property’ encompasses a broad range of assets, from the family home, savings, and superannuation to cars, business interests, and even inheritances. Crucially, it also encompasses any liabilities and debts.

Here is a list of the property considered in your property settlement:

• family home.
• jointly owned assets.
• savings and investment accounts.
• cars.
• superannuation.
• shares.
• business interests.
• family trusts and other trust interests.
• investment properties.
• debts.

In addition to these common assets, other assets are also taken into account, including:

• an interest in a company.
• property owned solely by one person.
• funds or interests over which a partner has influence or control.
• inheritances.
• assets owned before, during, and after the relationship.

Protect Your Rights, Preserve Your Peace

Contact Our Accredited Family Law Specialists.

Book an Appointment with Our Lawyers or call free (1800) 217 217

Procedures for Property Division 

The Family Law Act 1975 (Cth) outlines the following steps for property division after divorce or separation. While there is no singular method for property division, seeking trusted legal advice is crucial. Even if a former couple plans to divide their property without court involvement, seeking legal advice tailored to their circumstances is essential.

1. Identify the Properties: Both assets and liabilities are considered in property settlement during separation and divorce.

2. Check the Contributions: Each party’s contributions, both financial and non-financial, are taken into account. This includes gifts, childcare responsibilities, and home improvements.

3. Assess Future Needs of Each Party: Future needs are evaluated by comparing each party’s post-separation and divorce requirements. Factors such as earning capacity, health issues, and childcare responsibilities are considered. Adjustments are made accordingly.

4. Consider a Fair Settlement: The Family Law Court ensures that asset division is equitable and reasonable for both parties. Courts expect parties to attempt genuine efforts to resolve property settlement disputes outside of Court. Going to Court is costly and time-consuming, so separated couples are encouraged to settle independently.

What Happens If you and your family decide to Split up the Family’s Property?

When parties agree on the division of family property, they typically sign a binding financial agreement or obtain consent orders.

Failure to take action may expose both former partners to potential claims by the other later on. This becomes particularly problematic if one party depletes assets or increases debts in the asset pool. Therefore, addressing financial matters promptly post-separation is always advisable.

What Does a Property Settlement Consider to be Property?

In family law, property encompasses all valuable items related to your relationship. The Court considers assets, liabilities, and resources owned, shared, or disposed of by you and your former partner post-separation. This includes:

– Bank account balances

– Houses and cars

– Investments, shares, or trusts

– Gifts or inheritances received

– Superannuation funds

– Loans or other liabilities, including credit card debt

AUTOMATIC ENTITLEMENT: A WELL-BEING MISTAKE

Despite popular belief, there is no presumption for a specific division of assets, such as 50/50 or 60/40. Property matters do not entail automatic entitlements.

Advice from well-meaning friends or family, based on personal experiences, can often be misleading and unhelpful, fostering false expectations.

Each individual’s circumstances require careful assessment by a qualified family lawyer to provide accurate advice.

Financial settlements vary significantly between cases, with no two outcomes being identical. There is no presumption regarding percentage entitlements in property settlements. Understanding that each settlement is unique and may differ from others you’ve heard about is essential.

The Best Ideas for Resolving Your Family Law Property Settlement.

A family law property settlement involves dividing property after a marriage or de facto relationship ends. Under the Family Law Act, if parties cannot agree on the division, they must file for a court-ordered settlement within 12 months of finalising the divorce for married couples and within two years of separation for de facto relationships. If needed, permission can be sought for later applications.

Aiming for a prompt settlement is advisable, as assets and liabilities are assessed at the time of the property adjustment order, not at separation. This means the property pool could change significantly over time, potentially disadvantaging you. Seek advice from a family lawyer promptly to determine a fair and equitable division of assets and the best approach for your situation.

Protect Your Rights, Preserve Your Peace

Contact Our Accredited Family Law Specialists.

Book an Appointment with Our Lawyers or call free (1800) 217 217

• Possess Financial, Document, and Factual Access.

Having access to finances, documents, and facts is crucial. Closing joint bank accounts or credit cards with your partner may be advisable. Identifying your asset pool requires compiling financial information from the previous financial year and any recent updates. Prepare recent payslips, tax returns, bank and mortgage statements, and superannuation balance statements. These documents are vital for your lawyer to assess and establish the asset pool.

Additionally, recording significant facts about property purchases and any financial and non-financial contributions to running your household is helpful. Provide this information to your lawyer and evidence, such as bank transfers, to support your instructions. Prepare a clear timeline or chronology of significant events during the relationship to give to your lawyer.

• Hire an Accountant Right Away.

Engaging with your accountant early is beneficial to bring any outstanding tax or financials for the previous year up to date. Obtain year-to-date or adjusted financials to provide an indicative value during assessment. This is particularly important if you aim to settle your property dispute before the end of the financial year, especially for business owners concerned about the impact on business valuations.

• Seek Early legal counsel.

Seeking legal advice early is crucial. A lawyer can provide guided advice to address issues related to asset pool division. Obtaining early support allows for developing a sound strategy and readiness to engage in negotiation and mediation. This proactive approach may increase the chances of resolving the matter by agreement without resorting to litigation in the Federal Circuit and Family Court of Australia.

Frequently Asked Questions (FAQs)

Why do I need to provide current valuations if I separated some time ago?

Current valuations are necessary because the Court and solicitors must accurately reflect the present financial position. This ensures a clean break, considers creditors’ interests, and accounts for any tax consequences that require up-to-date values.

What is considered ‘property’ in a family law property settlement?

Property in a family law settlement includes a wide range of assets such as the family home, jointly owned assets, savings, investments, cars, superannuation, shares, business interests, family trusts, investment properties, and debts. It also includes interests in companies, property owned by one person, controlled funds or interests, inheritances, and assets owned before, during, and after the relationship.

What steps are outlined in the Family Law Act 1975 for property division after separation or divorce?

The steps are:

1. 1. Identify the properties (assets and liabilities).
   2. Check each party’s contributions (financial and non-financial).
   3. Assess the future needs of each party.
   4. Consider a fair, equitable, and reasonable settlement for both parties, encouraging resolution outside of Court if possible.

What should I do if my former partner and I agree on how to divide the family property?

If there is an agreement, parties should sign a binding financial agreement or obtain consent orders. Addressing financial matters promptly post-separation is crucial to prevent potential future claims and complications.

What documents and information should I prepare for my lawyer in a family law property settlement?

You should compile financial information from the previous financial year and recent updates, including payslips, tax returns, bank and mortgage statements, superannuation balance statements, and records of significant facts about property purchases and contributions. It is also advisable to provide a clear timeline of significant events during the relationship and engage with your accountant early to update any outstanding financials.