Property Settlement Lawyers Melbourne
Property & Financial Settlements
After a marriage or a de facto relationship ends, most couples need to divide their assets between them and/or assign responsibility for any liabilities. This is called a “financial settlement” or a “property settlement”.
These terms can be confusing. A property settlement in Family Law refers to the division of property of the relationship after separation. A property settlement in Conveyancing refers to the date when the purchase or a sale of a property occurs, is made final, and ownership of the property changes hands.
Married couples can finalise their property settlement matters before a Divorce Order is granted. A Divorce Order does not determine the division of assets of the relationship between spouses.
We strongly recommend that separated couples legally formalise any agreements reached about their financial settlement, so the agreement is legally binding and enforceable. This will protect both parties from future claims to a property settlement and/or spousal maintenance to the extent permissible under the Family Law Act 1975 (“the Act”).
Our property settlement lawyers in Melbourne will work with you to finalise your property settlement without the additional expense and stress of Court proceedings, wherever possible.
Following the breakdown of the relationship, a four-step legal process is commonly adopted in Family Law to determine a property settlement that is legally fair to both parties.
(1) Establishing the Asset Pool
The first step is to establish what is in the “property pool” or “asset pool”, net of debts. The definition of “property” or “assets of a relationship” is very broad. This includes all the assets and liabilities held by both parties —including assets that are in only one person’s name. Assets include real estate, cash, investments, vehicles, shares, companies, interests in businesses, companies and trusts, superannuation, and cryptocurrencies. The property or asset pool needs to take into account all liabilities of the relationship, regardless of who is responsible for the debt. The liabilities may include mortgages, personal or other loans, credit cards, tax debts, and all other personal obligations.
Superannuation is considered to be an asset of the relationship, but it is of a different nature and is commonly treated separately to other assets. If a superannuation split is part of a financial settlement, the relevant superannuation laws still apply. This generally means that if a party is not over retirement age, they will receive the funds as a superannuation benefit, and not as cash.
To ascertain the asset pool, both parties to the relationship are legally obliged to provide full disclosure of their respective financial positions. This is necessary to construct the asset pool of the relationship. This commonly involves the mutual exchange of documents in support of both parties’ interests in assets and liabilities for which they are responsible.
(2) Assessing Relevant Contributions Factors
In dividing assets, questions will often arise about each person’s contributions to the acquisition, conservation, and improvement of the assets of the relationship and to the welfare of the family.
Contributions can be both financial and non-financial in nature. For example, receiving an inheritance or a gift and using these funds to pay down a home loan will often constitute a direct financial contribution by that person. Non-financial contributions generally refer to the care of the children of the relationship.
If a relationship was short, initial contributions typically carry a greater weight. On the other hand, initial contributions may carry less weight the longer the relationship.
If one party makes significantly greater contributions during the relationship, they may seek a weighting in their favour regarding a division of the asset pool.
Importantly, the contributions made in the traditional roles of a primary income earner and a primary carer of children over the course of a long relationship are generally considered of equal value in the eyes of the law.
(3) Future Needs
The next step in the process is an assessment of what the parties will each need in the future. As outlined in the Act, this commonly includes consideration of each person’s age, health status, current earnings and future earning capacity, the number of children under 18 years and their care arrangements (where appropriate), and the length of the relationship. The size of the asset pool may also be relevant.
Depending on the circumstances of your relationship, some or all of these factors may be legally relevant to your property settlement. Based on all of the relevant legal factors, your lawyer will advise you about what is a “fair and equitable” division of the net assets of the relationship.
(4) Justice and Equity
Taking into account the individual circumstances of the relationship and separation, the final step is a consideration of whether a proposed division of the net assets is “just and equitable”, or legally “fair”. Your Melbourne property settlement lawyer will provide you with this advice. If final property settlement Orders are sought, the Court always has the discretion to decide what is ‘just and equitable’.
Please see below for more information about formalising property settlement agreements by way of Consent Orders or a Financial Agreement. You can also read about what happens when no agreement is reached.
Formalising Agreements
Once you have reached an agreement regarding the division of net assets of the relationship, our property settlement lawyers in Melbourne will assist you with formalising your agreement so that it is legally binding and enforceable.
There are two ways of formalising your property settlement agreement:
- Application to the Court for Consent Orders; or
- A Binding Financial Agreement.
An Application for Consent Orders involves a joint application to the Federal Circuit and Family Court of Australia (“the Court”), asking the Court to assess the proposed agreed terms of the division of assets of the relationship. No Court appearance is necessary to make this application. If the Court considers that the agreement reached is ‘just and equitable’ to both parties, then the Court will make Final Property Orders. Court Orders are binding and enforceable, and can only be varied or overturned in very limited circumstances. Breaches of Court Orders can result in serious penalties.
A Financial Agreement is a private contract between former partners, governed by specific provisions of the Act. Financial Agreements are legally binding and enforceable, and can only be overturned in exceptional circumstances as set out in the Act. Financial Agreements are not approved by the Court. Notwithstanding, strict formal requirements must be met for a Financial Agreement to be binding and enforceable, including that each party must be independently represented and advised by their own separate lawyers.
Your lawyer will discuss your circumstances to help you make an informed decision about whether Consent Orders or a Financial Agreement best meets your needs.
Going to Court – when there is no agreement
If you and your former partner are unable to reach an agreement about your property settlement matter or if there are circumstances of urgency, Court proceedings may be necessary. Court proceedings are commenced when one party files an Initiating Application and supporting documents with the Court to ask the Court to make decisions about the assets of your relationship.
Court proceedings can be finalised at any time if both parties agree to Orders being made by consent. The Court process is designed to encourage litigants to resolve their dispute by agreement, and provides many opportunities for them to do so. Most parties will be ordered to attend a Mediation in this regard.
If no agreement is reached by the parties during the proceedings, the case may need to be decided by a judicial officer/Judge.
Going to Court is a costly, time consuming, and stressful way to address the division of assets of a relationship. The Court expects parties to only consider legal proceedings as a last resort. There are instances where issuing proceedings is absolutely necessary.
Please explore the process options that we offer on our “Separation/Divorce and Process Options” page, under our “Areas of Practice”.
Spousal Maintenance
Following separation, there may be an imbalance between each party’s capacity to support themselves financially that may need to be addressed. For example, there may be a disparity in income because one party was the primary earner while the other contributed to the relationship as the children’s primary carer.
The Act provides for spousal maintenance to be ordered in certain circumstances at the Court’s discretion. There may be a legal obligation for a spouse or a partner of a de facto relationship to financially provide for the other.
Parties can reach an agreement for spousal maintenance to be provided from one party to the other. This agreement can be incorporated in an Application for Consent Orders or a Binding Financial Agreement.
If no agreement be reached, you may make an Application to the Court for spousal maintenance Orders. This application must be carefully prepared with evidence demonstrating that the Applicant is unable to adequately support himself/herself and that the other party is in a position to do so.
In assessing an application, the Court will consider a range of legal factors including the income, assets and liabilities of each party, their respective income earning capacities, and the arrangements for any children.
Our Melbourne property settlement lawyers are able to give you advice about whether you should attempt to negotiate or seek Orders for spousal maintenance or not.
Different Types of Binding Financial Agreements
You and your partner may wish to enter into a Financial Agreement before your marry or prior to the commencement of your de facto relationship. A Pre-Nuptial Agreement or a Pre-Cohabitation Agreement is a type of Financial Agreement that provides clarity about what will happen to property that you and your partner may bring into the relationship and/or may accumulate during the relationship, if the relationship breaks down. These agreements can help protect assets existing prior to the commencement of the relationship (particularly important if you have children from a previous relationship).
Speak to our Melbourne Property Settlement Lawyers today
Alternatively, you and your partner may wish to enter into a Financial Agreement during your marriage or your de facto relationship. This agreement will provide clarity about what will happen to property that you and your partner may have brought into the relationship and/or will accumulate during the relationship, if you separate.
Financial Agreements can also be entered into after the breakdown of a de facto relationship or marriage, or after a Divorce Order has been granted.
If you need the assistance of a trusted and affordable property settlement lawyer in Melbourne contact melbourne@maeveobrien.com.au or call 03 9857 0099 for expert legal advice.