Property settlements in court

When a relationship ends, often there are property and assets that need to be divided fairly between you and your former partner. A property settlement in court may be needed.

There are a few different ways you can come to an agreement over the division of property.

You may be able to reach an agreement without going to court (find out more about this process in our Property settlement without going to court article). However, if you and your former partner cannot reach an agreement yourselves, you will need to apply to the courts to reach a fair settlement.

Time frames for a property settlement

There are time limits on when you can apply to the courts for a property settlement.

If you were legally married you have 12 months from the date a divorce order becomes final to apply to the courts. If you were in a defacto relationship, you have 2 years from the date of separation.

What is the definition of a de-facto relationship?

The courts consider you to have been in a de facto relationship if:

  • there is a child of the relationship, or
  • the relationship lasted longer than 2 years, or
  • one of you made a significant contribution to the relationship (eg. contributed money towards a house purchase), or
  • the relationship was registered in an Australian state or territory

The property settlement process

How property is divided by the courts

There is no set formula the court uses when deciding how your property should be divided. Every situation is different and therefore the courts will look at each matter on a case by case basis.

However, the courts will follow a set process when deciding what is fair in your situation:

Step 1: Identify the property pool

The courts will determine what assets are held, both in your own name, your ex partner’s name and in joint names. Assets acquired prior to, during and after the relationship will be taken into account.

Property is defined as including:

  • houses and land
  • superannuation
  • insurances
  • businesses and companies
  • lifestyle assets such as cars, boats, caravans etc
  • cash and investments
  • gifts, inheritances and lottery winnings
  • furniture and household items
  • loans and debts
  • compensation payments

If you are unaware of all the assets you and your ex partner hold, you can formally request documents by way of what we call financial disclosure. Financial disclosure is an ongoing obligation on both parties to provide all documents that may be relevant to an issue in dispute. These documents include bank statements, tax returns, company financials, pay slips and loan documents among other things. Each party has a duty to be full and frank with their disclosure from the commencement of negotiations right through to the Final hearing of your matter. If a party fails to comply with a request for document you can then issue a subpoena which requires the banks and financial institutions to provide the information.

Once all the asset details have been collected the court will value the total asset pool as at the date of settlement of court hearing.

It is important to note that any property your purchase like cars, boats or houses before the final settlement of your matter could be considered by the court. This is why it is so important to finalise your property settlement before you move on.

Just because you or your partner did not work in paid employment does not mean that they have not made a contribution to the acquisition, conservation or improvement to the property you have accumulated whilst you were together. If they instead spent time in the home caring for the children so you could work full time, a court will give all but equal weight to this contribution when weighing up a comparable financial contribution that you may have been able to make as the breadwinner or sole financial provider.

The court will consider a party’s contributions – both financial and non-financial – to your superannuation and non-superannuation assets.

Step 2: Calculate the contributions to the relationship

The contributions made to the relationship will be determined. Contributions can also include items or payments after the relationship ended, up to the time your settlement is reached.

Contributions include both financial and non-financial contributions.

Financial contributions include money you or your family paid, deposits on a house, any property you brought to the relationship and income.

Non-financial contributions include unpaid work such as repair work on your property, housework if you are a homemaker or parent or work in a business.

Domestic violence, gambling and addictions may be taken into consideration and have the effect of reducing the offender’s settlement if their actions impacted the other person’s ability to make contributions to the relationship.

Step 3: Consider future needs

During your property settlement in court, the judge will consider the future financial needs of each party, which will be impacted by your ages and health status, income and ability to earn income in the future, financial entitlements and your caring responsibilities for others and any children of the relationship.

Step 4: Apply your individual circumstances

Once all the above steps have occurred, the court will then consider what is a just or fair and equitable division of property for your situation. The aim is to ensure any property settlement is fair and equitable, having taking into account the overall financial position of both parties.

After court

The property settlement determined by the court is legally binding on both you and your ex partner.

If you feel the decision in your case was made in error you have 28 days to file an appeal. An appeal can only be filed if there has been a legal error, not because you feel the decision was unfair.

What to do next

The best thing you can do if you have recently separated is to obtain sound advice at the earliest possible opportunity. If you have recently separated, contact us as soon as possible so we may assist you in achieving a fair settlement in your matter.

Need advice?

For more information regarding property settlement, get in touch with Burbank & Brown.