There are three ways to have a legally binding property settlement:
All three options will allow you to receive an exemption from paying stamp duty if you are wanting to transfer the family home into your own name as part of the property settlement. All three options will also allow you to split superannuation from or to your ex-partner.
One of the key questions to consider when looking at your options is, are your legal costs proportionate to the property settlement you hope to achieve?It doesn’t make sense to spend $30,000 in legal costs to fight over a possible $40,000.
If you and your ex-partner can agree, you have two options:
1. Consent Orders
This is usually the cheapest and quickest way to finalise property settlement. If I were separating, this would be my preferred option.
Consent Orders are made by a Registrar of the Family Court ‘on the papers’, meaning that you don’t have to go to court in person.
You will need to complete an Application for Consent Orders, which details both parties’ information, the proposed division of property and which briefly addresses the parties’ relative contributions to the net asset pool and the parties’ future needs (these are known as ‘justice and equity’ factors in legal-speak).
You will also need to complete Minutes of Consent, which are the formal orders you are asking the court to make.
Neither person needs to have a lawyer to make Consent Orders. Usually though, one person will have a lawyer to draft the Applicant and Minutes of Consent, which can be difficult for a non-lawyer to write correctly.
Provided the Registrar is satisfied that the documents are correct and that the proposed division of property is just and equitable (i.e. fair) the Consent Orders should be approved by the court and can then be implemented.
2. Financial Agreement
This is essentially a contract between you and your ex-partner, where you agree to opt-out of the court’s jurisdiction for your property settlement. Some people also call it a Binding Financial Agreement – it’s one and the same thing.
The terms of property settlement do not need to be ‘fair’. In fact, this is one reason why lawyers will propose a Financial Agreement over Consent Orders – because the proposed settlement is wildly in one person’s favour and they don’t think the court would approve Consent Orders.
Because you are opting out of the court’s jurisdiction, both parties must receive independent, specific legal advice prior to signing the agreement, and each person’s lawyer must sign a certificate that to that effect. If you don’t have this, the agreement will not be considered valid and binding.
3. Initiating Application in the Federal Circuit Court
If you and your ex-partner are simply not able to agree on how you will divide the relationship assets, this is the available option. You are essentially asking a judge to decide on your case, based on the law.
This can be a lengthy and costly process:
- It can take upwards of 2 years from start to finish.
- There are multiple court dates from the first mention through to further interlocutory events leading to a final hearing.
- It is not uncommon for each person to spend tens of thousands of dollars, if not hundreds of thousands of dollars, in solicitors and barristers fees.
Because of the high costs involved, I usually recommend this option only when there is no other feasible choice.
Sometimes this option is warranted e.g. if your ex simply refuses to negotiate / if your ex is a narcissist and is incapable of compromising / if you have a looming limitation date. If you are in this situation, don’t panic! Things are not all doom and gloom – the vast majority of applications started in court settle before going to a final hearing. Usually, having to meet the court’s imposed timeframe and process can provide enough motivation for people to reach agreement along the way. Such agreement can then be documented in Consent Orders, which we would ask the judge to make.
There is no presumption that property should be divided 50/50 when a couple separates:
The overarching question the law asks is: what is just and equitable? i.e. what is fair based on your particular circumstances. In considering what is just and equitable in your case, follow the following steps:-
- Assets and liabilities
Identify all of your and your ex-partner’s current assets and liabilities. Assets include the family home, investments, bank accounts, vehicles, business assets, superannuation and the like. Liabilities include the mortgage, personal loans, credit cards, hire purchase debts, taxation liabilities and such. Regardless of whether you or your ex-partner is the registered owner of the asset, it’s all in the mix for the purposes of working out a fair property settlement. - Contributions
Identify the contributions that each person has made to the growth of the parties’ current assets. Contributions can be both financial and non-financial. Contributions to the welfare of the family are relevant. Contributions made at the start of the relationship are factored in, e.g. one person owned a house at the start and sold it to pay for the deposit on the family home. Contributions during the relationship are also considered, e.g. an inheritance. Sometimes contributions after you have separated are also relevant, e.g. one person has maintained the family home and made all of the mortgage payments. - Future needs
Consider whether either person has greater future needs based on their age, health, primary care of children, income earning capacity or financial resources. In terms of what the law considers to be “fair”, these factors will often warrant an adjustment of property division to the person who has greater future needs.
Justine Dean – Samford Family Law