Getting divorced? The need to know info for severing financial ties
Updated: May 14, 2019
Resolving to split property fairly and amicably is the most cost-effective path after separation for all family members. There are however time limits for completing a property settlement. So, guidance from a McKenzie Friend could come in handy.
I have witnessed a friend in an out of court property dispute where the legal fees were $50K to end up giving the party on the other side a property settlement of $110K, so a total of $160K from a moderate matrimonial pool. Clearly, with hindsight, being bitter and holding onto emotion was costly and could be viewed as a total waste of money. I have been involved in two matters recently whereby the couples left separating property for years creating communication confusion between normally very friendly ex-partners resulting in unnecessary legal fees.
Property Split Time Constraints
If you were married, you have 12 months from the date you got divorced to start court action about property or spousal maintenance. So consider holding off on applying for a divorce until you have finalised a property agreement. This 12 month time-limit may not apply to you if you have a legal divorce from overseas.
An example of a near miss was, I had a person contact me who signed divorce papers at their lawyers office in 2016 following the lawyer's advice. Negotiations over property went pear shaped, they ran out of money and thought they had to walk away with nothing. I spoke to them about being able to self represent two weeks before the 12 month timeframe to lodge in court expired. This person was able to make an application 48 hours before the deadline and not walk away from a property division worth $300K to them. Knowing deadlines when dividing property and divorcing is a must.
If you were in a de-facto relationship, you have 2 years from the date you separated to start court action about property or de-facto maintenance.
If you are outside the time-limit, you can ask the court for permission to apply out of time. The court will only allow this if you have a very good reason. If you are in Western Australia, get legal advice as the laws are a bit different for de facto couples.
What items to consider when doing a division of the property?
Property includes all the things that you or your ex-partner owned (together or alone). It can include things like:
· Cash and investments.
· The family home, land and investment properties ― this includes anything that either of you owned before the marriage.
· The family business.
· Trusts, shares, stocks and bonds.
· Cars and other vehicles―such as caravans or boats.
· Personal property―such as jewellery and tools.
· Household items—such as furniture.
· Insurance policies.
· Gifts, inheritances and lottery wins.
· Redundancy or compensation payouts.
· Other entitlements―like long service leave and personal injury claims.
· Debts—including mortgages, loans, credit cards and personal debts.
If you split superannuation, you usually don’t get it until you retire. In Western Australia, the law is different for de-facto couples and superannuation.
Steps to try before lodging a property application in the family court
1. Negotiate with your ex-partner, compromise on both sides keeps the wheels turning forward. Sometimes it is best to get together across a table for a couple of hours with a cup of coffee and talk it out to get the issues resolved once and for all. This type of informal mediation / negotiation is more effective with capable unrelated knowledgeable support people like a McKenzie Friend.
2. Attend Family Dispute Resolution / Mediation and make a genuine effort to resolve the matter, as the next step would be to file in the Federal Circuit Court .
3. Seek advice if the dispute is dragging out. Contact Legal Aid or a free legal services clinic as a starter. Some private family lawyers offer a free first appointment if you ask. Collate the following information before your appointment to save time and keep your costs down:
A) Write out a list of what property you and your ex-partner own (including what debts you both have) with your estimates of the value of all that property.
B) ASIC’s MoneySmart – Asset stocktake calculator may help you work this out
C). If it is safe to do so, try to copy or collect important documents
D). Write down the history of your relationship including any history of domestic and family violence. Include important dates—like when you started living together, when you each worked, studied, looked after the children and when you separated.
When considering a settlement, it's handy to know how property is divided in a
There is no exact formula about how your property will be divided. The court does not have to split property 50:50. The law does not look at why you separated or whose fault it was. However, in some circumstances, the court may take domestic and family violence into account when it decides how to divide property. Every case is different.
If the court thinks it is fair to divide up your property, the court will use a 4-step process to work this out. The court will:
Work out what all the property that is in your name, you ex-partner’s name or joint names is worth
Look at what financial and non-financial contributions you and your ex-partner made. Financial contributions can include things like income, inheritances or gifts of money from your family. Non-financial contributions can include things like homemaker duties like cooking, cleaning, do-it-yourself renovations, working for no pay in the family business and looking after your children
Look at what each person will need in the future. For example―it will look at the age and health of each person, their ability to work and who will look after your children.
Once the court has considered each of the above steps, it makes sure the division is fair and reasonable.
Formalising your property agreement to sever all financal ties
If you and your ex-partner can agree about how to divide your property, you can apply for Consent Orders or make a Binding Financial Agreement. Both of these are legally binding documents and should be drafted by a professional.
If you are thinking about making an informal verbal or written agreement, an informal agreement will not end your financial relationship. It is not legally binding and can’t be enforced if your ex-partner doesn’t follow it.
If you have experienced domestic and family violence, it’s important that you get advice before agreeing to a property division. Domestic and family violence sometimes continues after separation and can make it difficult to negotiate a fair division.
There are a range of resources available when considering a division of property.
· Family Court of Australia – Before you file – pre-action procedure for financial cases
· Family Court of Australia – Financial Statement (Do it Yourself Kit)
· Family Court of Australia – De facto relationships
· Federal Circuit Court of Australia – Property and Finances After Separation
· Relationships Australia – A Fair Share – Negotiating your Property Settlement
· Family Court of Australia – Family Law and Superannuation
· Family Court of Australia – Superannuation Information Kit