How do couples divide assets after a split?
When a relationship ends, either a de-facto or a legal marriage, there are laws regarding the division of the couples’ shared property. Before beginning to divide assets, obtaining the right legal advice is important to help you divide your assets in respect to the Family Law Act. Both assets and liabilities will be discussed when dividing your property.
Even if you and your partner were not married, if in a de-facto relationship, you can still apply for property settlement. However, married or not, seeking legal advice is the best option as a first step.
There are time limits on when you must make an agreement. If you are divorcing, a financial agreement must be made a year after your divorce is finalised. If you are splitting from a de-facto relationship, a decision must be made two years after your relationship has ended. It may be important at this point to understand how the Family Court defines de facto relationships because if yours doesn’t meet the criteria, property division laws won’t apply.
The Family Law Act 1975 sets out the general principles the court considers when deciding financial disputes after the breakdown of a marriage (see Sections 79(4) and 75(2)) or a de facto relationship (see Sections 90SM(4) and 90SF(3)). The general principles are the same, regardless of whether the parties were in a marriage or a de facto relationship, and are based on:
- working out what you’ve got and what you owe, that is your assets and debts and what they are worth
- looking at the direct financial contributions by each party to the marriage or de facto relationship such as wage and salary earnings
- looking at indirect financial contributions by each party such as gifts and inheritances from families
- looking at the non-financial contributions to the marriage or de facto relationship such as caring for children and homemaking, and
- future requirements – a court will take into account things like age, health, financial resources, care of children and ability to earn.
The way your assets and debts will be shared between you will depend on the individual circumstances of your family. Your settlement will probably be different from others you may have heard about.
The superannuation splitting law treats superannuation as a different type of property. It lets separating couples value their superannuation and split superannuation payments, although this is not mandatory.
Agreements On How To Divide Assets
Reaching an agreement can be hard. We always recommend that you try to reach agreement on how to divide assets through negotiation or mediation first. If difficulties are becoming evident, you can then ask the court to decide on how to divide your assets. These are called consent orders and they are agreements made by the court that are difficult to change.
If seeking help when reaching an agreement on how to divide assets, legal advice is a good step. Mediation can be an option to help you negotiate and sign an agreement. However, if an agreement cannot be made, you can apply for a court order. There are steps you must follow before you can apply. Firstly, you can visit a financial counsellor or attend family dispute resolution services. These are easily found and most lawyers can assist you in finding an accredited dispute resolution service to help.
However, you may have made an informal agreement on how to divide assets with your partner. This can either be written or unwritten but you should be aware that it is not legally binding. To ensure this is legally binding, you must follow the right legal steps and possibly make the agreement into a court order.
When deciding how to split your property, multiple elements must be taken into consideration. You must discuss your finances and the amount of debt you have as a couple and what property is joint owned. Financial agreements must also be made in consideration of children and assets. Property included in couples’ settlements could vary from money, real-estate (including investments), insurance, super, cars, jewellery, or furniture and any corresponding debts.
Asking The Court For Orders on How To Divide Assets
The Family Law Rules require prospective parties to genuinely try to resolve their dispute before starting a case. All prospective parties must:
- Participate in dispute resolution services, such as family counselling, negotiation, conciliation or arbitration.
- If dispute resolution is unsuccessful, write to the other parties, setting out their claim and exploring options for settlement.
- Comply, as far as practicable, with the duty of disclosure
Firstly, the courts value all the property involved in the relationship. They then discuss what each person has invested into the relationship financially and non-financially. The third step to a court order is considering other elements of each person, how much they earn, their age and the relationship with children and family. Finally, the court then reviews all elements to make a final and fair decision on the financial agreement.
Keep in mind there is not set formula for the courts to follow and a decision is made after all the evidence has been considered. There is no specific 50/50 rule, for example.
Divorcing or ending a relationship can be a difficult time, however, discussing a financial agreement is not intended to be a difficult task. You should always seek legal advice and while a court order may not be your goal, it has many benefits in making your decision final.
Contact us today for more information – we offer a FREE, 10-minute phone consultation.