The dangers of delaying property settlement20-June-2017 Family Law By Mel Collins
De facto couples have two years from the date of their separation to bring an application to the Court for property adjustment, or otherwise formally settle their property by way of a Binding Financial Agreement or a Consent Order. Married couples have just one year from the date of divorce to similarly formally settle their property interests or make an application to the Family Courts. Not all married couples choose to divorce following separation. However, problems can arise if no formal legal arrangements have been made regarding jointly owned property.
People may choose not to legally formalise their property arrangements for many years for a number of reasons, including the need to provide housing stability for the children of the marriage. Others may make informal arrangements for the division of property interests in the belief that it is not necessary to go through legal channels. This is a very dangerous approach.
Informal agreements are rarely legally binding, even if signed by the parties. In the event that you want to have a legally binding private agreement, otherwise known as a Binding Financial Agreement, there are very strict rules regarding the drafting and execution of these documents under the legislation and they require both parties to obtain independent legal advice. They should not be attempted on a D.I.Y basis.
It is important for anyone considering a separation without divorce to make arrangements for property adjustment as soon as possible. Legally binding agreements can be very flexible and provide for the later sale of property and division of assets without the risk of having all future assets included in the distribution.
We regularly help people who have been separated for over 10 years and want to finally separate their property interests. The asset pool available for distribution between the parties is everything that exists at the time the parties are negotiating or on the date the Court makes a determination; not at the date of separation. If years have elapsed since separation, the assets and superannuation of one or both of the parties will have usually increased in value, and that increase may not always be equal. While a court will certainly consider the contribution of post-separation increase in the value or acquisition of assets, there is no guarantee that the party who has solely contributed to those assets will get to benefit exclusively from them.
The Family Law Act determines contributions of the parties when adjusting property interests between spouses. These can be financial contributions made prior to the relationship, during the relationship and post separation; and non-financial contributions such as home renovations and home-maker and parent contributions. Further adjustments may be made on a discretionary basis to account for the fact that one party may have a lower income/income earning capacity, the care of children, an illness and/or disability and even where the other spouse’s conduct during the marriage by way of family violence made the contributions (both financially and to the welfare of the family) more onerous.
Streeterlaw’s Family Law Accredited Specialist Simone Green said couples should engage a specialist lawyer after separation. “We urge anybody separating from a marriage to obtain advice from a Family Law specialist regarding their property distribution and how an amicable settlement can be achieved without going to Court,” she said.