Separating from a spouse or partner can be traumatic with many practical and financial considerations. A break-up places stress on the emotional wellbeing of all parties and their decision-making capacity. Getting advice early is important to ensure the best possible outcome is reached in your circumstances.
Married couples in Australia can apply for a divorce if their marriage has broken down irretrievably. To make an Application for Divorce there are a number of matters to consider but essentially the parties must have been separated for a period of at least 12 months. However, this time can include a period of separation under the one roof.
If you have children under the age of 18 years, you may be required to attend Court for the hearing of the application. The Court will need to be satisfied that proper arrangements have been put in place for the children.
What is a family law property settlement?
A property settlement concerns the division of assets, liabilities and financial resources between a separated couple to legally finalise their financial affairs. The conclusion of a legal property settlement enables the parties to move on with their respective financial activities. Which enables various stamp duty concessions when transferring certain assets such as real estate.
When can I obtain a property settlement?
A person may seek a property settlement once he or she separates from a former spouse or de facto partner. There is no requirement to be divorced before settling your financial affairs however the following time limitations are important:
- for de facto partners, any court proceedings for a property settlement must be commenced within two years of separating;
- the granting of a divorce triggers a twelve-month limitation period within which to bring court proceedings for a property settlement or spousal maintenance.
Even ex-partners on good terms should ensure that any agreement reached concerning the division of their property is legally documented and each receives independent legal and financial advice before finalising their affairs.
What steps are involved in dividing property?
The division of assets after separating can be achieved through a financial agreement, consent orders or court proceedings.
Most family law property settlements are finalised without going to court which should only be considered as a last resort.
The Family Law Act 1975 (Cth) encourages separating couples to settle property issues amicably and full disclosure is essential.
When negotiating how property should be divided after a break-up the same steps that a court would take are generally applied. These are:
- identifying the parties’ assets, liabilities and financial resources;
- assessing the parties’ respective financial and non-financial contributions;
- evaluating the parties’ future needs including their relative earning capacities, state of health, education and responsibilities as primary carer of any children;
- making just and equitable orders in consideration of all circumstances.
Why financial advice?
Whether you achieve 40%, 60% or ‘somewhere in between’ out of the property pool, it is essential that you are aware of the financial implications before you finalise a property settlement.
The retention, transfer, disposal or division of assets must be considered in light of taxation and stamp duty implications, the effect on your personal circumstances, and your current and future needs.
Consideration should be given to the nature of assets retained or disposed of, as it may be more advantageous to hold onto one type of asset over another. It is important to understand and utilise the best structure to manage tax liabilities, achieve legitimate tax savings and safeguard, as far as possible, your financial future.
A superannuation split may form part of your proposed property settlement and it is important to evaluate the net result of this. The split may permit the creation of a new interest for the non-member spouse / partner or a transfer or roll-out of benefits for the non-member spouse / partner to another fund.
The splitting of superannuation does not convert its value into cash as it is still governed by superannuation laws and will generally only be accessible at retirement age.
With assistance from a legal and financial expert, your options can be presented and explained so you can make informed decisions that are in the best interests for you and your family.