Expert Advice From Brisbane Property Settlement Lawyers
A property settlement refers to the division of the asset pool of a married or defacto couple, which is formalised in accordance with the Family Law Act 1975 so that it is binding, enforceable and final.
O’Reilly Shaw Lawyers offers a number of fixed fee packages to suit different ways that our clients want to negotiate and finalise their property settlement. Those packages range from very limited advice and preparation of the final settlement documents, right through to comprehensive advice, disclosure review, representation at mediation and preparing the settlement documents.
If you would like to enquire about our fixed fee packages, call us on (07) 3236 4504.
In order to decide a “just and equitable” property settlement, a 5-step process is adopted as follows:
- Determine the asset pool to be divided.
What are all the assets, liabilities, superannuation and financial resources of the separating couple? This includes (but is not limited to) houses, shares, cash, motor vehicles, personal property, furniture, jewelry, superannuation, and interests in a businesses, Trusts, or companies.
- Determine whether it is just and equitable to adjust the current legal ownership of the pool (the answer to this question is almost always “yes”).
- Assess the contributions each of the parties in the following categories:
- financial contributions;
- non-financial contributions;
- parenting contributions;
- homemaker contributions.
- Assess what (if any) adjustment should be made as a result of “future factors” (s75(2) of the Family Law Act) such as:
- the age and state of health of each of the parties;
- the income, property and financial resources of each of the parties and their capacity for employment;
- care arrangements for the children (if any);
- the commitments of each of the parties that are necessary to enable the party to support himself or herself and a child/children or another person he/she has a duty to maintain;
- a standard of living that in all the circumstances is reasonable;
- the duration of the marriage and the extent to which it has affected a party’s earning capacity;
- the need to protect a party who wishes to continue that party’s role as a parent;
- any child support that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child/children of the marriage;
- any other relevant factor or circumstances.
- Make any necessary final adjustment to the final percentage split to ensure the result is appropriate.
It is important to be aware that:
- there is no “one size fits all approach”;
- there is no 50:50 starting point or presumption;
- no one is “automatically entitled” to anything.
It is important that you and your spouse finalise a property settlement and that it is formally documented either by way of:
- Consent Orders; or
- A Binding Financial Agreement.
If you do not formally attend to a property settlement, you are at risk of unexpected consequences including:
- your spouse making a claim against you for a property settlement in the future;
- if you miss the “window” you have to ask the Court to make an Order for a property settlement (that window is 12 months after a Divorce Order becomes final, or 2 years after separation if you were in a de facto relationship);
- you may incur stamp duty when you transfer an asset without a Consent Order or Binding Financial Agreement;
- you may incur certain taxes (including but not limited to Capital Gains Tax) when you transfer or sell an asset;
- you may remain liable for a guarantee or loan;
- you may remain or become liable for a debt or a claim;
- your credit rating could be negatively affected; and/or
- continuing an ongoing financial relationship with your spouse.
Once you have reached an agreement for property settlement, you will need to formalise it, either by:
- Consent Orders; or
- A Binding Financial Agreement.
Both documents set out the agreement reached. Both documents are binding and enforceable. Both documents enable you to benefit from stamp duty exemptions, such as if one partner is transferring their interest in a property to the other. Both documents require financial disclosure and deal with all of the assets, liabilities, superannuation and resources of both partners (“the asset pool”).
If you formalise your agreement by “Consent Orders”, there are 2 documents that you will need to complete and file with the Court:
- An Application for Consent Orders; and
- Minute of Consent Orders.
Together these documents set out the assets, liabilities, superannuation and financial resources, your respective incomes and what is to happen to each of the items in the settlement.
The Application and Minute of Consent Orders are filed with the Family Court of Australia (a filing fee is charged by the Court) and reviewed by a Registrar. You are not required to attend Court. Provided that the Registrar is satisfied that the Orders are just and equitable, he/she will grant those Orders. The Registrar will seal the Orders and this is the date the Orders become binding and enforceable, and the clock starts “ticking” in respect to any time limits/timeframes in the Orders.
You do not have to get legal advice from a solicitor to prepare/lodge Consent Orders, although we strongly recommend that you do, as once the Orders are made, they are irreversible except in exceptional circumstances. Also, there may be an unexpected or hidden outcome for you in the deal (e.g. tax consequences, stamp duty, a liability, or remaining in the family business when you need out!) and you don’t want to be left with a liability you weren’t expecting in the deal.
Binding Financial Agreements are essentially a Deed that sets out the asset pool and what is to happen to each item in the settlement. In order to be binding and enforceable, both of you must obtain independent legal advice as to the nature and effect of the Agreement, as well as the advantages and disadvantages to you in entering into the Agreement at the time. The solicitor for each spouse must provide a statement of independent legal advice, attesting to this advice having been given.
Binding Financial Agreement do not get filed with the Court, and so they do not require a Registrar to review and approve the settlement.
Most property settlements can and should be formalised by way of Consent Orders, for many reasons, including that they are easier to enforce if things go awry. Binding Financial Agreements have very technical requirements and do not require the approval of a Registrar of the Court (who in respect of Consent Orders, needs to be satisfied that the settlement is just and equitable in order to approve the orders). Binding Financial Agreements are usually reserved for unconventional or unusual property settlements.
The negotiation process can be as straightforward or as detailed as you like.
Be aware, however, that you and your spouse are obliged to make full and frank financial disclosure of your financial position when reaching your property settlement. If disclosure is not fully made, there is a risk the property settlement could be set aside by the Court in the future.
It is therefore vital that you and your spouse attend to your disclosure obligations in your negotiation process.
Once you have exchanged disclosure documents/information and the asset pool is known, you can negotiate your property settlement. This process can occur via:
- direct discussions between you and your spouse;
- via lawyers in correspondence/telephone calls/meetings;
- via mediation (with or without lawyers);
- via the collaborative law model.
Litigation should always be a last resort. It is expensive, time-consuming, emotionally taxing and you have no control over the process or outcome.
Arbitration is an alternative to litigation, if you and your spouse cannot reach an agreement, but you do not want to go to Court. Arbitration involves your case being decided by an independent mutually chosen Arbitrator. The Arbitrator’s decision is binding and enforceable (once it is registered with the Court), however the cost and waiting times are less than the Court’s, and the model is more flexible and can be decided by you and your spouse.
If you and your spouse have reached an agreement, it is important that you formalise it and we recommend that you take the agreement to a lawyer (he/she cannot act for both of you – only 1 of you) to have the agreement properly formalized, so that you have a final, binding and enforceable settlement. If you have agreed to split superannuation, then there are additional steps that must be taken before you have your agreement formalized. If you do not take those steps, your superannuation split is likely to be unenforceable.