Everyone has their own personal experience following the breakdown of a relationship.
Below are some facts about property settlement that will arm you with important information to assist you in determining how and when you should take the first steps to move forward.
TIME LIMITATIONS APPLY
Your relationship is at an end, you feel overwhelmed. You delay dealing with the division of your assets because you don’t know where to start or who to speak to.
It’s important to understand that there are time limits within which parties must finalise financial arrangements after the breakdown of a relationship.
Parties who have been married are required to commence proceedings for property settlement within 12 months of an order for Divorce taking effect. Parties seeking to commence proceedings outside this 12-month period are required to seek the leave/ or permission of the Court.
This can add to additional cost, delay and stress.
A party to a de facto relationship must apply for property settlement within 2 years of the date of separation.
MY FORMER PARTNER AND I HAVE REACHED A “KITCHEN-TABLE” AGREEMENT. WHAT NOW?
It is important to document the terms of property settlement in a way that is legally binding. Failing to do so can lead to your financial relationship being left unfinalised. This can have flow on effects for your finances into the future.
There are two options available to parties wishing to finalise the terms of property settlement and ensure that the agreement is legally binding:
1. Obtaining Orders from the Court
Once agreement has been reached as to the terms of property division an Application may be made to the Family Court of Australia seeking that the terms reached be approved by the Court.
The Court will consider the Application “on the papers” without requiring the parties’ attendance at Court. If the Court deems the terms of your agreement to be just and equitable, the Court will formalise the terms of your agreement by approving those terms as an Order of the Court.
2. Financial Agreement
The second option available is for the parties to document the terms of the agreement reached by way of a private agreement called a Financial Agreement. Financial Agreements are not required to be filed with the Court and do not require the Courts approval.
To enter into a Financial Agreement both parties must obtain independent legal advice. The Court does have the power to set aside Financial Agreements in limited circumstances. The strength of Financial Agreements rests in both in the careful drafting of the agreement and in the parties complying with their financial disclosure obligations.
Due to the complexities involved in drafting Financial Agreements, it is imperative that parties receive legal advice in relation to which form of property settlement is most appropriate given their circumstances.
There are occasions where both options may be exercised together.
Seeking legal advice sooner rather than later
A common misconception is that the assets of the relationship/or the assets of the parties are valued at the date of separation.
For example, Question: we separated in January 2020, we are now seeking advice in March 2021, is the relevant value the value as at January 2020?
Answer = No.
The assets are in fact valued at the date that negotiations take place, or at the date upon which a Court is asked to determine the division of property between parties, not at the time of separation. It is beneficial to settle property matters sooner rather than later. Obtaining legal advice early allows parties to protect their interests and given careful consideration to relevant matters such as whether assets are likely to increase or decrease and the risk of liabilities continuing to rise.
Peace of Mind
The earlier property settlement is achieved, the sooner parties have peace of mind and the ability to move forward with financial certainty.
We can assist you with commencing this process to give you direction and confidence in moving forward with achieving property settlement.