Can’t reach an agreement about property settlement. What should I do now?
When you are getting divorced, you may want to protect and secure your own property as much as you can. Things are easier if you can reach an agreement with the other party regarding the division of your assets. However, if you cannot reach an agreement with the other party, you may need to apply to a court for Financial Orders. This is usually the last step to take, because applying for financial orders can be time-consuming and expensive for both parties.
1. What is a financial order?
A financial order is a set of orders made by a court relating to the division of property. It can include orders for payment of spouse or de facto partner maintenance.
A court can make a financial order based on an agreement between the parties (consent orders) or after a court hearing or trial.
When a financial order is made, each person affected by the order must follow it.
2. What you must do before applying to a court?
You must make genuine effort to resolve the matter with your partner by family dispute resolution.
If you are applying for financial orders, the Family Court prescribes that parties must follow pre-action procedures before filing an application.
The aim of the pre-action procedures is for parties to explore areas of resolution and, where a dispute cannot be resolved, to narrow the issues that require a court decision. They should control costs and if possible, resolve disputes quickly, ideally without the need to apply to a court.
3. What financial orders can you seek?
You can apply for orders relating to:
- property – to say how your property, income, financial resources and debts should be shared
- maintenance – to provide financial support for former spouse or de facto partner
- child support – in certain circumstances
4. What should come first? Divorce application or property settlement?
Getting divorced and formalising a property settlement are two separate legal issues. The applications can be filed in any order, or at the same time. There is no need to wait until you are divorced to finalise your property settlement.
You may:
- Apply for a divorce and within 12 months of the divorce being finalised apply to court for property settlement order; or
- Apply for property settlement order and apply for a divorce afterwards
5. What does the court consider when determining an application for property settlement?
When you apply for a property settlement, the Court determines the application by in a 4-step process:
Step 1: Identifying and valuing the assets, liabilities and financial resources of the parties
This includes all assets, liabilities and financial resources, whenever and however acquired. It includes property presently possessed and property expected (for example an inheritance). It may also include assets and liabilities disposed of in the past.
Property must be identified at the date of settlement, not at the date of separation. When identifying assets, full and frank disclosure should be demonstrated.
Step 2: Assessing the contributions made by the parties
The contributions made by each party fall into the following categories:
- financial contributions
- non-financial contributions
- contributions to the care and welfare of the family
- contributions in the capacity of home-maker or parent
Step 3: Assessing the future needs of each of the parties
The Court will consider the following, but not limited to the following factors:
- how much money each party could earn in the future
- age and health of each party
- care and financial support of children
- responsibility for looking after other people
- the length of the relationship
Step 4: Is the proposed division of property fair to both parties?
After assessing Steps 1, 2 and 3, the Court must decide whether the final result is fair for each of the parties. To achieve this aim, it is important for both parties to know their obligations and entitlements.
6. Conclusion
While we all hope for ‘happily ever after’, relationships can sometimes break down. The lengthy court battles, emotional and financial stress that can ensue often prompt couples to consider making a Binding Financial Agreement in advance. It can be a particularly cost-effective way to protect the assets you’ve worked hard to earn; protecting your future income or inheritance; making sure you (and any children) are adequately looked after financially if the relationship doesn’t end amicably.
At Ascent Lawyers, we have experience in drafting and advising on all aspects of Binding Financial Agreements. The importance of getting a Binding Financial Agreement right the first time cannot be stressed enough.
If you or someone you know needs expert advice from our team of family lawyers, do not hesitate to contact us.
