The Importance of Finalising your Property Settlement & the Dangers of Delay
Oftentimes, particularly in circumstances where parties to a separation are amicable and consider that they “get along well”, spouses divide their assets according to a personal agreement – that is, an agreement negotiated personally between the parties without the use of lawyers or the Australian courts.
Such an arrangement is not legally binging, and until an agreement is documented in one of the approved manners, the agreement is considered to be an informal agreement.
One of the most significant consequences of not formalising your property settlement is the possibility that your former spouse is able to make an application for a property settlement in the future – one, two or even several years later. Being required to undertake a settlement years after your separation can have detrimental impacts on your financial and mental wellbeing and makes it difficult to plan your personal affairs. This is particularly so when as far as you knew, the matter was dealt with and is in the past.
It is important, and a principal consideration of the Australian courts, that parties finalise the financial aspects of their relationship so that they can get on with their lives.
HOW DO I FORMALISE A PROPERTY SETTLEMENT?
Australian family law affords former spouses (or parties to a de facto relationship) two ways in which they can formally finalise a property settlement. These are:
1. Making an application to the court for consent orders; or
2. Entering into a binding financial agreement (‘BFA’) (also colloquially known as a ‘pre-nup’).
To reiterate, an agreement is not legally binding unless and until it is is documented in one of these manners.
1. CONSENT ORDERS
Parties to a separation that have reached agreement about their property settlement are able to apply to the Family Court of Australia for orders to formalise the agreement so that it is legally binding. This application documents and details:
- The agreement reached by the parties; and
- Its practical application.
When considering an application for consent orders in respect of a property settlement, the Family Court must be satisfied that the orders proposed are just and equitable.
Although the parties are not required to obtain legal advice in relation to an application for orders, it is highly advisable that you do so, as the documents required are technical in nature, and the consequences of an agreement not being documented correctly can be costly and time consuming.
2. BINDING FINANCIAL AGREEMENTS
Parties to a marriage or de facto relationship can enter into a binding legal agreement (essentially a contract) that details the financial arrangements should their marriage or de facto relationship break down.
A binding financial agreement can be entered into:
- Before marriage;
- During marriage; and
- After divorce.
A binding financial agreement is capable of covering:
- Property matters; and
- Financial support of a spouse (i.e. spousal maintenance), or the termination there of that is, to prevent a former spouse making an applicaton for maintainance in the future should their circumstance change. This protection is not afforded solely by consent orders.
Unlike an application for consent orders, in order for a financial agreement to be binding, both parties must seek independent legal advice as to the effect of the agreement on the rights of either party and the advantages and disadvantages thereof. Additionally, and as distinct from an application for consent orders, a binding financial agreement is not required to be deemed as just and equitable by the Australian courts.
OTHER IMPORTANT CONSIDERATIONS
You are not required to be divorced to formalise your property arrangements – in Australia, divorce is a largely administrative process and is distinct from property settlement matters.
You should also consider that when you are divorced, you have twelve months from the date that the divorce is granted to bring an application for a property settlement to the court. After this time, ‘leave’ (i.e. permission) from the courts to apply for property orders may not be granted, or may nevertheless be costly and time consuming to pursue. De facto couples have two years from the date of separation in which to apply to the court for property orders.
WHERE TO FROM HERE?
Our accredited family law specialists are available to assist in all matters pertaining to your property settlement and can advise as to the method that is most suited to your particular circumstances. If you would like to speak to one of our family law specialists about any of your family law matters, please contact us on (03) 9804 7991 or email email@example.com to arrange a free telephone consultation.