PROPERTY SETTLEMENT AND DISPUTE
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Property Settlement
Property settlement and parenting are the two most complex aspects of relationship breakdown. Property settlement is complex because it requires separating couples to establish a property pool of all of their assets and debts and then divide them in a way that it is equitable. This can be a time-consuming, expensive and emotional process.
The Australian Family Law system is governed by the Family Law Act 1975 (Cth). The Act deals with property settlement for both married couples and de facto couples. The process is slightly different in Western Australia, so if your matter is being heard in that State, you may require additional assistance.
Time limits
You can apply for property settlement from the date of separation. However, time limits apply. If you are:
Married: You have 12 months from the date your divorce is finalised to complete your property settlement
De facto: You have 2 years from the date of separation to complete your property settlement.
If you are unable to comply with these time limits, you may be able to seek leave of the court to have your matter heard. If you have exceeded your time limit, contact our team for expert advice.
Division of property
Property division requires you are your ex-partner to create a property pool. The property pool is made up of all of your assets and all of your liabilities (debts).
Assets
An asset contains economic value or benefit. Assets can include:
Bank accounts
Shares
Real estate such as the family home and investment properties
Bitcoin
Superannuation
Furniture
Artwork such as paintings
Family trust
Family business
Any other assets
Liabilities (debts)
Liabilities are anything that runs at a loss. Liabilities can include:
Mortgage
Personal loans
Credit cards
Outstanding debts of the relationship, for example, hire purchase agreements, orthodontic work, payment plans, unpaid utility bills, etc.
Outstanding taxes
Debts of the family business
Any other debts
Case Study
Mike and Amanda were in a de facto relationship for 20 years. Mike is an accountant and earns a salary of $120,000 per year. Amanda is a classroom teacher and earns $80,000 per year. Five years before they became a couple, Mike bought a unit to live in valued at $350,00 at the time of purchase. At the start of their relationship, Mike owed $200,000 on his mortgage. That mortgage has now been paid out and the property is currently valued at $520,000. Amanda didn’t own any property, however, she had $50,000 in her savings account and owned a number of shares now valued at $70,000. Two years into their relationship, Mike and Amanda rented out the unit for $400 per week and used its equity to purchase a family home in Sydney for $500,000. The mortgage on the house was $320,000. They currently owe $50,000 on the mortgage. It is currently valued at $610,000. Throughout their relationship, they collected a lot of valuable artwork such as paintings. Upon valuation, the artwork came to $1.5 million. Mike also received an inheritance of $15,000 during their relationship. At the time of separation, Mike and Amanda had a credit card with a balance of $10,000 and an unpaid electricity bill for $300. They also currently owed $40,000 over two car loans. Mike has a superannuation account valued at $480,000 and Amanda has a superannuation account valued at $460,000. They do not have any children. Mike and Amanda separated amicably and did not want a drawn-out court hearing. They attended mediation to help them discuss how they would like to divide their assets and liabilities. They established they had: Assets = Over $3.905 million Liabilities = $100,380. They decided to formalise their agreement and drafted a financial agreement. There were no questions of jurisdiction or law to complicate their agreement so they applied to the Federal Circuit Court for consent orders.
Seek Expert Legal Advice
Contact Jameson Law for legal advice
List All Assets and Liabilities
Work out what assets and liabilities (debts) you have. It is recommended that you seek independent financial advice, especially if you have complex finances such as family trusts, family business, etc. You may also need to get a valuation on your assets such as shares, artwork, etc. You may also require the services of a forensic accountant if you are concerned about your finances. For example, if you believe your former partner is hiding assets.
Who contributed what?
Work out what each of you contributed to the relationship and the value of each of these contributions. This can include pre-marital/relationship assets, non-financial contributions such as care of children or homemaker, financial contributions such as personal income.
Informal or Formal Agreement
Reach agreement about the division of property. This can be completed informally or formally.
Informal: You and your former partner come to an agreement about property division without the need to attend court. You can come to an agreement yourself or use a dispute resolution service (mediator) to assist you. Informal agreements are not binding and are not enforceable. It is recommended that you create a written financial agreement to prevent either party from making an additional claim on any property in the future.
Formal:
You can apply directly to the court for a court order, however, the court has the discretion to refer you to mediation if you have not made an attempt to resolve your dispute. The court considers:
- What you have, what you owe and the value
- Your direct financial contributions e.g. wage
- Your indirect financial contributions such as gifts or inheritance
- Your non-financial contributions such as homemaking
- Future needs such as age, health, financial resources, care of children and ability to earn
- The court looks to your individual circumstances when determining how your property will be divided. There is no set formula to work this out.
If you have attended mediation or drafted your own financial agreement, you can formalise it by applying to the court for consent orders.
A formal agreement is also known as a binding financial agreement. It is also enforceable and any breach will be taken seriously by the court.
Divide Assets
Once you have reached an agreement or the court has divided the property, you will need to contact service provides such as your mortgagor, land titles office, utility providers, etc to change the account names for any asset or liability in joint names.
In a nutshell...
Post-separation property division requires all of your assets and liabilities (debts) to be pooled before being divided. You may require the assistance of a financial advisor or forensic accountant depending on your financial circumstances. You will also need to change account names for accounts in both your names such as the title on your property, utility accounts, etc. Let our law firm ease the stress and help you receive your property entitlements. Contact our team for a free initial consultation.
Case Study
Paul and Jenny were married for 30 years. They met while at university and were engaged shortly after graduation. Paul became a doctor, working long hours. Within 12 months of being married, Jenny gave birth to their first child. They had three children throughout the course of their marriage. They agreed that Jenny would become a homemaker and stay home to look after their family. Each child has now left home and supporting themselves financially.
During their marriage, Paul and Jenny purchased their family home, now valued at $1.2 million. It still has a mortgage of $300,000 owing. They own property in New Zealand and Victoria. They currently have a credit card valued at $20,000 and have private health insurance valued at $3,000 per year. Paul and Jenny have two vehicles. They owe $15,000 in loans for them.
Paul and Jenny’s relationship did not end amicably. They attempted mediation, however, their first session became heated and the mediator was concerned that coercive control may have played a part in the relationship and issued a section 60I certificate.
Jenny made an application to the court for an initiating application for interim and final property orders. The court took into consideration:
- Their assets, debts and their total value e.g. house, cars, superannuation, loans, credit cards, etc
- Paul’s direct financial contributions through his salary
- Indirect financial contributions by both parties e.g. gifts and family inheritance
- Jenny’s non-financial contributions to child care and homemaking
- Future requirements e.g. age, health, financial resources, Jenny’s ability to earn an income as she has not worked in 30 years, etc.
Property Disputes
Which Family court will hear my matter?
It does not matter whether you are married or in a de facto relationship, both courts have the jurisdiction to hear your property settlement dispute.
Federal Circuit Court of Australia
The Federal Circuit Court hears the bulk of Family Law court proceedings including property settlement. It has the discretion to refer complex matters to the Family Court of Australia, especially when a hearing is likely to take more than four days.
Family Court of Australia
The Family Court of Australia is a specialised court that hears more complex matters. This may include complex questions of jurisdiction or law if the matter proceeds to hearing and is expected to last more than four days and disputes about whether the matter should be heard in Australia.
Case Study
Cameron and John were in a de facto relationship for eight years. Neither of them owned any real estate when they met, however, John owned $10,000 worth of bitcoin. Cameron is a firefighter earning a salary of $110,000 per year. John is an electrician with his own business. John’s average annual income from his business is $85,000. The business has been valued at $500,000 and owns $20,000 in assets.
They didn’t purchase any joint real estate and rent a unit for $550 per week. John moved out three months ago. At the time of separation, they owed $200 for water and $300 for electricity.
John has a superannuation account currently valued at $75,000. Cameron owns a unit as part of his self-managed superannuation fund. It is currently valued at $450,000.
They have a joint credit card with a current value of $20,000. Cameron received an inheritance of $10,000 during their relationship.
Cameron and John have been unable to reach an agreement about how their property pool should be divided. They received legal advice and were advised that mediation is the first step. John also received financial advice in relation to his business and self-managed superannuation fund. During a successful mediation, they established they had:
Assets = Over $1.26 million
Liabilities = $20,500
The above is general legal information and should not be considered legal advice. You should speak with one of our property settlement lawyers for legal advice tailored to your specific legal matter. The courts deal with matters on a case by case basis. It should also be noted that there may be court delays due to COVID-19.
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Related Family Law News and Resources
Dispute Resolution in Family Law Proceedings
Mediation is a dispute resolution process where parties involved in a dispute are assisted by an independent third party to help them reach agreement....
FAQs
Frequently Asked Questions.
Successful mediation significantly reduces the cost of completing property settlement. However, if your matter cannot be mediated, there are additional costs that apply.
Court fees may include:
Application for consent orders = $170
Initiating application – interim and final parenting and property (the Family Court of Australia) = $715
Initiating application – interim and final parenting and property (the Federal Circuit Court of Australia) = $715
Daily hearing fee = $655
Some of these fees may be reduced in the event that you are able to prove you are suffering from financial hardship or you have a Government concession card.
Additional costs apply if you require the services of a financial planner or forensic accountant.
Not necessarily. Court proceedings are dealt with on a case by case basis, however, the court generally favours the financially weaker party or those with child care responsibilities. To reach 50/50 or close to it, it is best to work together to reach a satisfactory outcome for both parties.
Yes. Parties to a separation often underestimate the assets and liabilities they have. It isn’t until they work through their finances with an expert that they realise the true value of their assets and liabilities. If you are unsure whether you should complete property settlement, talk to our team for a free initial consultation.
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Industrial Relations Commission of New South Wales
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Land and Environment Court of New South Wales
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