After separation, it is vitally important to finalize your financial affairs with your former partner as soon as possible. If you do not finalize your financial relationship, either party may file a claim on the other at a later date (in some cases up to twenty years later). If this happens, the Court does not consider the property of the parties’ at the date of separation but at it at the date of proceedings, and, if your matter continues through the Court process, at the date of a Trial.
This can have a significant impact upon your financial affairs – imagine the effect upon real estate or assets acquired after separation (even with another person), increases in superannuation and savings, and increases in the former matrimonial home. An inheritance or lottery win post-separation can also be included in the property asset pool for the Court to consider.
We encourage you to obtain legal advice prior to entering into any property settlement with your former partner so that you are aware of where you stand legally. We can assist you in many ways to navigate this process – not all matters end up in Court. In fact, statistics show the vast majority of matters settle out of Court, with the assistance of lawyers.
Mediation between the parties is always an option we recommend if it is likely that an agreement can be reached. However, in some cases where there is little likelihood of Mediation succeeding, commencing Court proceedings may be appropriate course of action to take. The Court process induces parties to address the issues and Mediation can follow. It is rare for a matter to actually end up at Trial – of cases that end up before a Court, the significant majority settle before reaching trial either at, or before, mediation, prior to any Trial.
Often, there are disputes about what property is in the property pool, what values are attributable to those assets and how they should be managed during the process (i.e. who should pay the mortgage, or who should live in the house before a final Property Settlement has taken place). These types of issues vary on a case -by-case basis but must also be dealt with to allow the Property Settlement process to proceed.
What Are the Time Constraints for Property Settlement?
Generally it is best to settle your property matters as soon as possible after separation. If you are unable to come to an agreement with your former partner, separating parties must commence proceedings for a Property Settlement (via an Application to the Court) within twelve months of their Divorce, for a married couple and for a de-facto couple, within two years of their separation. If you are “out of time” you will require the leave of the Court to proceed with a property settlement.
We can assist you to settle your property matters with your former partner through negotiations. Upon agreement between the parties, the best way to finalize property is through Consent Orders. Consent Orders are Orders both parties have agreed to and which the Court then scrutinizes and if they are satisfied that the proposed settlement is just and equitable, they will make the Orders sought by the parties.
There is also an option to formalize any agreement is a document called a Binding Financial Agreement. This is an agreement between the parties that has not been scrutinized by the court system. We recommend Consent Orders in preference to a Binding Financial Agreement, as there are some cases where these Binding Financial Agreements have been overturned by the courts.
We Can Assist You With the Following Options to Finalize Your Property Affairs with Your Former Partner:
- Application for Consent Orders
- Binding Financial Agreements
Binding Financial Agreements
Often mistakenly referred to as a “pre-nuptial” or “post-nuptial” agreement, a Binding Financial Agreement can be entered into by parties before or during a relationship or marriage, as well as after separation. The effect of a Binding Financial Agreement is to finalise a property settlement between the parties which is legally binding, but entered into as a private agreement between themselves – effectively contracting away from the Family Law Act 1975 and any rights that they may have pursuant to that legislation.
The main advantages of entering into a Binding Financial Agreement are that parties are able to tailor a financial settlement that is specific to their needs and requirements. Often it is cheaper and more convenient to enter into a Binding Financial Agreement rather than commence legal proceedings in the Federal Circuit or Family Court, which may also improve the relationship of the parties post-separation.
The disadvantage of entering into a Binding Financial Agreement is that the Agreement can be overturned by the Court for a number of reasons under the Family Law Act 1975 (Cth), although it is uncommon. For this reason we recommend an Application for Consent Orders from the Family Court of Australia, the difference being that the agreement reached by the parties is scrutinised by a Court Officer under the Family Law Act to which a Binding Financial Agreement is not. That said, Consent Orders are only available to a couple that has separated and in that respect, many couples who are still together, but wish to agree to how their financial matters would be resolved should their relationship fail at some stage, enter into a Binding Financial Agreement.
A Binding Financial Agreement holds the same power as an Order of the Court and is able to be entered into by married, de facto and same-sex couples. We can assist you in drafting one of these Agreements, tailored to suit your needs, or alternatively we can assist you by providing to you the Independent Legal Advice necessary to execute one of these Agreements.