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After separation, couples usually wish to become financially independent of each other even though their divorce has not been finalised.

Property

What is property?

The term ‘property’ has been interpreted widely by the family law courts. It includes the following:

  • Real estate – owner-occupied and investment
  • Motor vehicles
  • Funds held in bank accounts
  • Furniture, household contents and personal effects
  • Shares held in a company
  • Trust assets
  • Superannuation
  • Redundancy payments
  • Long service leave entitlements
  • Interest of a partner in a partnership

The above list is not conclusive. You should seek legal advice on whether your property should or should not be added to the matrimonial pool for distribution between you and your spouse.

What is a financial resource?

In determining property and spousal maintenance matters, you and your spouse must consider your financial resources. The term ‘financial resource’ has also been interpreted widely by the family law courts. The term means something not covered by the terms ‘income’ or ‘property’. It includes funds or assets over which you or your spouse has influence or control or (in certain circumstances) prospective entitlements or benefits which were received in the past and which might be expected to continue. Examples include income of your de facto partner and distributions from a trust. You should seek legal advice on whether your financial resources should or should not be added to the matrimonial pool.

Distribution of matrimonial property

The Family Law Courts can make orders altering and adjusting the interests of you and your spouse to your property. This exercise involves four steps. Those steps may be broadly described as follows:

  1. Ascertaining the net matrimonial pool - Identification and valuation of all assets, liabilities and financial resources whether they are acquired before, during the marriage or after the separation
  2. Contributions - Direct and indirect, financial and non-financial contributions made by you and your spouse
  3. Future needs - Whether you or your spouse have any future needs, for example, age, health, income earning capacity, the property of you and your spouse, whether you or your spouse have the care and support of children, the financial circumstances of any new relationship of you or your spouse
  4. Practical effect - Whether the result reached between you and your spouse is just and equitable in all circumstances

Which court?

If you and your spouse cannot agree on how your property should be divided, both the Family Court of Australia and the Federal Magistrates Court of Australia have power to make orders altering and adjusting the interests of you and your spouse. You or your spouse can apply to either court at any time if you are an Australian citizen, ordinarily resident in Australia or present in Australia on the date on which the application is filed. Property and/or spousal maintenance applications must be made within 12 months of a divorce becoming final. Examples of orders the court can make are:

  • A declaration specifying the particular interests that you and your spouse have in relation to your assets, liabilities and financial resources
  • An order for a property to be sold or for the transfer of the property between you and your spouse
  • An order for the sale of particular assets and a distribution of the proceeds of sale
  • An order for payment of money by you or your spouse to the other

Only a small proportion of cases proceed to a final hearing to be determined by a judge. Most cases are settled by agreement between the parties.

Duty of disclosure

In any property settlement, you and your spouse have a clear obligation to make full and frank disclosure about your respective financial circumstances. A failure to make proper disclosure of a relevant matter can have serious consequences.

Spousal Maintenance

In certain circumstances, separating couples can have an obligation to provide maintenance for their former partner. In broad terms, you can be liable to pay support for your former spouse if:

  • Your former spouse is unable to adequately support himself or herself so that their reasonable needs are met
  • You have the financial capacity to do so

Issues surrounding spousal maintenance can be complicated, and will often need to be considered as part of an overall settlement of property matters. You should seek legal advice in relation to those issues.

Resolving disputes

It is desirable for you and your spouse to try to reach agreement on the division of your property. The law requires that you and your spouse must make a genuine effort to reach agreement and that you exchange relevant information and try to reach agreement before starting any court proceedings.

Mediation

Mediation can be a cheaper and friendlier way for separating parties to settle property disputes. Mediators help parties decide which areas are in dispute, explore possible solutions and draw up agreements. Agreements reached in mediation are not legally binding and should be formalised.

Collaborative practice

Collaborative practice encourages an open, cooperative environment, where you and your spouse and your lawyers work towards a fair solution without resorting to court proceedings. Collaborative practice is designed to focus on resolution and minimise conflict and anxiety.

Reaching an agreement

If you and your spouse do reach agreement regarding a property settlement, there are two ways of formalising it:

  • Consent Orders through the Family Court of Australia
  • Making a Financial Agreement which is binding under the federal Family Law Act 1975

You should take legal advice as to which of those options is more appropriate for your circumstances.
 

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Please note the above information is not intended to, and does not encompass all aspects of the law on this subject matter. Further professional advice should be sought before action is taken based on matters outlined on this page.

- March 2018

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