Finances & Property - Jano Family Law

Overview

When people separate (whether from a marriage or a de facto relationship), they usually need to sort out how to divide their property and debts.

One person may also need financial support from the other, either for themselves in the form of spousal or de facto maintenance (which can arise out of both a marriage or a de facto relationship), or for their child or children, in the form of child support or child maintenance.

If it is safe to do so, it is generally best if you can reach your own agreement with your former spouse or partner. Making your own agreement will save you both money, time and stress. For more information about ways you may be able to reach an agreement without the need for Court action, see Consent Orders.

There are various ways you can make arrangements to divide your finances after separation:

If you agree on arrangements, you can seek to formalise your agreement by applying for consent orders or making a financial agreement.
If you cannot agree on some issues, you can use dispute resolution or mediation to help you resolve any issue in dispute.
If you cannot reach an agreement after dispute resolution, you can apply to the Court for financial orders, including orders relating to the division of property and payment of spouse or de facto partner maintenance.

TIP: Divorce is a completely separate process to financial proceedings.

A property settlement is the division of all assets, liabilities and/or financial resources which parties to a marriage or de facto relationship have acquired either before, during or after the relationship. Why the relationship broke down is not relevant when determining a settlement.

Fixed fee property matters

At Jano Family Law, we are able to provide you with a fixed fee for your family law property matter. Please see our Fees page for more details.

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When can the Court make financial orders?

Marriage

The Court has power to make financial orders in relation to marriages (including void marriages) under Part VIII of the Family Law Act 1975.

You can ask the Court to make orders for property settlement or maintenance arising out of a marriage even if you are not yet divorced.

If a Court has made an order that your marriage was a nullity (the technical way of saying, that the marriage was void or that you were not validly married), you can still ask the Court to make financial orders arising out of that void marriage.

De facto relationship

A de facto relationship is defined in section 4AA of the Family Law Act 1975. The law requires that you and your former partner, who may be of the same or opposite sex, had a relationship as a couple living together on a genuine domestic basis.

Before the Court can determine your financial dispute, you must satisfy the Court that you were in a genuine de facto relationship with your former partner which has broken down, and that you:

have a geographical connection to a participating jurisdiction (which includes each Australian state and territory except Western Australia), and meet at least one of the following criteria:
- the period for the de facto relationship was at least two years, and/or
- there is a child in the de facto relationship, and/or
- the relationship is or was registered under a prescribed law of a state or territory, and/or
- one party made significant contributions to the property of the other, and the failure to make an order would result in a serious injustice.

Your relationship is not a de facto relationship if you were legally married to one another or if you are related by family.

You should obtain legal advice about whether your circumstances satisfy the criteria before filing an application.

Time limits

Different time limits apply for making an application to the Court for financial orders depending on your individual situation.

If you were married, applications for property adjustment must be made within 12 months of your divorce becoming final.

If your marriage was declared null, your financial applications must be made within 12 months of your decree of nullity being made.

If you were in a de facto relationship, your applications for property adjustment must be made within two years of the breakdown of your de facto relationship.

If you want to start proceedings out of time, you must ask the Court for leave. This is not always granted.

Time limits do not apply to child support and child maintenance.

NOTE: If you are married and your divorce is not finalised, you can still apply for financial orders.

Considerations in financial matters

There are a number of things you may need to consider when making financial arrangements after separation and before making an application to the Court.

Superannuation

Your respective superannuation interests can be adjusted by ‘splitting’ one or more of them. If you want to adjust superannuation interests, you must do so when you are formalising your financial arrangements. However, it is not mandatory to adjust superannuation interests.

Superannuation can be split using Court orders (either consent orders or orders made after a hearing), or by using a binding financial agreement.

The superannuation fund trustee should be given at least 28 days to review and comment on any proposed orders or binding financial agreement which attempts to split a super interest. The 28 days does not begin until the trustee has received all the relevant documentation.

Super splitting is a complex area of the law and you should seek our legal advice in relation to this.

Bankruptcy

The Court can deal with the bankruptcy of a party to a marriage or de facto relationship involved in certain family law proceedings.

Financial support for you (spousal or de facto maintenance)

For information about whether you can get orders requiring your spouse or de facto partner to financially support you, see our Free Guide to Spousal Maintenance.

Financial support for my child (child support and child maintenance)

For information about getting financial support for your child and children, see child support and child maintenance.

Death of your former spouse or de facto partner

The Court only has jurisdiction to make financial orders if, at the time when the application was filed, both parties to the relevant marriage or de facto relationship were alive.

How does the Court decide financial cases?

There is no formula used to divide your property and finances. If you are not able to reach an agreement at dispute resolution, your matter may progress to a hearing. No one can tell you exactly what orders a judicial officer will make, but an experienced family lawyer can, in many cases, predict a range of outcomes based on a given fact scenario.

The decision is made after all the evidence is heard and the judicial officer decides what is just and equitable (fair according to the law) based on the unique facts of your case.

The Family Law Act 1975 sets out the general principles which the Court considers when deciding property settlement cases (see sections 79(4) and 75(2) in relation to marriages, and sections 90SM(4) and 90SF(3) in relation to de facto relationships).

The general principles are the same, regardless of whether the parties were in a marriage or a de facto relationship, and are based on:

the assets and liabilities of you and the other party individually and jointly (i.e. what you own, and what you owe), and what they are worth;
direct financial contributions by each party, such as property you each had when you began to live together, and your wage and salary earnings while you lived together;
indirect financial contributions by each party, such as gifts and inheritances from family members;
non-financial contributions to property, such as renovations to a home, management of investments, or running a business;
contributions to the welfare of the family, such as caring for children and doing housework, and;
each party’s future needs – a court will take into account things like age, health, financial resources, care of children and ability to earn.

The way your assets and debts will be shared between you will depend on the individual circumstances of your family. Your settlement will probably be different from others you may have heard about.

Are high net worth cases treated differently?

No, the law is the same regardless of the value of the asset pool. However, for high net-worth couples going through divorce or de facto separation, the division and future ownership of previously jointly-held assets will require careful and strategic legal advice. There is often a business, investments, multiple homes and assets held both in Australia and overseas, often through complex legal structures. There are also tax and inheritance issues to consider. In addition to deploying the utmost legal expertise, in conjunction with Senior Counsel, there is usually a need to adopt a forensic, investigatory approach to determining the asset pool.

FAQ

What is the Court filing fee for property settlement consent orders?

The court filing fee is currently $170. If you have a health care card, you can get the reduced filing fee.

When can I get a property settlement?

You can make a property settlement any time after you separate. Once a divorce becomes final, you must apply to the Court within 12 months if you need a property settlement or spousal maintenance. If your partner applies for divorce, seek legal advice to get a property settlement if you have not already done so. Sometimes you can get leave of the Court to apply out of time for property orders. You should get legal advice about this.

Divorce is simply the legal dissolution of a marriage, it does not deal with the issues of child/parenting, child support, finances/property, or spousal maintenance.

When can I make a binding financial agreement?

You can make a binding financial agreement at any time before, during or after a marriage or de facto relationship.

Remember though, if the other party does not agree to enter into a financial agreement, once a divorce becomes final, you must apply to the Court within 12 months if you need a property settlement or spousal maintenance.

What if we don’t agree about the finances and property settlement?

It is generally in your interest to stay out of the court system IF you can get a fair result by agreement. In reality however for many people the only way they can get a fair property settlement is by going through the court system.

You should first attempt direct negotiation with your ex. If this fails, ask your lawyer to negotiate in writing with your ex and their lawyer – in many cases this will result in settlement being reached. You may also wish to attempt mediation, where both parties assisted by their lawyers, work with a mediator to try and resolve the dispute.

There are obvious advantages to parties who are able to resolve their matter without formal legal proceedings being initiated, including:
1. The parties themselves are able to have input into the final outcome;
2. The dispute is capable of being resolved much more quickly; and,
3. There are significant cost savings to each of the parties in settling outside of Court.

If there is still no settlement, your lawyer will need to file an Initiating Application to the court. The Family Law Rules require prospective parties to genuinely try to resolve their dispute before starting a case, this called “pre-action procedures”. Going to court does not mean that you need to go through the court all the way until the end – most cases are settled before any final hearing. Once the court process starts, your ex has no choice but to engage in the process. The court may also order a mediation conference to be held if there has not been an attempt at mediation previously.

Most lawyers will charge on an hourly basis for work associated with negotiating an agreement or going to court, you may also need to pay barrister’s fees for the final hearing. Some lawyers can offer fixed fees for each stage of the process.

At Jano Family Law my mission is to provide you with top quality family law at a fair price. Learn more about our fee options here.

How does the Court decide family law financial matters and property settlements?

There is no exact formula used by the courts to divide property and each case is unique. The Court has a wide discretion in making orders that alter the interest of parties in property.

The Family Law Act 1975 sets out the general principles the court considers when deciding financial disputes after the breakdown of a marriage. The Court must ultimately determine what is “just and equitable” in the particular circumstances of the case.

The Court’s decision is based on:

– working out what you’ve got and what you owe; that is your assets and liabilities and what they are worth.
– looking at the direct financial contributions by each party to the marriage or de facto relationship such as wage and salary earnings, and how they’ve been applied through the course of the relationship.
– looking at indirect financial contributions by each party such as gifts and inheritances from families.
– looking at the non-financial contributions to the marriage or de facto relationship such as caring for children and homemaking.
– future requirements – a court will take into account things like age, health, financial resources, care of children and ability to earn.

For more information read our article Divorce Property Settlement Case Studies.

Do I have to reveal all my assets and liabilities in a divorce property settlement?

Yes. Each party has an obligation to fully disclose his or her financial position to the court and the other party. Full and frank disclosure is expected from the beginning and is an ongoing obligation. Failure to provide full and frank disclosure or providing a false undertaking as to disclosure can result in severe penalties.

For more information read our article Going to Court: The Importance of Disclosure.

What are assets and what are financial resources?

Financial resources include superannuation, pension interests and interests in a trust.

There is a wide definition of what is an asset or property which basically encompasses almost anything of value. It generally includes anything of value such as real estate, cars, bikes, boats, jewellery, artwork, shares, cash, bank accounts, jointly owned property, property owned in one person’s name, business interests, crypto currency, and even prospective entitlements.

Can a property or financial settlement impact on spousal maintenance?

A binding financial agreement can be used after separation to oust the jurisdiction of the court to deal with spousal maintenance i.e. to extinguish any possibility of spousal maintenance being claimed after the property settlement. Sometimes property matters will be dealt with separately in court orders and at other times the financial agreement will deal with both property and spousal maintenance. This can be a complex area of the law and if you have any questions about a possible spousal maintenance claim after your property settlement (either wanting to make one yourself, or to extinguish the possibility of your ex making one) you should seek our legal advice.

Would a future inheritance be relevant in the property settlement?

The determination of each spouses “percentage entitlement” involves a careful consideration of all of their respective “contributions”, as well as their “future needs”. It is in the context of “future needs” that any “prospective inheritance” becomes relevant. This can be a complex area of the law and you should seek our legal advice in relation to your query.

What are the tax consequences of a property settlement?

Generally capital gains tax is payable on the net profit made on the sale, transfer or disposal of property to another person.

However, the family home is exempt provided it has been used for the whole period of the combined ownership by its owners and provided its owners were the spouses themselves.

For assets other than the family home, special rules apply to the transfer from one spouse to the other when the transfer is pursuant to an order, financial agreement or arbitration award under the Family Law Act 1975. These rules defer the liability to pay capital gains tax until such time as the asset is sold. This means that the spouse to whom the asset was transferred will be liable to pay the tax on any gain made on a subsequent sale of the asset. Furthermore, it is important that any transfer of land pursuant to an order, financial agreement or arbitration award under the Family Law Act 1975 is done properly to avoid any potential State stamp duty liabilities.

Transfers of a spouse’s entitlement in a superannuation fund to another spouse are disregarded for capital gains tax purposes provided the transfer is pursuant to a court order or binding financial agreement.

Tax liabilities can be complicated in a property settlement and you should seek our advice to avoid incurring any unnecessary tax liabilities.