Property settlements after divorce: here’s what you need to know
It’s important to organise your finances after a marriage breaks down. Property settlements can be done after you divorce, although it’s a good idea to begin when you separate. The process is the same whenever it happens, although if you wait until after your divorce there are some rules you need to know. Let’s take a look at what’s involved in separating your finances.
Start with financial separation checklist
To separate your property, first you need to know what assets and debts you have. A good place to start is using a financial separation checklist for Australia. It should include details about:
other assets of value such as household goods and jewellery
credit card and other debt
hire or rental agreements
businesses you run or share
other benefits or inheritances
non-financial contributions to the relationship
Understanding how a property settlement works
Once you’ve tackled your financial separation checklist, you can make decisions about what you have (also known as your asset pool) and how it will be shared. There are different pathways to achieve this including:
Litigation – where you and your ex-partner can’t agree and you go to court
Arbitration – a form of dispute resolution where both parties present their case to an independent third person (the arbitrator) and are bound by their decision
Alternative Dispute Resolution – mediation, negotiation and other forms of dispute resolution are where both parties come to an agreement on the division of property, rather than going to court
If you and your ex-partner agree on how your property should be divided You can make an informal agreement, however it won’t be legally binding. You can formalise your agreement by entering a legally binding financial agreement or by applying for consent orders in the Family Court.
If you and your ex-partner don’t agree on how your property should be divided You can apply to a court for financial orders, where the court decides how assets and debts are divided based on evidence. You must make a genuine effort to resolve the matter by family dispute resolution before applying for financial orders. These are known as pre-action procedures.
Be aware that through these processes you may need to engage with:
accountants to investigate the total value of the asset pool, complicated structures and asset protection schemes
Non-confrontational alternative dispute resolution (ADR) specialists such as mediators or arbitrators.
What you’re entitled to
There isn’t a special formula used to work out what property you are entitled to when you separate. It’s up to you and your partner to work out what you believe is fair. If you can’t come to an agreement and decide to go to court, a judicial officer will decide what is just and equitable based on the unique facts of your case. You can present evidence and they’ll consider for you and your ex-partner:
what you've got, what it’s worth and what you oweyour direct financial contributions to the relationship such as wage and salary earningsyour indirect financial contributions to the relationship such as gifts and inheritances from familiesnon-financial contributions to your relationship such as caring for children and homemakingfuture requirements, factoring in your age, health, financial resources, care of children and ability to earn.
How long a property settlement takes
The time it takes to work out a property settlement depends on several factors, including your financial situation, if you and your partner agree, if you proceed with family dispute resolution or if you go to court. It can be completed in a matter of weeks or it could take years.
However, if you haven’t worked out a property settlement while you’re separated, there is a property settlement after a divorce time limit. You have until one year from the date your divorce order has taken effect to apply for a property settlement. If you’re wondering: ‘when can I get a divorce?’ You must be separated for 12 months before you can apply for a divorce.
Find the support you need
Legal advice It’s important to get quality, independent legal advice. You can ask trusted friends and family for referrals or you can search for a family lawyer in your state.
Mediation If you are unable to reach an agreement with your ex-partner, mediation is a good alternative to going to court. Consider using an accredited Family Dispute Resolution practitioner. Just remember, mediators don’t give advice – they’re there to help both parties resolve the dispute. You should still obtain your own independent legal advice.
Arbitration You could also try using an Arbitrator – an independent person who can make binding decisions on dividing your property.
Family Dispute Resolution And remember, if you plan to go to court, you need to genuinely attempt family dispute resolution, before filing an application.
How to pay your family lawyer fees
The best way to pay for your family lawyer depends on your personal circumstances. Here are three ways to pay for a lawyer to consider.
Paying outright An obvious place to start is looking at the funds you have available. You may be able to pay outright with money you already have. However, sometimes your money may be tied up in your property settlement, meaning you may need to seek an interim (short-term) order from the court to be given a lump sum of funds from the property pool prior to the final settlement. You might also not want to use your funds for other things.
Personal loans You may want to borrow money to pay for your legal fees. Although some people borrow from family or use their credit card, a personal loan can be a good option if you don’t have a settlement to worry about and you’re confident you can meet the loan terms. A personal loan gives you the ability to repay the money over time – lenders usually offer loan terms between 1 and 7 years. It’s important to understand that you’ll likely have to pay an upfront fee to establish the loan and you’ll need to start making your monthly repayments straight away. You should also be aware of any penalty fees that may apply (say, if you miss a monthly repayment) and if you’ll be charged for repaying the loan in full prior to the end of the loan term fee (an early repayment).
Legal loans A legal loan is a special type of personal loan designed specifically to help you pay for family law matters, so it works a little differently. A form of asset-based lending, you can usually borrow up to 30% of the expected property settlement. You can borrow what you need, when you need it (so you don’t need to draw down the full amount upfront) and you only pay interest on what you use. Plus they don’t require regular repayments – you only need to repay the loan once you’ve received your property settlement.