Property Settlement

Publish Date 03 Septemeber 2004

What is a property settlement?

At the end of a marriage, it is necessary to determine how to divide up your assets and financial resources. A property settlement is the term used to describe who gets what after the end of a marriage. The Family Law Act 1975 covers matters relating to property settlements for married couples. The law is different for De Facto Relationships. De facto and same sex couples are covered by state laws and the State Courts have jurisdiction with respect to a property settlement in such cases. (However, the laws relating to child matters relating to children are uniform throughout Australia and are covered by the Family Law Act.)

A financial case can cover such things as property settlement, maintenance, child support or financial enforcement. "Property" covers such things as your home, other real estate, money in the bank or other financial institution, cars, boats, investments, business interests, household contents, and Superannuation.

Full and Frank Disclosure

If you are involved in a case about property you are required to make a "full and frank disclosure" to the other party about all of your property, superannuation, financial resources. For detailed information about this, refer to the page Disclosure under Family Law Rules.

Mediation and Negotiation

On 29 March 2004, new Family Law Rules came into force. These Rules require you to take certain steps before you commence legal proceedings in the Family Court (These steps are called Pre Action Procedures). The Pre Action Procedures are intended to encourage parties to resolve matters through negotiation rather than having a Judge make a decision in Court. Unless your case is urgent, or involves some exceptional factor, such as allegations of abuse or fraud, you must:

Make a genuine effort to resolve the dispute through counselling or mediation;
Providing the other party with copies of relevant documents;
Make a settlement offer;
advise the other party of the orders you will seek from the Court.

Complete details of what is required to comply with Pre Action Procedures can be found at the page-Pre Action Procedures.

How do you determine what the Property Settlement should be?

There is no formula for working out how the property will be divided. Contrary to urban myths, there is no presumption that the property should be divided 50/50, 60/40 or in any other arbitrary proportion. The Family Law Act sets out the factors which must be taken into account when a Judge has to consider how property is to be divided. These factors include:

what each party had at the commencement of the marriage;
the length of the marriage;
contributions made towards assets, (e.g. maintaining the assets, gifts or assistance from family members, non-financial contributions, such as physical work done to improve the home and contributions made to the welfare of the family as a carer or homemaker);
the future needs of each party (including whether the party has the capacity to support himself/herself, the age and health of each party and whether one of the parties has the responsibility for the care of children.

Can you have an informal property settlement?

Whilst there is no law against making your own informal property settlement without lawyers and outside the scope of the Family Law Act, it is not a wise move. Unless a settlement is approved by a Court, or a formal binding Financial Agreement is made pursuant to the Family Law Act, an informal property settlement is not regarded as binding. This means that one of the parties could renege on it and be entitled to apply to the Family Court for a greater share of the property in the future. However, it is not necessary for you to appear in court in order to have a binding settlement. If terms of settlement are reached, a family lawyer can prepare an Application for Consent Orders which may be lodged at the Family Court without the need for anyone to actually appear in Court. Consent orders have the same legal force as a decision made by a Judge in a Courtroom. Before making the consent orders the Court will need to be satisfied that the orders are properly drafted and that the terms are just and equitable. The benefit of having orders made by consent is that you know exactly what the settlement will be as opposed to the uncertainty of having a judge to decide the matter for you. The long delays experienced in court proceedings coupled with the expense of court proceedings certainly make going to court the less preferred option.

Property Settlement for De Facto (Domestic) Partners in Victoria

Couples (including same sex couples) who have been living together for two years or more, or who have been cohabiting for a shorter time but who have had a child together, are entitled to make a claim for adjustment of property interests in Victoria under the Property Law Act. This is in addition to other rights at common law and equity. These laws are different to those which apply to married people. Generally, proceedings are taken in the Supreme Court of Victoria and the Court will take into account:

financial and non-financial contributions made by the partners to the acquisition, conservation and improvement of their assets
the contribution, including any made in the capacity of homemaker or parent to the welfare of the other partner or the welfare of their family
any written agreement that has been made by the parties.

The Property Law Act generally requires any court proceedings for property settlement to be commenced within two years of the date on which the relationship ended. An exception to this rule may be made if hardship would be suffered.

It should be noted that, unlike the Family Law Act, the law relating to de facto or domestic partners does not take into account the future needs of each party nor does give any right to maintenance.

To avoid future problems, even if there is an "amicable" separation, it is prudent to have a settlement formalised at least in the form of a Deed.

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