Property / Financial Settlements

General Information – Property Settlements

There is a lot of confusion that client’s have when it comes to property / financial settlements and divorce. A lot of questions that we are being asked is “Can I do a financial settlement without a divorce?”

The simple answer is yes. You do not have to get a divorce before you and your ex-spouse do a property settlement. Getting a divorce and going through a property settlement are two completely different matters. That is, you do not need a divorce to get a property settlement, and you do not need a property settlement to get a divorce.

In fact, it is usually better to reach a property settlement before you legally apply to get divorced.

Below we explain why it may be more beneficial for you and your spouse to do a property settlement before getting a divorce.

Is there are Time limit?

There is no time limit as to when you should finalise your financial separation between you and your spouse if you are separated but not divorced.

For example, if you and your spouse have been separated for 5 years and are not divorced, then you still have plenty of time to take that extra step to organise and sort out your financial affairs.

Essentially, you can do your property settlement whenever you want after you have separated.

But beware that if you are Divorced, then there is a strict time limit, speak to your family lawyer on how to approach this.

Time Limit – Property settlement after Divorce

If you and your spouse decide to get a divorce before you do a property settlement, time limits start to apply when you want to commence proceedings for a property settlement. That is, parties only have 12 months from the date their divorce becomes final before they can commence proceedings seeking a property settlement.

If you are in a de facto relationship, then you have 24 months from the date of separation to commence proceedings to finalise your financial matters.

These are called limitation periods and apply when you and your spouse want to finalise your finances by commencing proceedings with the Court as opposed to an informal agreement amongst each other.

What if you and your spouse are unable to come to an agreement regarding your finances?

If you and your spouse are unable to come to a mutual agreement before your limitation period is expiring, then you must commence proceedings with the Federal Circuit and Family Court of Australia prior to your limitation period expiring in order protect yourself and your interests in any property you may acquired prior to and throughout the relationship.

If you do not commence proceedings before the limitation period has expired, you need to seek the courts permission to make an application for property adjustment orders, and this is only rarely granted in exceptional circumstances. such as financial hardship. In this case, you would need to demonstrate to the court that you would suffer financial hardship if there were no property settlement.

Case study example[1]

James and Sarah got married on 20 December 2010. One year after their marriage, James and Sarah purchased a house with each other as joint tenants for $1,000,000. In 2012, James and Sarah gave birth to twin girls.

On 10 January 2018 James and Sarah decided that it was time to end their relationship and separate on a final basis.

On 15 March 2019, Sarah made an Application for Divorce in the Federal Circuit and Family Court of Australia (“the Court”). The Divorce was granted on 25 June 2019 and finalized on 26 July 2019.

In this scenario, the limitation period for James and Sarah to commence proceedings in relation to property ends on 26 July 2020 (being the 12 months following the date their divorce became final).

On the other hand, if James and Sarah were in a de facto relationship, James and Sarah would only have until 10 January 2020 before they can commence proceedings with the Court in relation to a property settlement.

What if you and your ex-spouse reach an agreement after you are divorced, and the limitation period has expired?

If you and your ex-spouse have both reached a mutual agreement with respect to a property settlement but your limitation period has expired and you want to formalize the agreement to make it legally binding, then you can make an Application with the Court for Consent Orders.

Consent Orders for property settlements are legally binding Orders which formalise and finalise your financial and property agreement with a former partner or spouse.

Consent Orders are made by the Court and carry just as much judicial weight as any other order a Court makes at a hearing.

Unlike making an application with the court for a property settlement/property adjustment order, which would involve a hearing with the court, property Consent Orders do not require any hearings as the parties are all coming to a mutual decision as to their finances.

It is very important that your property settlements are finalised and legalised because this signifies the end of your financial commitment and future financial expectations.

Once you have a legally binding property settlement you can move forward in life with confidence and that your future earnings or assets will be protected.

It may be wise however that following a separation, you take the time to reflect and emotionally adjust to the separation before you decide to formalize your finances as you will be in a much better head space.

Disclaimer: this information is general in nature and is not intended as legal advice.

For legal advice and to speak to a family lawyer email info@cominoslawyers.com.au or call 02 8999 1800

[1] These are fictitious names and scenario for the purposes of general information.