Property Settlement Step By Step Guide
Everything you need to know about dividing your property after you have separated or divorced
Step 1: Identify and value assets, liabilities and superannuation
This first step in your property settlement is all about identifying what is available to be divided and how much it is worth. Everything that is currently owned is included when we are identifying the pool of property available to be divided.
Start by making a list of both people’s assets including:
- property
- investments
- savings
- vehicles
- belongings
- business interests
- superannuation
List both people’s liabilities including:
- mortgages
- loans
- amounts owing on credit cards
- tax liabilities
Include everything that is held:
- in joint names, and
- in either person’s sole name
When we are working out property settlement in family law, everything is on the table. List all property that is currently owned including:
- property that was owned by one person before the relationship
- property bought during the relationship
- property bought after the relationship ended
Work out the value of each item based on what it would currently sell for. Agreed estimated values are perfectly acceptable for consent orders.
If both parties are in agreement, the court does not need to see independent evidence of any values, with the exception being a superannuation account if it is being split.
Step 2: Identify each person’s contributions
The aim of this step is to make a broad assessment of each person’s contributions during the whole of the relationship.
This is not a mathematical exercise. This is not about getting out dollar for dollar what you put in. We are considering contributions to a personal domestic relationship not a commercial arms-length one, after all.
Australian family law recognises both financial and non-financial contributions made by each person in property settlement calculations. This includes property either person brought into the relationship, income earnings during the relationship, gifts and inheritances either person has received, and each person’s homemaking and child-raising contributions.
In a traditional marriage, one person’s wage earnings are generally considered equal in value to the other person’s contributions as homemaker and primary caregiver of children.
The longer the relationship, the more likely it is for contributions to be seen as equal, as the significance of an asset owned prior to the relationship lessens with time.
Step 3: Identify each person’s future needs
In addition to each person’s contributions, the future needs of each party are relevant when working out a fair division of assets in property settlement.
It may help to think of this example when looking at future needs – in circumstances where one person earns much less than the other, it will generally be fair for them to get a little more of the overall assets now. Not because they contributed more, but because they are less able to get back on their feet financially. Their lower income earning capacity will mean they are less able than the other person to get a mortgage, for instance.
Future needs factors include age, health, earning capacity, children’s care responsibilities, and financial resources.
The goal is to ensure that both parties can move forward with a reasonable level of financial security.
Step 4: Negotiate to reach agreement
Having worked in traditional family law for many years, we have seen the crippling financial and emotional stress people experience in high-conflict, adversarial property disputes.
We always recommend that you negotiate to seek agreement on how to divide your assets.
This can involve direct discussions between you and your ex-partner, assisted negotiations through lawyers or a more formal mediation process.
However you do it, the aim is to find a mutually acceptable property settlement agreement that can then be formalised legally.
Step 5: Consent Orders or Binding Financial Agreement?
Once agreement is reached, we recommend that you formalise it in a legally binding way.
This can be done through Consent Orders approved by the Court or a Binding Financial Agreement (BFA). Each of these documents will outline the agreed division of assets and provide certainty and legal protection for both parties.
Consent Orders tend to be the cheaper option than a BFA. This is because each person must have their own independent lawyer in the BFA process. Neither person is required to have a lawyer for Consent Orders to be valid.
Consent Orders also carry less risk than a BFA as they are Court-approved and can only be challenged in very limited circumstances.
Step 6: How we can help you
We provide cheap and easy Consent Orders Australia-wide.
Our Consent Order packages give you an affordable and accessible property settlement.
Get started now and let our experienced family lawyers give you the certainty and protection of a Court-approved legally binding property settlement.
