A property settlement involves the formal division of assets, financial resources, and liabilities between a couple whose relationship has broken down. It legally finalises their financial affairs and enables them to move on with their respective financial lives.
If you and your ex-partner agree on a property settlement, you should ensure that the agreement is legally formalised. If you do not, you may leave yourself open to future claims and may not be entitled to certain stamp duty or capital gains tax relief.
You can formalise the division of your property through consent orders or by entering into a financial agreement (also known as a Binding Financial Agreement).
Consent orders are filed with the court and if the court believes they are just and equitable the court will make the orders, which makes them legally binding. It is important to receive legal advice before agreeing to consent orders.
A financial agreement is a written agreement between the parties that must comply with certain formalities to be valid, including the requirement for each party to receive independent legal advice before entering the agreement.
If your matter cannot be settled, you may need to go to court. In working out your entitlements in a property settlement, the court will take the following approach (which is usually also followed when reaching an out-of-court agreement):
- assess the value of the property pool — taking into consideration real estate, shares, investments, business interests, motor vehicles, furniture, cash, superannuation, etc.
- consider the financial and non-financial contributions made by the parties (taking particular note of any gifts of money, inheritances or windfalls)
- assess any adjustments for the parties’ future needs such as the care of children, health problems and/or income disparity
- determine an overall division that is just and equitable in the circumstances and how to best divide the property pool.