What are you entitled to in a property settlement?

Separation and divorce can be emotionally challenging, and figuring out how to divide assets fairly adds another layer of complexity. Understanding your legal entitlements during a property settlement is essential for protecting your financial future. Whether you’re just starting the separation process or already negotiating terms, knowing where you stand legally can make a significant difference. If you’re looking for expert family lawyers in Monee Ponds to guide you through this process, getting professional advice early can help protect your interests.

Key Takeaways

• Both married and de facto couples (including same-sex relationships) have property settlement rights under Australian family law
• A property settlement includes all assets, liabilities, financial resources and superannuation
• Courts follow a five-step process to determine fair entitlements based on contributions and future needs
• Time limits apply – 12 months after divorce for married couples and 2 years after separation for de facto relationships
• Professional legal advice is recommended before finalising any property settlement agreement

Who can make a property settlement claim?

Australian family law provides a framework for property settlements that applies to various relationship types. Understanding your eligibility is the first step in determining your entitlements.

Married couples

If you’re married, you can make a property settlement claim at any time after separation, even before divorce. However, once your divorce is finalised, you have 12 months to file for property settlement. Missing this deadline means you’ll need special permission from the court to proceed.

De facto couples

De facto relationships typically require a two-year cohabitation period to qualify for property settlements under family law. However, exceptions exist if you have a child together or have made substantial contributions to shared property. De facto couples must apply within two years of relationship breakdown.

Same-sex couples

Since the 2017 marriage equality reforms, same-sex relationships are treated identically to heterosexual relationships under Australian family law, whether married or de facto.

Time limits and prerequisites

Before court proceedings, you must attempt dispute resolution (except in cases involving family violence or urgency). This can include mediation, collaborative law approaches, or negotiation through lawyers.

“Property settlements aren’t about winning or losing – they’re about achieving a fair division that allows both parties to move forward financially. Each case is unique and requires careful consideration of both past contributions and future needs.” – Pearsons Lawyers

What is included in a property settlement?

A comprehensive property settlement considers all assets and liabilities regardless of whose name they’re in or when they were acquired.

Types of property

Real estate forms the cornerstone of most settlements, including the family home, investment properties, and holiday homes. Other physical assets include vehicles, furniture, collectibles, and personal items of value.

Financial assets

All financial resources must be disclosed, including bank accounts, cash, investments, shares, managed funds, and business interests. This includes assets held in trusts or companies that either party effectively controls.

Superannuation

Superannuation is treated as property in Australian family law. It can be split between parties through formal orders or agreements, even if it cannot be accessed immediately.

Liabilities

Debts and financial obligations are also divided during settlement. These include mortgages, personal loans, credit card debts, tax liabilities, and other financial commitments.

Non-financial contributions

The law recognises homemaking and parenting as valuable contributions to the relationship. These non-financial contributions can significantly impact your entitlements.

How entitlement is determined

Australian courts follow a well-established five-step process when determining property settlement entitlements:

Step 1: Identify all assets and liabilities

Both parties must provide full and frank disclosure of their financial circumstances. Hiding assets can result in severe consequences, including unfavourable court judgments and potential legal penalties.

Step 2: Valuing assets and liabilities

Assets are generally valued at current market rates. For complex assets like businesses or unique properties, professional valuations may be required.

Step 3: Evaluating contributions

The court considers both financial and non-financial contributions throughout the relationship. This includes initial contributions, inheritances, gifts, income, and homemaking/parenting roles.

Step 4: Considering future needs

Factors like age, health, earning capacity, childcare responsibilities, and financial resources affect how the property pool might be adjusted to account for future needs.

Step 5: Just and equitable outcome

The final step involves determining whether the proposed settlement is fair and reasonable in all circumstances.

Types of agreements to finalise entitlements

Several legal mechanisms can formalise your property settlement:

Consent orders

These are court orders based on an agreement between parties. They’re legally binding and enforceable while avoiding the need for court appearances.

Binding financial agreements

Similar to pre-nuptial agreements, these contracts can be made before, during, or after a relationship. They must meet strict legal requirements, including independent legal advice for both parties.

Court orders

If agreement cannot be reached, the court will make determinations after hearing evidence from both sides.

Evidence you must collect

Gathering comprehensive documentation is critical for a fair property settlement:

• Bank statements and account details from the past 12 months
• Superannuation statements showing current balances
• Property valuations and ownership documents
• Business financial statements and valuations
• Tax returns and assessments for recent years
• Evidence of contributions (financial and non-financial)
• Details of inheritance or gifts received
• Documentation about debts and liabilities

Common challenges to avoid

Several pitfalls can undermine your property settlement:

Hidden assets

Attempting to conceal assets can backfire severely, potentially resulting in additional legal costs and less favourable outcomes.

Valuation issues

Incorrectly valuing complex assets like businesses or investment portfolios can lead to unfair settlements. Professional valuations are often worth the investment.

Acting without advice

Agreeing to settlements without proper legal and financial advice can lead to regrettable long-term consequences and potentially unfair outcomes.

Checklist before accepting a settlement

Before finalising any property settlement:

Confirm full asset disclosure

Verify that all assets and liabilities have been properly identified and valued.

Assess tax implications

Some settlements may trigger capital gains tax or other tax consequences that should be factored into your decision-making.

Consider practical arrangements

Think about how assets will be transferred or sold, and what timelines are realistic.

Get independent advice

Always consult with a family law specialist before signing any agreement or court orders.

Conclusion

Property settlements are complex processes requiring careful consideration of legal, financial and practical factors. While general principles guide how assets are divided, individual circumstances heavily influence outcomes. Taking time to understand your entitlements and seeking professional guidance can make a substantial difference to your financial future after separation. Pearsons Lawyers specialises in helping clients navigate property settlements with confidence, ensuring your rights and entitlements are protected throughout the process. For personalised advice about your specific situation, consider consulting with a family law specialist who can provide tailored guidance.