Property & Finance

To commence property settlement negotiations, you will have to list and assign an agreed value to all of the property of both parties, which in the simplest form means anything of financial value.

Property includes all assets, liabilities and financial resources whether they are in joint names or the name of only of spouse.  All items acquired before and during the relationship as well as those acquired after separation are included.

For the purposes of property settlement, all of the items listed below are included but the list is not exhaustive.  

Assets (either jointly owned or in individual name)

• Real estate - family home, holiday home, home purchased for another person to live in, investment properties

• Cars, and other vehicles including, motor bikes, scooters, trailers, trucks, caravans and water craft

• furniture and household contents

• bank accounts

• shares and other investments

• business entities including trusts, companies, partnerships, syndicates, sole and joint trading ventures

• machinery

• specialist hobby or leisure equipment of commercial value

• tools of trade

• livestock

• intellectual property - patents, trademarks and copyright with commercial value

• life insurance

• jewellery

• collections such as art, antiques, stamps etc.,

• airline or other loyalty points of value

• unused annual or long service leave

• money owed by a third party

Liabilities (in either joint or separate names)

• mortgage

• personal loan

• taxation liability

• credit cards

• finance facility or store cards

• CGT, Stamp duty or other costs payable as a result of property distribution

• money owed to a third party

Financial resources

• superannuation

• pension interests

• future entitlement (eg inheritance, compensation, lottery win or trust income)

If you are unsure as to whether something should be included in the property settlement, seek the opinion of a family lawyer.

Many couples are able to negotiate a property settlement between themselves without involving the family court and this is called an out of court settlement.  

Property settlement and division of assets can take about 2-3 years if you pursue it through the family court system.   An out of court settlement is without doubt the best way to resolve your property issues, if possible. 

Few couples are able to manage the entire process on their own and agreement is often reached with assistance from dispute resolution mediators, collaborative family lawyers or with negotiation between the couple but with separate family lawyers advising each party in isolation.

You are strongly advised to seek legal opinion about your specific circumstances before agreeing to any form of property settlement.

Before you seek legal advice, ensure you have collated all of the information they will require. They simply cannot advise you on your circumstances if they don't know what they are. The Split Kit has been specifically designed to assist you to collect all of the information and present it in a very simple format.

Your aim should be to negotiate a division of your assets and provision for your ongoing needs and those of any children which is within the just and equitable range by applying the four step process used by a judge if your case was to appear in court, without incurring the time, anxiety and costs of going to trial.

Around 95% of cases in Australia are settled out of court, though many of those are finally thrashed out days before trial. Many couples reach an out of court settlement after having initiated an application with the court for property orders and having completed part of the procedural requirements to attend trial. So often in these cases, the same or similar outcome could effectively have been reached earlier in the process and without incurring the additional legal fees.

If you do file an application for property orders, it's important to remember that you can step back from the court process at any time and reach an agreement between you and your former partner out of court.  This is particularly relevant if you have already had a hearing in front of a judicial officer who has offered guidance on how your case may be viewed in court.

That said, there are no guarantees you will get the orders you are asking for when it comes to rulings in the family court. You may appear before a different judge to the one who offered guidance. Each judge applies the principles of the law to the case as they see fit on the day. The results could easily vary from one judge to another.

In many cases, you would be better off to arrive at an out of court settlement that each of you can live with and save yourself the stress and significant legal fees involved in going to trial.

Even when you are able to negotiate with your partner to reach an agreement on property issues, it is important to take legal advice to ensure that you are aware of all of your rights and responsibilities.

If you and your ex-spouse can reach an agreement out of court, it is strongly recommended that you formalise your agreement by way of a Legally Binding Financial Agreement or Consent Order sealed by the Family Court.

The court must be satisfied that a property settlement is ‘just and equitable’ before it will endorse your agreement.

If you are unable to reach an agreement, you can lodge and Initiating Application for Property Orders.

For married couples, the application can be lodged before divorce but it must be done within 12 months of the date a divorce is granted. For non-married couples, it must be done within 2 years of the end of the relationship.

Failure to lodge within these time frames will mean you would have to seek leave from the court to hear your matter at a later date and provide exceptional circumstances for them to do so.

When a magistrate looks at determining a property split and possible spousal maintenance for a couple, the following four-step-process is applied:

1. Identify the assets, liabilities and future financial resources of the parties

2. Assess the contributions made by the parties

3. Evaluate each party’s earning capacity and future needs so far as they are relevant

4. Make or seal orders made for a split of the assets and liabilities and any arrangements for ongoing financial support which are ‘just and equitable’.

Generally, a court will refer to a property split in terms of the percentage of the overall assets awarded to each party. So far as we can determine, there is no principle of family law that says the split should start from a position of 50/50 and deviate on the basis of influencing factors however that is the generally accepted practice.

Of course, there is no black or white answer and each case is considered on merit by the judge of the day.

A 60/40 property settlement without maintenance on one day could easily be a 55/45 split with maintenance when heard before a different Magistrate because of such factors as personal variances in the overall interpretation of the law, the magistrate's view of the contributions by each party or the emphasis and flow of information and questions between the legal representatives.

However, it is unlikely for one magistrate to rule wildly different than another. It is also unlikely for qualified lawyers to advise you and your ex-partner of wildly different outcome scenarios provided, of course, that both lawyers are working from the same set of information.

You and your former partner should take qualified advice and then aim to follow the four-step process to arrive at an agreement that would fall within the same range as a Family Court magistrate might rule, without incurring all of the cost of court appearances and fees due to the involvement of lawyers, forensic accountants, psychologists, or other third parties.  Don't underestimate the cost of lost opportunities throughout an extended period of litigation proceedings.  Sometimes it is far more valuable to you to accept an agreement that may not be exactly what you think you should get but at least you will be free to move on independently with your life.

Identifying net assets

The net asset value of the marital pot is the value of all of your assets less all liabilities.

List all of the assets you have within the partnership whether they are owned jointly or by one of you individually. Include any assets that are jointly owned with third parties. List all liabilities you currently owe, either jointly or individually. For the purposes of the initial assessment, anything acquired before or during the marriage, as well as post-separation is included.

Generally, if you owned assets before you were married, these too are deemed to be part of the joint asset pool. If you have been married for a very short period of time, this may mean you could retain assets you held personally before the marriage in the property split but you will need to seek expert assistance.

One of the first points of agreement you will need to reach with your ex, is the current value of each asset and all of the outstanding liabilities. If you can't agree on a valuation, you may need to engage a professional valuer, this is particularly the case with real estate and business interests.

The Redbook Online gives free vehicle price guides and offers an individual vehicle valuation for under $25 if required.

You may wish to include household items. Household items are not counted at their present replacement cost. These items are valued at their second-hand value; what you would get for them were you to sell the item through a market such as eBay, a second-hand dealer, auction, or a garage sale.

You should also consider all other financial resources, including superannuation, and any business entities over which either of you have influence, control, or prospective entitlements.

Accurate valuation of assets may mean you'll have to take into consideration issues regarding possible taxation liabilities, stamp duties, and the appreciation or depreciation of asset values.

Valuations can get quite complex where there’s joint ownership of assets with parties outside the relationship or elaborate trust and company business entity structures. You may benefit from engaging the services of a collaboratively trained financial advisor.

If you’re unable to reach an agreement as to the value of any asset, the Court may appoint a valuer to do so for you, and you may be required to share or pay the full costs of obtaining that valuation report.

In most cases, determining the net asset pool and making a start at negotiating a property settlement offer should be a task you can perform with The Split Kit and without professional assistance.

Identifying Contributions

You will need to assess and document the contributions of a financial and non-financial nature made by both you and your former partner.  This information will be included in your affidavit to file for consent of property orders and will be one of the first questions a family lawyer will have for you before they can offer you advice.  To help you to complete this information, download our free Summary of Significant Events form.

You should include all manner of contributions made before and during the marriage as well in the period post-separation. There are several types of contributions that may have been made by either spouse.

The court considers all of the following:

• Financial contributions

• Non-financial contributions, such as a homemaker, primary carer of children, or renovations to homes or other properties

• Gifts, bonuses, and inheritance

• Initial contributions, such as assets attained before marriage.

When establishing the contribution of each party to the joint financial pool, the Family Court attributes significant value to domestic duties, where one person has assumed the majority of domestic duties and child care.

In special circumstances, the Court may also take into account an exceptional skill one party has, such as the development of a patented product, if that exceptional skill has resulted in the primary source of significant wealth creation for the family.

Identifying ongoing financial needs

Were your property settlement to be decided by a Court, the following factors would be taken into account when determining the future financial needs for each of you:

• Age

• Health

• Future parenting responsibilities, including the needs of the children and the capacity of each parent to provide for those needs.

• Current income

• Earning capacity and the likelihood in terms of physical and mental capacity for each person to be gainfully employed

• The property and assets of each party

• Any pre-agreed commitments to children such as education, vehicles, etc.

• New de facto relationships and the combined financial resources of that couple

• Any existing care or financial responsibility either party has to support other people

• Child Support commitments

• Eligibility for future financial resources such as pension, super or other benefit

• Commitments of either party that are necessary in order for them to continue to generate an income

• The impact of any Orders on the ability for either party to service existing debt

• Any other circumstance that would significantly impact either party financially, which the judicial officer deems relevant.

What is fair and equitable?

The Court will try to arrive at a property split between you and your ex-partner and provision for ongoing spousal support, if it is necessary, that is fair and equitable. Fair and equitable is sometimes also referred to as just and equitable.

It is important to note, that ‘fair and equitable’ may not necessarily equate to an equal share of assets to each party.

You only have to read through the real life divorce stories on this site to see that an unequal division of assets plus an order for spousal support may not seem fair and equitable to some.

A hard working spouse of a 20-year marriage who has no desire to divorce may not think it 'fair and equitable' to be ordered to part with 60% of the family home and half of his or her superannuation, plus pay spousal support to a spouse who is less financially solvent, has been unfaithful, and is the one who wants to leave the marriage.

Similarly, a person who already had equity in a house when they married and is forced to lose 50% of that home and 50% of the time with their children after a 7 year marriage may not see that as a fair and equitable split.

However, with the introduction of no-fault divorce, the ruling in a property split will generally exclude any consideration of whose fault it was that the relationship ended and only consider each spouse’s specific economic circumstances during the marriage and concentrate almost exclusively on splitting the asset pool available at the time the case is being heard.

When a court determines that one spouse would be at a significant economic disadvantage post-divorce, it can use its fair and equitable discretion, to adjust the ratio of the split in favour of one spouse.

Courts will try to leave the parties on as equal economic footing as possible and try to prevent significant negative long-term financial consequences for either person.

If there are children involved, significant consideration will be given to ensuring the children will be able to enjoy a similar standard of living when spending time with each parent.

Some of the factors the court might consider in awarding more of the assets to one party, award the retention of pre-marital property, or to make an order for spousal support are:

• The length of the marriage

• A spouse's contribution as a homemaker or as a stay-at-home parent

• The skill set and earning capacity of each spouse

• The respective financial needs, especially considering parenting duties

• The relative health and/or disability of each spouse

• Any specific carer duties each spouse make have that would impact on their ability to earn a living

• Absence from the workforce and loss of commercial skills in order to support the other spouse

• The previous standard of living of the couple in relation to the standard of living that is considered reasonable for each party going forward

• A spouse's contribution to the other's education or earning ability (for example one person supporting another through a degree into a high paying career path)

• Whether one spouse's efforts caused a premarital asset, normally not subject to division, to appreciate, for example, time spent fixing up a spouse's premarital home or helping with landlord duties related to the property

• The financial resources which cannot be split but would become available to each party in the future, for example, some forms of superannuation, trust income, future options

• Whether one spouse has a specialised skill set or activity, such as a patented idea or product, pending contracts, which will result in significant financial gain.

In rare circumstances, a spouse may be compensated for their ex-partner's behaviour and 'fault' might be considered to award more of the property share to the spouse who has been wronged.  

Such cases might include:

• Financial wastage of a business or assets

• Crime or fraudulent disclosure of assets

• Addiction specific activity of one spouse which resulted in the depletion of family resources

• Failure to provide support for a family

• Family violence and abuse.

Once you have negotiated a property settlement, it is strongly advisable that you document and formalise the details.  

There are two ways to do this.  

• File a Consent Order, or
• Enter into a Binding Financial Agreement.  

Both of these options are legally binding.  This means you must abide by the terms set out in the document or risk further legal action against you, be fined, ordered to do community service, be imprisoned or ordered to pay costs to the other side.

There are pros and cons for both options and you should take legal advice as to which is most appropriate for your circumstances.

Consent Orders:

• the application is filed by you and your former partner in the Court

• are scrutinized by the Court to determine that the orders you have asked for are 'fair and equitable'

• the orders must be made by a Court

• can be used to document both property and parenting agreements

• can by completed without the assistance of lawyers

• costs less than a entering into a Binding Financial Agreement

Binding Financial Agreement:

• can be entered into at any point in the relationship

• must be drawn up by a lawyer

• is not scrutinised and the terms are not reviewed by a Court or anyone else

• the terms do not have to be fair and equitable

• both parties must be ordinarily resident in Australia

• is only binding when each party has taken independent legal advice from their own lawyer before signing each page

• each lawyer who provided advice must sign a Lawyer's Certificate confirming advice was given before the client signed

• cannot be entered into by a person who has already entered into a Binding Financial Agreement with another partner

• is not filed or registered anywhere

• does not cover parenting arrangements

A third party to a family law matter may include individuals such as friends or relatives of either spouse, business associates or financial institutions.

The Family Law Act gives power to the Court to alter the rights, liabilities or property interests of a third party to a marital property settlement.

Generally, the Court takes a conservative approach when dealing with third party interests.

Occasions when a third party may become involved in a property settlement could include:

• To prevent a bank or financial institution selling property in which one or both spouses have equity.

• When property legally owned by a third party should rightfully be owned by one or both of the parties to the marriage.

• When a family member, business associate or friend is owed money by either party to the marriage.

• If there are insufficient assets in the net asset pool to settle the matter without using assets owned by a third party.

• When one party asks the Court to set aside a transaction which occurred to defeat a Court Order.

• To alter the rights of a creditor of either party.

• To order a third person to provide information or assist in carrying out the property settlement.

• To restrain a spouse from taking action which may affect the entitlements of the other spouse.

When a there is a third party involved in family law matters, it is likely that proceedings will become far more time consuming and expensive than would otherwise be the case. The third party must be served with all documents and be given the opportunity to represent their case. The business dealings and financial status of the third party may be scrutinised and made public.

Properties are often sold and the proceeds split in order to reach a fair and equitable split of assets. It is also common for one party to retain a property and buy out the other spouse's share. These types of transactions can have financial implications which impact the overall settlement result for one or both parties.

In the case of real estate, Stamp Duty and Capital Gains Tax implications should be taken into account.

Stamp duty can be avoided when transferring one party's share in a property to the other if the parties:

• File a consent order; or

• The Court makes and order for a property split: or

• The couple sign a Legally Binding Financial Agreement.

Selling or transferring a property may trigger a Capital Gains Tax (CGT) event. CGT is due when a property which is sold or transferred has increased in value from the purchase price.

It is possible to apply for Capital Gains Tax roll over relief but this can be complex and you should seek the advice of a tax specialist before signing a property settlement.

If you have a family business, trust or company, the tax obligations of the entities you are involved in must also be factored into the property settlement and an adjustment made to compensate for impact of these future liabilities on either party.

It is important to ensure you are fully aware of the personal tax liabilities of each party before entering into a property agreement of any nature.

This is a listing of some of the Government Benefits which may be available to you. Payments and the criteria for eligibility are added and changed often, so be sure to check with the Department of Human Services - Centrelink website for the latest information.

If you are in crisis and need money immediately, investigate:

Centrelink Crisis Payment - A one off payment to help people who are experiencing difficult or extreme circumstances, including domestic violence.

Centrelink Advance Payment - This is a lump sum Advance Payment on your existing Social Security benefit payment of between $250 and $500 and may be available if you need some money to help pay your expenses. It is not an extra payment. You have to pay your Advance Payment back to Centrelink. 

Centrelink Special Benefit - You may get Special Benefit if you are in severe financial hardship, you are not able to earn enough income to support yourself and your dependants for reasons outside your control, you cannot get any other payment from Centrelink and you meet residency requirements.

Parenting Payment (Single) - Parenting Payment is paid to the person who is the main carer of a child and is to help with the costs of caring for children. If you are granted Parenting Payment (single) you will have compulsory part-time participation requirements from the time your youngest child turns 6 years of age. 

NewStart Allowance - Single parents are eligible for the Newstart allowance when your youngest child turns 8. You may be expected to apply for Newstart, rather than it be an automatic switch from the Single Parent Payment.

Family Tax Benefit Part A & B - Family Tax Benefit Part A helps you with the cost of raising children. Family Tax Benefit Part A helps families with the cost of raising children. It is generally paid for dependent children and dependent full time teen / young adult students under a certain age who are not receiving Youth Allowance or similar payments like ABSTUDY or Veterans' Children Education Supplement.  Note: If you have not applied for child support, or an exemption from seeking child support you may only get the base rate of Family Tax Benefit Part A. If you receive over a certain amount of Child Support, your Family Tax Benefit Part A may be reduced. Family Tax Benefit Part B gives extra assistance to sole parent families and to families with one main income where one parent chooses to stay at home or balance some paid work with caring for their children. If you are a single parent, you can get the maximum amount of Family Tax Benefit Part B provided your income is $150,000 per year or less. Shared Care may affect your payment.National Hardships Register - The National Hardships Register negotiates debt waivers on behalf of many vulnerable consumers.  To be included on the NHR, a consumer must meet the Eligibility Criteria and make an application at no cost via a not-for-profit financial counsellor (counsellor).  The purpose of the industry funded NHR is to protect those consumers who are experiencing long-term and severe financial hardship from unnecessary debt collection activity.